Negotiable Instrument Act, 1881 – ss. 138, 141, 142 – Whether a director of a company would be liable for prosecution u/s. 138 of NI Act without the company being arraigned as an accused – Held: If the complainant fails to make specific averments against the company in the complaint for the commission of an offence u/s. 138 of NI Act, the same cannot be rectified by taking recourse to general principles of criminal jurisprudence – The provisions of s.141 impose vicarious liability by deeming fiction which pre-supposes and requires the commission of the offence by the company or firm – Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-Section (1) and
(2) would not be liable to be convicted on the basis of the principles of vicarious liablity.
Negotiable Instrument Act, 1881 – ss. 138, 141, 142 – Whether a complaint u/s. 138 of NI Act would be liable to be proceeded against the director of the company without their being any averments in the complaint that the director arrayed as an accused was in charge of and responsible for the conduct and business of the company – Held: It is settled that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business – Simply because a person is a director of a company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable – In the instant case, perusal of the averments made in the complaint goes to show beyond a shadow of doubt that there are no averments that respondent no. 2 (director of the company), at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company.
Dismissing the appeals, the Court
HELD: 1. The description of the respondent-accused contained in the complaint is that though the respondent-accused was described as a Director of ROL, but the company itself was not arrayed as a party in the complaint. A perusal of the averments made in the complaint also goes to show beyond a shadow of doubt that there are no averments that respondent no. 2, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. This Court has been firm with the stand that if the complainant fails to make specific averments against the company in the complaint for the commission of an offence under Section
138 of NI Act, the same cannot be rectified by taking recourse to general principles of criminal jurisprudence. Needless to say, the provisions of Section 141 impose vicarious liability by deeming fiction which pre-supposes and requires the commission of the offence by the company or firm. Therefore, unless the company or firm has committed the offence as a principal accused, the persons mentioned in sub-Section (1) and(2) would not be liable to be convicted on the basis of the principles of vicarious Liablity. [Paras 18 & 19][115-C-H]
2. Arguments advanced by counsel for the appellant that an additional accused can be impleaded subsequent to the filing of the complaint merits no consideration, once the limitation prescribed for taking cognizance of the offence under Section
142 of NI Act has expired. More particularly, in view of the fact that neither any effort was made by the petitioner at any stage of the proceedings to arraign the company as an accused nor any such circumstances or reason has been pointed out to enable the Court to exercise the power conferred by proviso to Section 142, to condone the delay for not making the complaint within the prescribed period of limitation. [Para 23][119-E-G]
3. The three-Judge Bench also took note of the earlier pronouncements of this Court in the case of State of Haryana Vs. Brij Lal Mittal & Ors., wherein it was held that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of a company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, without being a director a person can be in charge of and responsible to the company for the conduct of its business. The Bench also considered the dictum of this Court in the case of K.P.G. Nair Vs. Jindal Menthol India Ltd., which was also a case under the Negotiable Instruments Act. In the said case, it was found that the allegations in the complaint did not in express words or with reference to the allegations contained therein make out a case that at the time of commission of the offence, the appellant was in charge of and was responsible to the company for the conduct of its business. It was held that requirement of Section 141 was not met and the complaint against the accused was quashed. [Paras
28 and 29][123-H; 124-A-D]
Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd. (2012) 5 SCC 661 : [2012] 5 SCR 503; S.M.S
Pharmaceuticals Ltd. v. Neeta Bhalla & Another (2005)
8 SCC 89 : [2005] 3 Suppl. SCR 371; State of Haryana v. Brij Lal Mittal & Ors. (1998) 5 SCC 343 : [1998] 3 SCR 104 – relied on.
N.Harihara Krishnan v. J. Thomas (2018) 13 SCC 663 : [2017] 9 SCR 324; Bilakchand Gyanchand Co. v. A. Chinnaswami (1999) 5 SCC 693 : 1999 (10) JT 236; Rajneesh Aggarwal v. Amit. J. Bhalla (2001) 1 SCC
631 : [2001] 1 SCR 54; Himanshu v. B. Shivamurthy & Another (2019) 3 SCC 797 : [2019] 1 SCR 991; K.K. Ahuja v. V.K. Vora & Anr. (2009) 10 SCC 48 : [2009] 9 SCR 1144; K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 : 2000 (1) Suppl. JT 519. - referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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