V.BaladhandayuthamDirector,M/s.Sivakami Mills Limited v. Ind Bank Merchant Banking Service Limited

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 04.11.2009C O R A MTHE HONOURABLE MR.JUSTICE K.MOHAN RAMCriminal Original Petition Nos.21290 and 21221 of 2002and Crl.M.P.Nos.8781 and 8788 of 2002V.BaladhandayuthamDirector,M/s.Sivakami Mills Limited,Thennur, Madurai 625 408.... Petitioner in both the Crl.O.Ps. (A-3 and A-9, respectively,)-Vs.-Ind Bank Merchant Banking Service Limited,rep. By its Senior Project Executive P.S.Ramachandran,III Floor, Raja Annamalai Building,19, Marshalls Road, Chennai-8. ...Respondent in Crl.O.P.21290/02Ind Bank Merchant Banking Service Limited,rep. By its Vice President, R.Ravi,III Floor, Raja Annamalai Building,19, Marshalls Road, Chennai-8....Respondent in Crl.O.P.21221/02Criminal Original Petitions filed under Section 482 Cr.P.C. to callfor the entire records relating to the proceedings in C.C.Nos.2612and 2611 of 1998, respectively, on the file of the VII MetropolitanMagistrate, George Town, Chennai and quash the same in so far as thepetitioner is concerned. For Petitioner in both the Crl.O.Ps. :Mr.K.M.Vijayan, Senior CounselFor Respondent in both the Crl.O.Ps.: Mr.S.Sundar RajanC O M M O N O R D E RThe petitioner, who is third and ninth accused, in C.C.Nos.2611and 2612 of 1998, respectively, on the file of the VII MetropolitanMagistrate, George Town, Chennai and who is facing trial for thealleged offence under Section 138 of the Negotiable Instruments Act,has filed the above criminal original petitions seeking to quash allfurther proceedings therein. https://hcservices.ecourts.gov.in/hcservices/

2. The petitioner and the respective respondent in both theabove criminal original petitions are one and the same. Since acommon issue arises for consideration in both the above criminaloriginal petitions, they are being disposed of by this common order.3. The brief facts which are necessary for disposal of theabove criminal original petitions are set out below:The complainant/respondent herein filed a complaint before thelearned Magistrate alleging that in partly discharge of its liabilitythe accused issued cheques bearing Nos.373639 and 373640, dated31.03.1997 and 30.06.1997, for a sum of Rs.8,10,000/- each, drawn onthe bank account of the first accused maintained with the PunjabNational Bank, Service Branch, Madurai. The said cheques were signedby the accused herein. When the said cheques were presented forencashment, they were returned / unpaid with endorsements "refer todrawer". In the complaints, it is further alleged that in theaccount, there was no sufficient funds to honour the cheques. Aftercomplying with the statutory requirements, the complaints were filedand the same have been taken on file. Aggrieved against the same,the above criminal original petitions are filed.4. Heard both sides.5. Mr.K.M.Vijayan, learned senior counsel appearing for thepetitioner submitted that in paragraph 14 of the complaint inC.C.No.2611/98 and in paragraph 15 of the complaint inC.C.No.2612/98, the following similar averments have been made:-"The Complainant states that the accused have thereforecommitted offences under Section 138 and 142 of theNegotiable Instruments Act. The second accused is theManaging Director of the first accused company the thirdto seventh accused were the Directors of the first accusedcompany and the eighth accused the authorised signatory ofthe first accused company. The cheque was signed by theeighth accused. The second to eighth accused were at thetime of offence was committed and still are in charge andresponsible to the first accused for the conduct for thebusiness of the first accused company. The offence wasalso committed with the consent and connivance of thesecond to eighth accused. All the accused have thereforecommitted the offence and are liable to be punished." According to the learned senior counsel for the petitioner, the saidaverments are not sufficient to attract the provisions containedunder Section 141 of the Negotiable Instruments Act and to array thepetitioners as accused. The learned senior counsel submitted thatit should be further averred in the complaints as to how thepetitioner herein as Director of the first accused Company wasincharge of the first accused company but such averments areconspicuously absent in the complaints. Therefore, the learned https://hcservices.ecourts.gov.in/hcservices/ Magistrate has erred in taking cognizance of the complaints underSection 138 of the Negotiable Instruments Act as against thepetitioner herein. In support of his contention, the learned seniorcounsel relied on the following decisions:-i) 2009 (5) SCALE 670, (RAMARAJSINGH Vs. STATE OF M.P.)ii) 2009 (5) CTC 81, (K.K.AHUJA Vs. V.K.VORA)6. In 2009 (5) SCALE 670, (referred to supra) and 2009 (5)SCALE 670, (referred to supra), a three Judges Bench of the ApexCourt, while considering the scope of 141 of the NegotiableInstruments Act, after referring to number of decisions, approved thefuture legal principles enumerated in the decision reported in 2007(9) SCC 481, N.K.WAHI Vs. SHEKHAR SINGH AND OTHERS. In the saiddecision reported in 2009 (5) SCALE 670, (referred to supra) inparagraph 8, it has been laid down as under:"8. To launch a prosecution, therefore, against thealleged Directors there must be a specific allegation inthe complaint as to the part played by them in thetransaction. There should be clear and unambiguousallegation as to how the Directors are incharge andresponsible for the conduct of the business of thecompany. The description should be clear. It is truethat precise words from the provisions of the Act need notbe reproduced and the Court can always come to aconclusion in facts of each case. But still in theabsence of any averment or specific evidence the netresult would be that complaint would not beentertainable."7. In 2009 (5) CTC 81, (referred to supra) in paragraph 18, ithas been laid down as under:-"18.It should, however, be kept in view that even anOfficer who was not in charge of, and was responsible tothe Company for the conduct of the business of the companycan be made liable under sub section (2) of Section 141.For making a person liable under Section 141(2), themechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessaryaverments in the Complaint as to how and in what manner theaccused was guilty of consent and connivance or negligenceand therefore, responsible under sub-section (2) of Section141 of the Act."In the very same decision, in paragraph 21, it is further held asunder:-"21. If a mere reproduction of the wording ofSection 141 (1) in the Complaint is sufficient to make aperson liable to face prosecution, virtually everyofficer/employee of a Company without exception could be https://hcservices.ecourts.gov.in/hcservices/ impleaded as accused by merely making an averment that atthe time when the offence was committed they were in chargeof and were responsible to the Company for the conduct andbusiness of the Company."Basing reliance on the aforesaid submissions, the learned seniorcounsel for the petitioner submitted that if the averments containedin the complaints are considered in the light of the law laid down inthe aforesaid two decisions, the criminal original petitions areliable to be allowed.8. While the learned counsel for the respondent is unable torepel the contentions advanced by the learned senior counsel for thepetitioner based on the abovesaid decisions contended that in thereply notice sent by the accused it has not been stated by them thatthe petitioner herein is not incharge of and responsible for theCompany and therefore it has been averred in the complaints that thepetitioner is incharge of any responsible for the conduct of thebusiness of the first accused company and further details are notaverred in the complaints. Except the aforesaid submission, no othersubmission has been made by the learned counsel for the respondent. 9. I have considered the aforesaid submissions made by thelearned counsel for the petitioner and perused the allegationscontained in the complaints and the decisions relied upon by thelearned counsel.10. If the allegations contained in paragraphs 14 and 15,respectively, of the complaints are considered in the light of thelaw laid down by Apex Court in the decisions reported in 2009 (5)SCALE 670 (referred to supra) and 2009 (5) CTC 81 (referred tosupra), it could be held that the said averment in paragraphs 14 and15, respectively, do not satisfy the requirements of Section 141 ofthe Act. Except reproducing the wordings contained in Section 141of the Act, the complainants have not averred in the complaints as tothe part played by the petitioner in the said transaction. Thereshould be clear unambiguous allegation to show as to how theDirectors are responsible for the conduct of business of the companybut such unambiguous allegations are absent in the complaints.Therefore, the said contentions put forth by the learned seniorcounsel have to be countenanced.9. As far as the contention of the learned counsel for therespondent that in the reply notice sent by the accused it has notbeen stated that the petitioner is not incharge or responsible forthe conduct of the Company is concerned, it cannot be countenancedfor the reason that it is the duty of the complainants to make thenecessary details in the complaints to prima facie make out a caseunder Section 138 of the Negotiable Insturments Act.10. For the aforesaid reasons, both the criminal originalpetitions are allowed and all further proceedings in C.C.Nos.2611 and2612 of 1998 on the file of the VII Metropolitan Magistrate, GeorgeTown, Chennai, are quashed as far as the petitioners/A3 and A9 alone https://hcservices.ecourts.gov.in/hcservices/ are concerned. Since C.C.Nos.2611 and 2612 of 1998 are pending rightfrom the year 1998, the learned Magistrate is hereby directed todispose of the same within a period of four months from the date ofreceipt of a copy of this order positively. The connectedmiscellaneous petitions are closed. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarvriTo1. The VII Metropolitan Magistrate, George Town, Chennai2. -do- Through The Chief Metropolitan Magistrate, Egmore, Chennai-9.+ 2 ccs to M/s. La Law, Advocates, SR 58799.Crl.O.P.Nos.21290 and 21221 of 2002& Crl.M.P.Nos.8781 and 8788 of 2002BK (CO)RH (16.11.09)