Legal Blog: Vicarious Liability under S. 138 Negotiable Instruments Act : Necessary Averments must be made in Complaint

Legal Blog on the Social Networks

Loading

Sunday, April 6, 2014

Vicarious Liability under S. 138 Negotiable Instruments Act : Necessary Averments must be made in Complaint

Justice C.K. Prasad
Supreme Court of India
The Hon'ble Supreme Court in A.K. Singhania Vs. Gujarat State Fertilizer Co. Ltd. & Anr. has reiterated that a complaint under S. 138 read with S. 141 of the Negotiable Instruments Act must necessarily contain specific averments with respect to the role of each Director in cases where a Company is arrayed as an accused. While examining previous decisions on this subject, the Bench has held as under:

16. In case of offence by company for dishonour of cheque, the culpability of the Directors has to be decided with reference to Section 141 of the Act, same reads as follows: 
141. 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 deemed 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 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.  
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.  
Explanation.- For the purposes of this section,-
(a) "company" means any body corporate and includes a firm or other association of individuals; and  
(b) "director", in relation to a firm, means a partner in the firm.” 
17. From a plain reading of the aforesaid provision it is evident that every person who at the time the offence was committed is in charge of and responsible to the Company shall be deemed to be guilty of the offence under Section 138 of the Act. In the face of it, will it be necessary to specifically state in the complaint that the person accused was in charge of and responsible for the conduct of the business of the Company? In our opinion, in the case of offence by Company, to bring its Directors within the mischief of Section 138 of the Act, it shall be necessary to allege that they were in charge of and responsible to the conduct of the business of the Company. It is necessary ingredient which would be sufficient to proceed against such Directors. However, we may add that as no particular form is prescribed, it may not be necessary to reproduce the words of the section. If reading of the complaint shows and substance of accusation discloses necessary averments, that would be sufficient to proceed against such of the Directors and no particular form is necessary. However, it may not be necessary to allege and prove that, in fact, such of the Directors have any specific role in respect of the transaction leading to issuance of cheque. Section 141 of the Act makes the Directors in charge and responsible to Company “for the conduct of the business of the Company” within the mischief of Section 138 of the Act and not particular business for which the cheque was issued. We cannot read more than what has been mandated in Section 141 of the Act. 

18. A large number of authorities of this Court have been cited by the counsel representing the party to bring home their point. We deem it inexpedient to refer to all of them. Suffice it to say that this question has been answered eloquently by a three-Judge Bench decision of this Court in the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, in the following words: 

“19. In view of the above discussion, our answers to the questions posed in the reference are as under: 

(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. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.” 

20. This Court in the case of National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330, after reviewing all its earlier judgments summarized the legal position as follows: 
“39. From the above discussion, the following principles emerge:  
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.  
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.  
(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.  
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.  
(v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.  
(vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint.  
(vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.” 
21. In Harshendra Kumar D. v. Rebatilata Koley, (2011) 3 SCC 351, after referring to its earlier decisions in S.M.S. Pharmaceuticals Ltd.(supra), National Small Industries Corpn. Ltd.(supra), N. Rangachari v. Bharat Sanchar Nigam Ltd., (2007) 5 SCC 108 and K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48, this Court reiterated the same view. 

22. We have found on fact that there is no averment that the two accused herein were in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Hence, there is no essential averment in the complaints. In view of what we have observed above, the prosecution of accused A.K. Singhania and accused Vikram Prakash cannot be allowed to continue. Accordingly, the order of the High Court quashing the prosecution of the accused Vikram Prakash is not fit to be interfered with. For the same reason the order passed by the High Court declining the prayer of A.K. Singhania for quashing of the prosecution cannot be sustained and the appeals preferred by him deserve to be allowed. 

23. In the result, we dismiss the appeals preferred by the complainant Gujarat State Fertilizers Company Ltd. and allow the appeals preferred by A.K. Singhania and quash his prosecution in all these cases.

55 comments:

  1. Sir when will be announce JNVST Results 2014 Please tel me the Date

    ReplyDelete
  2. Dear sir when is Web Counselling begin and what is the Rank wise Web Counselling Dates 2014 Please info me

    ReplyDelete
  3. Escorts Srvice Delhi
    Delhi Escorts service offer hot Indian college, school, model, Panjabi, Kashmiri, Housewife and more click link to hire Escorts in Delhi

    ReplyDelete
  4. Delhi based escort agency willing to offer gentlemen a complete satisfaction in terms of relaxation of mind and body. We are a team that is working just to serve our clients in a unique way. Our female ladies from all around the world is providing Delhi escorts service to those people who are in Delhi for business or fun.


    Visit these links to know more about Delhi Escorts Agency.

    1. Delhi Independent Escorts, Escorts Delhi
    2. Delhi Independent Escorts, Escorts Delhi
    3. Delhi Independent Escorts, Escorts Delhi
    4. Delhi Independent Escorts, Escorts Delhi
    5. Delhi Independent Escorts, Escorts Delhi

    ReplyDelete
  5. Hi Gentleman! This is Tara Gupta attractive hot companion, by profession I am an independent escort in Delhi. I am well spoken and privately educated girl. I am independent Collage girl in Delhi. I am young escort based in Delhi.
    My website link
    Hi Gentleman! This is Tara Gupta attractive hot companion, by profession I am an independent escort in Delhi. I am well spoken and privately educated girl. I am independent Collage girl in Delhi. I am young escort based in Delhi.
    My website link
    Delhi Independent Escorts | Delhi Independent Escorts | Independent Escort In Delhi | Independent Escorts In Delhi | Independent Delhi Escort | Independent Escorts In Delhi | Independent Delhi Escorts | Independent Delhi Escorts | Independent Delhi Escorts

    ReplyDelete
  6. Thank you sir for sharing such imprtant information online. For a country like India growing awareness alone can help save the downtrodden from doom.

    ReplyDelete
  7. I am a real class Independent Delhi Escorts. I feel to produce wonderful quality of service with a touch of class. You can't compare me with other Delhi Escorts Service. Whatever I do, I jazz with love and care to satisfy my clients with heavenly pleasure.

    ReplyDelete
  8. Meet with the most sexy model escort in Delhi. Shatorupa Roy is independent Delhi escort offering high profile escort service in Delhi NCR.

    Delhi Escorts Service
    Independent Delhi Escorts
    Delhi Escort Agency
    Delhi Female Escort

    ReplyDelete
  9. Thank you sir for sharing such imprtant information online. For a country like India growing awareness alone can help save the downtrodden from doom

    OFAC SDN List

    ReplyDelete
  10. Replies
    1. www.bobyraj.in
      Mumbai Escort
      Mumbai Escort Service
      , Escorts in Mumbai Agency,
      Independent Escorts in Mumbai in all areas in Maharashtra."

      Delete
  11. What is the punishment for dishonor of cheque under section 138 of the Negotiable instruments act?

    ReplyDelete
  12. Call Sweta Shetty 09818990100, Every girl from our Delhi escorts gallery are most pretty companions in India and our Sweta Shetty escort service agency opened 24 hours.
    PNTY Delhi Escorts Agency

    ReplyDelete
  13. Thank you admin for sharing this useful stuff regarding Criminal Matter, I would like to suggest an another Criminal Lawyer
    in Delhi, Mr. Kislay Panday - Supreme Court of India

    ReplyDelete
  14. My name is Jayani Jaiswal and i am from escort Hyderabad. A guy from all around the world comes to Hyderabad as this town is the company of India. An individual who comes to Hyderabad for company gets escorts services by women escorts in Hyderabad after finishing their formal perform. I am a regional girl from Hyderabad and always available to those individuals who are looking for a wonderful and knowledgeable escort girl here in Hyderabad.

    Hyderabad is a very wonderful town and the whole town is at the lender of India Sea. Environment of town is amazing and you can appreciate the town once the set get down. Hyderabad is well known for its glamorous and of course Hollywood. Hyderabad is the town that never falls and you can do fun whenever you want at nighttime in cafes or groups. You can seek the assistance of a women Escort in Hyderabad like me to create your 100 % free time- A Unforgettable Day of your Lifestyle.

    Checkout my partner's

    Hyderabad Escorts
    Independent Escorts in Hyderabad
    Hyderabad Escorts Agency
    Hyderabad Escorts Services
    Escorts in Hyderabad
    Independent Hyderabad Escorts
    Hyderabad Model Escorts
    Hyderabad Female Escorts

    Goa Escorts
    Independent Escorts in Goa
    Goa Escorts Agency
    Goa Escorts Services
    Escorts in Goa
    Independent Goa Escorts
    Goa Model Escorts
    Goa Female Escorts
    Russian Goa Escorts


    Escorts in Goa
    Independent Goa Escorts
    Goa Model Escorts
    Goa Female Escorts
    Russian Goa Escorts
    Goa Escorts
    Independent Escorts in Goa
    Goa Escorts Agency
    Goa Escorts Services

    ReplyDelete
    Replies
    1. www.bobyraj.in
      Mumbai Escort
      Mumbai Escort Service
      , Escorts in Mumbai Agency,
      Independent Escorts in Mumbai in all areas in Maharashtra."

      Delete
  15. Arpita Chowdhary bring you exclusive independent Mumbai escorts from all over india: The Untold Story of Indian Indian female model Versha. Arpita Chowdhary offers fascinating insights into the escort service that touches a gentlemen desire-- from the housewives, college girls, the models who walk the ramp and an elite and demanding airhostess. First up is a story of an aspiring model Versha (name changed to protect privacy) who works for a famous luxury brand in mumbai.

    ReplyDelete
  16. www.bobyraj.in
    Mumbai Escort
    Mumbai Escort Service
    , Escorts in Mumbai Agency,
    Independent Escorts in Mumbai in all areas in Maharashtra."

    ReplyDelete
  17. I am the perfect choices for you: I am avani Roy an Independent Mumbai Escorts like you have never seen at one time, readied to do the most crazy things you may consider.

    Mumbai Escort
    Mumbai Escorts
    Mumbai independent Escorts
    Mumbai Female Escorts
    Mumbai Model Escorts
    Mumbai Escorts Services

    ReplyDelete
  18. Hello I am High Profile Girl Mansi Chawla Independent Escorts in Mumbai For Your Private Service at Mumbai City Star Hotel.

    For More Info About Me Click Here . . .

    Mumbai Escorts
    Mumbai Independent Escorts
    Mumbai Model Escorts
    Mumbai Female Escorts

    ReplyDelete
  19. our own Organization is accessible throughout the India then one may get all of them in any section of the globe.
    Mumbai Escorts
    Delhi Escorts
    Independent Escorts in Mumbai

    ReplyDelete
  20. Hack Coupons for Mobiles & Fashion Products. Put 'Hack Flipkart Coupons' or 'Hack Myntra Coupons' in Google Search and find your favorite stores Coupons at http://www.Hackdeals.com

    ReplyDelete
  21. Russian Escorts Mumbai Service by high profile
    mumbai Escorts
    High Class Escorts Girls in Mumbai

    ReplyDelete
  22. I am Akrti Bansal a self sufficient, passionate, individuality Independent Escorts with perfect looks. I am a 21 year old, a very slim fit escort girl with untold features of my services which will display you on bed. I am a very delightful, nice-looking and sexy escort girl. I have a burning desire to please with a sweet and very friendly personality. I am a young girl who loves style and luxury life. I am high profile, gifted and well knowledgeable girl. I am slim, soft untarnished skin with a sweet quality. I provide restricted companionship service and promise to bring you a zealous and loveable escort occurrence. I love to meet and greet with an upscale person and expend some quality time with them.
    Please check out my partner’s website for more entertainment:
    Jaipur Escorts
    Jaipur Escort
    Jaipur Escorts Service
    Independent Escorts In Jaipur
    Jaipur Escort Agency
    Jaipur Escort Service
    Escort In Jaipur

    Goa Escorts
    Goa Escort
    Goa Escorts Service
    Independent Escorts In Goa
    Goa Escort Agency
    Goa Escort Service
    Escort In Goa

    Gurgaon Escorts
    Gurgaon Escort
    Gurgaon Escorts Service
    Independent Escorts In Gurgaon
    Gurgaon Escort Agency
    Gurgaon Escort Service
    Escort In Gurgaon

    ReplyDelete
  23. My name is Silve Menon and I am provider escorts services in delhi and call as extending delhi escorts. I am soft , gentle and caring always love to meet new people. I am the girl of quality with a sexy figure. I am well educated, well affected and skilled with lots of amazing stuff. I belong to a reputed north Indian family and all my education done at my native city.I am in delhi and working as an executive level on an MNC.
    Kindly Visit My Friends Websites:
    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    ReplyDelete
  24. My name name is Tanika Jain and I am provided escorts services in Mumbai and call as leaving Mumbai escorts. I well know, well acted and experience with enough of excellent things. I offer call girl solvents in Mumbai as a full-time. I fix sessions only with those someone’s who I think are really awesome people. My organic charm makes all simple for me to get in contact more closely to my clients. I am a perfect influenced girl with an average figured body. I do regular yoga to keep myself fit and vitality. I am very much witting about the emotions of people who really like to see a tremendous female escort and I always creates this real.
    See My Partners website for future bookings:
    Mumbai Escorts
    Mumbai Escort
    Mumbai Escorts Service
    Independent Escorts In Mumbai
    Mumbai Escort Agency
    Mumbai Escort Service
    Escort In Mumbai

    Independent Mumbai Escort
    Mumbai Escorts
    Mumbai Escorts service
    Mumbai Escorts
    Mumbai Escorts Service
    Mumbai Escort Service

    Mumbai Escorts
    Mumbai Escorts
    Mumbai Escorts service
    Mumbai Escorts
    Independent Escorts In Mumbai
    Mumbai Escorts Service
    Mumbai Escort Service

    ReplyDelete
  25. My name is Isha,I am an Independent Delhi Escort for the Classy and discreet men. I live in Delhi, I am cute and lovely with face and my charming body. My beautiful personality appeal every man, they want to be with me for some fun and personal instants. If you are a businessman or vacationist, staying in any hotel and want some for for companionship as you are alone while traveling, which i realize well and i think of you with full of my body fluid.
    Please See my Other Friends Website:
    Delhi Female Escort
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts

    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    ReplyDelete
  26. Hi, i am Anishka and that i want to begin by welcoming you to my site. I hope by the end of this passing introduction and once looking at my Profile you'll need a much gamier idea of who i am and be startled to assemble for a one-on-one meet. I am a young and beautiful looking woman from Delhi working as an independent escort can be an elect comrade with a zest for all the nice things life allows for those ready for success. I reflect myself as an true independent escort position perfect body curves, beautiful, soft and just right... something i am notably proud of.
    See other Website of my partners:
    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escort Agency
    Delhi Escort Service
    Escort In Delhi

    Delhi Escorts
    Delhi Escort
    Delhi Escorts Service
    Independent Escorts In Delhi
    Delhi Escorts Service
    Delhi Escort Service
    Escorts In Delhi

    Independent Delhi Escorts
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts
    Delhi Escorts

    ReplyDelete
  27. Hi guys! I am Ashna Bhatiya, the proprietor and the lead Mumbai Independent Escort from this High Profile Mumbai Escorts.I am blessed with a magnetic personal appeal and the one that can jolt you by just one look and penetrate your senses deep within. I am very much hooked to sexual love and for me it is like a daily demand which is hard to live to without. Getting along with different men is my passion and trying out different lovemaking techniques is the thing that I love the most.
    Go through Our Partner Web Pages:
    Mumbai Escorts
    Mumbai Escorts
    Mumbai Escorts service
    Mumbai Escorts
    Independent Escorts In Mumbai
    Mumbai Escorts Service
    Mumbai Escort Service

    Mumbai Escorts
    Mumbai Escorts
    Mumbai Escorts service
    Mumbai Escorts
    Independent Escorts In Mumbai
    Mumbai Escorts Service
    Mumbai Escort Service

    Independent Mumbai Escort
    Mumbai Female Escort
    Mumbai Escorts Service
    Independent Escorts In Mumbai
    Mumbai Escorts Service
    Mumbai Escort Agency
    Escorts In Mumbai

    ReplyDelete
  28. Mumbai Escorts - cheap out call escort agency. We offer for you only a cheap escort service and interested in your secondary reference to our Escort agency.

    For More Info....

    Mumbai Escorts Girl
    Mumbai Escort
    Mumbai Independent Escorts
    Mumbai Model Escorts
    Mumbai Escorts Services

    ReplyDelete
  29. Russian Escorts Mumbai Service by high profile
    mumbai Escorts
    High Class Escorts Girls in Mumbai

    ReplyDelete
  30. Mumbai Escorts Top Class and high Profile Escorts Girls In Pune
    Foreigner Escorts In Pune Escorts Service in pune

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...
There was an error in this gadget