TAMIL NADU NEWS PRINT & PAPERS LTD. Vs. D.KARUNAKAR & ORS.
CODE OF CRIMINAL PROCEDURE, 1973 (CrPC)
Section 482 - Saving of inherent powers of High Court
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 1846-1847 of 2008, Judgment Date: Aug 06, 2015
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.
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.
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 :
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 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 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 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.