SUNNY V L Vs. VENUGOPAL A P

JUDGEMENT

(1.) Does the mere fact that an indictee is a Director of a Company attract culpability under Section 138 read with 141 of the Negotiable Instruments Act (for short the Act) On whom does the burden lie to prove that such indictee director was (or was not) in charge of and responsible to the company for the conduct of its affairs Does Rangachari v. B.S.N.L,2007 2 KLT 1030 lay down a proposition that at the stage of evidence/trial, it must be presumed that every director is in charge of and responsible to the company for the conduct of its affairs These interesting questions are raised in this case.

(2.) This application for leave under Section 378(4) Cr.P.C. is to prefer an appeal against a judgment of acquittal in a prosecution under Section 138 of the Negotiable Instruments Act.

(3.) The petitioner herein filed a complaint alleging commission of offences under Section 138 read with 141 of the Negotiable Instruments Act. Altogether there were nine accused persons. First accused is a company. Second accused is the Managing Director of the Company. Accused 3 to 8 are the directors of the company. Accused 9 is the Manager of the Company. Accused 2 and 9 have allegedly signed the cheque in question on behalf of the first accused. Accused No. 8 had expired and the allegations against him had abated. Accused 3 to 7 alone were available for trial. The only allegation against them is that they were the directors of the company and that they were in charge of and responsible to the company for the conduct of its affairs. Accused 3 to 7 denied the offences alleged against them. Accused 1, 2 and 9 were not available for trial. The complainant examined PW1 and proved Exts. P1 to P11. The accused examined DWs 1 to 7 and proved Exts. D1 to D11. The learned Magistrate, on an anxious consideration of all the relevant inputs, entered the verdict of not guilty in favour of accused 3 to 7 and acquitted them. The relevant discussion appears in paragraph 8 under point No. 3. The question whether accused 3 to 7 were in charge of and responsible to the first accused for the conduct of business were considered. I extract below paragraph 8 in which the crucial findings appear. The discussion is of course continued in paragraph 9 and 10 also and it is finally answered that Accused 3 to 7 were not in charge of and responsible to the company for the conduct of its affairs at the relevant time. Paragraph 8 reads as follows: