At the outset, we may note here that in paragraph 10 of the impugned Judgment, the High Court has purported to quote the relevant paragraph from the complaint bearing CC No.1/2012, which is the subject matter of this appeal. In paragraph 4 of the complaint, it is stated that the accused No.1 is the Company on account whose the two cheques were issued and accused No.2 is the Managing Director of the accused No.1. The Accused 2 to 7 are fully aware of the business transactions of the Accused No.1 company.
It is also necessary to note the averments made in Paragraph 8 of the complaint in which the second respondent stated that the statutory notice of demand was not served on the accused.
Sub-section 1 of Section 141 of the NI Act required the complainant to aver that the present appellants at the time of the commission of the offence were in charge of, and were responsible to the company for the conduct of the business of the company.
This appeal takes exception to the order of the High Court by which the prayer made by the present appellants for quashing a complaint under Section 138 of the NI Act has been rejected. Complaint Nos.963 and 692 of 2011 pending in the Court of Judicial Magistrate First Class, Nandyal is quashed so far as the present appellants are concerned. The present appellants have been arrayed as accused Nos.5 to 7 in the complaint filed by the second respondent under Section 138 of the NI Act.
Also Read: https://newslaw.in/supreme-court/extension-of-benefit-of-doubt-in-criminal-convictions/
Accused No.3 is the Managing Director of Accused No.2 Accused No.4 to 7 are the directors of the accused No.1 Company and Accused No 2 to 7 are Managing the Company and busy with day to day affairs of the Company and all are managing the Criminal Appeal No.879 of 2023 company and also in charge of the company and all are jointly and severally liable for the acts of accused No.1 Company.” The learned counsel appearing for the appellants has relied upon various decisions of this Court in support of his plea that the material averments which are required to be incorporated in terms of sub-section (1) of Section 141 of NI Act are completely lacking in these cases.
The vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 are satisfied.
Every person who is sought to be roped in by virtue of sub-section 1 of Section 141 NI Act must be a 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. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act.
Also Read: https://newslaw.in/supreme-court/vicarious-liability-under-section-34-of-ipc/
Offences by companies.- (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 deeded to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: 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 Criminal Appeal No.879 of 2023 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.]” 20 The impugned judgment is set aside insofar as the appellants are concerned.
Case Title: ASHOK SHEWAKRAMANI Vs. STATE OF ANDHRA PRADESH (2023 INSC 692)
Case Number: Crl.A. No.-000879-000879 / 2023
