ORDER
G. Sasidharan, J.
1. The question which arises for consideration is whether in a complaint filed in a Court alleging that a company committed offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the Act”), for making the Directors liable for the commission of the offence, is it necessary that there should be averments in the complaint that they were in charge of and were responsible to the company for the conduct of the business of the company at the time when the offence was committed. In the present case, in three complaints filed before the learned Magistrate, there is no statement that at the time when the offence is alleged to have been committed by the company, the petitioner was in charge of and was responsible to the company for the conduct of the business of the company. The complaints only say about the issuance of the cheque, dishonour of the cheque and also issuance of the notice to the Managing Director as well as the other Directors and non-payment of the amount covered by the cheque within the statutory period in spite of receipt of notice.
2. Section 141 (1) of the Act provides that when 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. The above section does not say that when the person committing the offence under Section 138 of the Act is a company, all the Directors can be proceeded against for the offence. But what the section says is that persons who at the time of commission of the offence were in charge of and were responsible to the company for the conduct of the business of the company are liable to be proceeded against and punished accordingly. What has to be gathered from the above provision is that a person cannot be proceeded against for commission of an offence by a company under Section 138 of the Act for the mere reason that he happens to be a Director of the company. The question whether there has to be averment in the complaint that the persons who are arrayed as accused in the complaint were in charge of and were responsible to the company for the conduct of the business of the company has to be decided by taking into account the above facts.
3. Sub-section (2) of Section 141 of the Act says that 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. The above Sub-section says as to who can be made liable for the offence even though he is not in charge of and is responsible to the company for the conduct of the business of the company. Even if the person is not in charge of and responsible to the company for the conduct of the business of the company, he can be made liable for the commission of an offence under Section 138 of the Act, if it is proved that the offence has been committed with the consent and connivance of such person in his capacity as Director, Manager, Secretary cr other officer of the company. A reading of Section 141(1) of the Act along with Sub-section (2) of the same section would make it clear that it becomes necessary to say how the complainant makes liable a person for commission of an offence by the company. A person can be made liable for commission of an offence under Section 138 of the Act by the company either under Sub-section (1) or Sub-section (2) of Section 141 of the Act. This is also an important fact which has to be borne in mind while considering the question whether there has to be specific averment as to how the accused is made liable when an offence under Section 138 of the Act is stated to have been committed by the company.
4, In State of Haryana v. Brij Lal Mittal, IV (1998) SLT 796=II (1998) CCR 246 (SC)=(1998) 5 SCC 343, the Supreme Court was dealing with the question as to what averments should be there in a complaint filed alleging commission of offence under Section 34 of the Drugs and Cosmetics Act, 1940. The provision in Section 34 of the said Act is similar to Sub-section (1) of Section 141 of the Act. Section 34 of the Drugs and Cosmetics Act reads as follows :
“Offences by companies.–(1) Where an offence under this Act has been committed by 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 such person liable to any punishment provided in this Act if he provides that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.”
There also, when an offence under the above Act is committed by 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. In the above decision, the Supreme Court stated that there has to be allegation in the complaint that the accused were in charge of the company and also responsible to the company for the conduct of its business. The complaint was quashed in that case for the reason that there was no such allegation in the complaint. Under Section 141(1) of the Act as well as under Section 34 of the Drugs and Cosmetics Act, the vicarious liability of a person for being prosecuted for commission of an offence by the company arises if at the time when the offence is alleged to have been committed, he was in charge of and was responsible to the company for the conduct of its business. It is necessary that there has to be averment in the complaints that the petitioners were in charge of and were also responsible to the company for the conduct of the business of the company. If there is no such averment, there should be other materials available before the Magistrate to indicate that the accused were in charge of and were responsible to the company for the conduct of its business. The learned Magistrate took cognizance of the offence on the basis of the complaints in which there are no such averments and in the absence of any other materials which are necessary for making the present petitioners liable for the offence.
5. The learned Counsel appearing for the respondents would submit that notices were issued to the petitioners demanding payment of the amount covered by the cheque which was dishonoured. It is maintained by him that even though there is no averment in the complaint, issuance of notices would be sufficient for showing that the respondents want to make them liable for the commission of the offence. In three of the cases, Crl.M.C. Nos. 4010/1999, 4022/1999 and 4023/1999, copies of the reply sent by the petitioner are also produced. In the reply, it is seen that the petitioner has stated that he is a non-executive Director of the company and was not in charge of the conduct of the business of the company nor was he responsible for the dishonour of the cheque and that there was no liability on his part to pay the amount covered by the dishonoured cheque. The fact that notices were issued to the petitioners will not in any way go to show that the absence of averment in the complaint or any other material to show that the petitioners were in charge of and responsible to the company for the conduct of its business is of no consequence. Taking cognizance of the offence by the learned Magistrate without there being sufficient averments in the complaints to implicate the petitioners cannot be justified. The complaints as against the petitioners and C.C. Nos. 958, 959 and 960 of 1998 pending on the file of the Judicial Magistrate of the First Class, Neyyattinkara are quashed.
The Criminal Miscellaneous Cases are allowed as above.