Page 1

1

NON-REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No(s).  1846-1847 OF 2008

TAMIL NADU NEWS PRINT & PAPERS LTD.      Appellant(s)                                 VERSUS

D.KARUNAKAR & ORS.                       Respondent(s)

J U D G M E N T ANIL R. DAVE, J.

1. In  these  appeals,  the  order  dated  12th April,  2007, passed by the High Court of judicature at Madras in Crl. O.P.Nos. 1222 & 4098 of 2007 and Crl. M.P. No. 1 of 2007, has been challenged.  

2. By virtue of the impugned order, the High Court has allowed the petitions filed under the provisions of Section 482 of the Code of Criminal Procedure, whereby proceedings in  pursuance  of  C.C.  No.  3022  of  2000  on  the  file  of learned  IX  Metropolitan  Magistrate,  Saidpet,  Chennai  in respect of some of the accused have been quashed.  

Page 2

2

3. The facts giving rise to the present appeals, in a nutshell, are as under :-

The appellant is a company manufacturing news prints and  papers.   It  had  business  dealings  with  M/s  Manito Electronics Pvt. Ltd., Accused No.1, a company of which Accused Nos. 2 to 9 were the Directors.  Though, all the accused had not filed quashing petitions, the High Court has quashed the proceedings in respect of all the accused, other than Accused No. 1, which is the company and Accused No. 2, who was the Managing Director of the company, who had issued the cheque.   

A cheuqe for Rs.57,68,524/- (Fifty Seven Lakhs Sixty Eight  Thousand  Five  Hundred  and  Twenty  Four)  had  been issued on behalf of Accused No. 1 company by Accused No. 2, the Managing Director to the appellant company.  As the cheque had not been honoured and in spite of a statutory notice issued, no amount in respect of the said cheque had been paid to the present appellant, a complaint, being CC No.  3022  of  2000  had  been  filed  in  the  Court  of  IX Metropolitan Magistrate, Saidpet, Chennai.   

4. The present respondents had filed two petitions under Section 482 of the Code of Criminal Procedure for quashing the said complaint, which the High Court has allowed to the limited extent, as stated hereinabove.  

Page 3

3

5. The present appellant, in whose favour the cheque had been issued by Accused No. 2, on behalf of Accused no.1 company,  has  been  aggrieved  by  the  order  whereby  the proceedings have been quashed in part by the High Court and therefore,  the  present  appeals  have  been  filed  by  the complainant.    

6. Though served, no one has appeared on behalf of the respondents.  It appears from the record that notice issued to Accused no.1 company was refused and whereabouts of all the Directors could not be known.  In these circumstances, a paper publication was effected yet none has appeared for the respondents.

7. It has been submitted by the learned counsel appearing for the appellant that the High Court was not right in quashing the proceedings in part so far as Accused Nos.3 to 10 are concerned.  He has referred to Section 141(1) of the Negotiable Instruments Act, 1881 (hereinafter referred to as, “the Act”), which reads as under :-

“141(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :

Page 4

4

   Provided  that  nothing  contained  in  this sub-section  shall  render  any  person  liable  to punishment  if  he  proves  that  the  offence  was committed  without  his  knowledge,  or  that  he  had exercised  all  due  diligence  to  prevent  the commission of such offence :     Provided  further  that  where  a  person  is

nominated as a Director of a company by virtue of his holding any office or employment in the Central Government  or  State  Government  or  a  financial corporation  owned  or  controlled  by  the  Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.”  

(Emphasis supplied)        

8.  It has been submitted by the learned counsel for the appellant that in the complaint, an averment has been made to  the  effect  that  all  the  accused  were  Directors  and incharge of day-to-day business of Accused No. 1 – company and therefore, they are liable to be punished under the provisions of Section 138 of the Act.

9. It has been further submitted by the learned counsel for the appellant that the High Court is not right when it has observed in paragraph 7 of the impugned order that “the complainant has not whispered a word about the position held

by  the  petitioners  herein  and  there  is  not  even  a  single

statement  to  the  effect  that  the  petitioners  are  the

Directors and as such they are in charge of the day to day

Page 5

5

business of A1, the Company.  It is merely stated that A3 to

A9 are involved and in charge of the business of A1, the

Company.”   

10. The  learned  counsel  has  drawn  our  attention  to  the Judgment  delivered  by  this  Court  in  the  case  of  S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another reported in (2005) 8 SCC 89.  Paragraph 19(a) of the Judgment reads as under :-

“19(a)  It  is  necessary  to  specifically  aver  in  a complaint  under  Section  141  that  at  the  time  the offence  was  committed,  the  person  accused  was  in charge  of,  and  responsible  for  the  conduct  of business  of  the  company.  This  averment  is  an essential requirement of Section 141 and has to be made in a complaint........”  

11. The learned counsel has also submitted that, in fact, an averment had been made in the complaint that Accused Nos.  2  to  9  were  Directors  and  were  in  day  to  day management  of  the  accused  company.   In  spite  of  the aforesaid  fact,  the  High  Court  has  made  the  aforesaid observation that there was no such averment made against Accused Nos. 3 to 10.  According to him, the said view of the High Court is not correct and therefore, this criminal appeal deserves to be allowed.   

12. We  have  carefully  gone  through  the  impugned  order passed by the High Court and the complaint filed on behalf

Page 6

6

of the appellant.

13. Upon perusal of the complaint, we find that an averment has been made to the effect that Accused Nos. 3 to 10 were, in fact, in-charge of the day-to-day business of Accused No. 1 – company.

14. It is an admitted position that simply because someone is a Director in a company, he cannot be held responsible in respect of a cheque issued on behalf of the company, but if  the  concerned  Director  is  in-charge  of  and  is responsible to the company for its conduct of business, he can be held to be guilty of the offence under Section 138 of the Act and therefore, the High Court ought not to have quashed the proceedings against such directors.

15. In our opinion, the High Court has committed an error by making an observation that not a single statement was made in the complaint to the effect that Accused Nos. 3 to 10 were in-charge of the day-to-day business of Accused No. 1 – company.   

16. It is also pertinent to note that on behalf of the accused company notice was refused and whereabouts of all the Directors are not known. Notices served upon them in normal course could not be served and therefore, by way of substituted service, a paper publication was made and an affidavit  giving  details  about  the  publication  has  been

Page 7

7

placed on record of this Court.  In spite of the said fact, no body has appeared on behalf of the respondents.  This fact also indicates the intention of the accused.   

17. For the reasons stated hereinabove, in our opinion, as there was an allegation to the effect that Accused Nos. 2 to 10 were involved in day-to-day business of Accused No. 1 – company, we see no reason for sparing them by the High Court.   

18. In these circumstances, the impugned order passed by the High Court is set aside and the Criminal Appeals are allowed.   

19. It is also directed that the proceedings shall commence as soon as possible so that they can come to an end at an early date.   

20. The Registry is directed to send an intimation of this order  to  IX  Metropolitan  Magistrate,  Saidpet,  Chennai. Record and proceedings, if sent to this Court, be returned forthwith.           

.......................J.               [ ANIL R. DAVE ]  

.......................J.               [ AMITAVA ROY ]  

New Delhi; August 06, 2015.