{"id":177991,"date":"2010-03-25T00:00:00","date_gmt":"2010-03-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/in-the-matter-of-an-application-vs-opp-party-on-25-march-2010"},"modified":"2016-09-02T08:09:10","modified_gmt":"2016-09-02T02:39:10","slug":"in-the-matter-of-an-application-vs-opp-party-on-25-march-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/in-the-matter-of-an-application-vs-opp-party-on-25-march-2010","title":{"rendered":"In The Matter Of An Application &#8230; vs Opp.Party on 25 March, 2010"},"content":{"rendered":"<div class=\"docsource_main\">Orissa High Court<\/div>\n<div class=\"doc_title\">In The Matter Of An Application &#8230; vs Opp.Party on 25 March, 2010<\/div>\n<pre>I.Mahanty, J.\n<\/pre>\n<p>HIGH COURT OFIORISSA: CUTTACK<br \/>\nCRLMC No. 2189 of 2009<\/p>\n<p>In the matter of an application under Section 482 of the Code of Criminal<br \/>\nProcedure. &#8216;<\/p>\n<p>Petitioner<\/p>\n<p>Smt. Laxmidevi Ram<\/p>\n<p>-Versus-\n<\/p>\n<p>Opp.Party<\/p>\n<p>. . \u00bb . no<\/p>\n<p>Tifupati Electra Marketing Pvt. Ltd..,<\/p>\n<p>: M\/ s G.Madaris,S.K.Pradhan,<\/p>\n<p>&#8216; For Petitioner<br \/>\nM.Dalai, B.K.Mishra 85 J.Pal.\n<\/p>\n<p>For Opp. Party : Mr. D.Das.\n<\/p>\n<p>PRESENT:\n<\/p>\n<p>THE HON &#8216;BLE MR.JUSTICE INDRAJIT MAHANTY<br \/>\nDate of hearing: 25.3.2010 Date of Judgment: 25.3.2010<br \/>\nIn this application under Section 482 Cr.P.C. the petitioner-<br \/>\nSmt. Laxmidevi Ram has prayed for quashing of the order of cognizance<br \/>\ndated 17.3.2008 passed in I.C.C. No. 847 of 2008 by the learned SDJM,<\/p>\n<p>Bhubaneswar in respect of the present petitioner.\n<\/p>\n<p>2. &#8211; Mr.Pal, learned counsel for the petitioner states that the<\/p>\n<p>petitioner who was a Director of M\/ s L.P.Electronics (Orissa) Private<\/p>\n<p>Limited, has been implicated as an accused in a proceeding under<\/p>\n<p>Section 138 of the N.I: Act, inter alia, only for the reason of her having<\/p>\n<p>been named as Director of such company. He asserts that other<\/p>\n<p>similarly placed Directors had also \ufb01led application under Section 482<br \/>\nCr.P.C. for quashing of order of cognizance, namely, Sri Om Prakash<br \/>\nRam and Sri Deepak Kumar Ram in CRLMC Nos. 1051 and 1900 of<br \/>\n2008 which were disposed of on 19.5.2009, whereby Hon&#8217;ble Mr.<br \/>\nJustice B.K.Patel came to a conclusion that there were no express<br \/>\naverments made in the complaint petition that any of the petitioners<br \/>\ntherein was either in-charge or and \/ or was responsible to the accused<br \/>\ncompany .for the conduct of the business of the company. Therefore<br \/>\nrelying on Section 141 of the N .I.Act, the learned Single Judge came to<br \/>\nhold that the learned counsel for the opposite party Was constrained to<\/p>\n<p>admit that the complaint petition does not contain such averrnents as<\/p>\n<p>required under Sectionl&#8217;4lof the N .1. Act for implicating the Directors<\/p>\n<p>who are petitioners therein. Accordingly, the CRLMCS were allowed and ,<\/p>\n<p>order of cognizance in so far as it concerned other Directors was<br \/>\ndirected to be quashed.\n<\/p>\n<p>3. Mr. Pal further contends that the present petitioner is<br \/>\nsimilarly circumstanced as the Director, Who had moved the CRLMC<\/p>\n<p>mentioned herein above and against whom order of cognizance has<\/p>\n<p>been quashed.\n<\/p>\n<p>4. Mr. Das, learned counsel for the complainant&#8211;opposite party<\/p>\n<p>relied upon the judgment of the Hon&#8217;ble Supreme Court in the case of<br \/>\nMalwa Cotton and Spinning Mills Ltd. Vrs. Virsa Singh Sindhu and<br \/>\nOrs., reported in 2008 CriLJ 4316 in which their Lordships came to a<br \/>\nconclusion that the claim of the petitioner therein that he has resigned<br \/>\nfrom the Directorship of the defaulting Company prior to the date on<br \/>\nwhich the cheque had been issued was a matter which should be<br \/>\nproved in course of trial and therefore, came to a conclusion that the<\/p>\n<p>High Court yvas not justified in quashing the proceeding in the said<\/p>\n<p>case. He further placed reliance on a reference made therein to an<br \/>\nearlier judgment in the case of N.Rangachari Vrs. Bharat Sanchar<br \/>\nNigam Ltd., reported in 2007 CriLJ 2448 in which it is observed that in<br \/>\nthe commercial World having a transaction with a company is entitled<br \/>\nto presume that the Directors of the company are in charge of the<br \/>\naffairs of the company. If any restrictions on their powers are placed by<\/p>\n<p>the memorandum of articles of the company, it is for the Directors to<\/p>\n<p>establish it at the trial.\n<\/p>\n<p>5. Sn&#8221; Pal, learned counsel for the petitioner on the other hand<\/p>\n<p>placed reliance upon the recent judgment of the Hon&#8217;ble Supreme Court<\/p>\n<p>in the case of National Small Industries Corporation Limited Vs.<\/p>\n<p>Harmeet Singh Paintal and Another, reported in<\/p>\n<p>MANU\/SC\/0112\/2010 which was disposed of on 15.2.2010. In the said<br \/>\njudgment, the Hon&#8217;ble Supreme Court has referred to its earlier<br \/>\njudgment in the case of N..Rangachari (supra), the relevant portion of<\/p>\n<p>Which in paragraphs 9, 10 and 1 1 thereof are as folloWs:-\n<\/p>\n<p>&#8220;Section 138 of the Act refers about penalty in<br \/>\ncase of dishonour of cheque for insufficiency of funds in<br \/>\nthe account. We are more concerned about Section 141<br \/>\ndealing with offences by Companies which reads as<\/p>\n<p>under. _\n<\/p>\n<p>141. Offences by companies&#8211;(1) If the person<\/p>\n<p>committing an offence under Section 138 is a company,<br \/>\nevery persons Who, at the time the offence Was<br \/>\ncommitted was in charge-of, and was responsible to the<br \/>\ncompany for the -conduct of the business of the<br \/>\ncompany, as Well as the company, shall be deemed to<br \/>\nbe guilty of the offence and shall be liable to be<br \/>\nproceeded against and punished accordingly.\n<\/p>\n<p>Provided that nothing contained in this Sub-<br \/>\nsection shall render any person liable to punishment if<br \/>\nhe proves that the offence was committed Without his<br \/>\nknowledge, of that he had exercised all due diligence to<br \/>\nprevent the commission of such offence.\n<\/p>\n<p>Provided further that Where a person is<br \/>\nnominated as a Director of a company by Virtue of his<\/p>\n<p>i<\/p>\n<p>%\u00bb<\/p>\n<p>holding any of\ufb01ce or employment in the Central<br \/>\nGovernment or State Government or a \ufb01nancial<\/p>\n<p>corporation owned or controlled by the Central<br \/>\nGovernment or the State Government, as the case may<br \/>\nbe, he shall not be liable for prosecution under this<br \/>\nChapter.\n<\/p>\n<p>(2) Notwithstanding anything contained in Sub-<br \/>\nsection (1), where any offence under this Act has been<br \/>\ncommitted by a company and it is proved that the<br \/>\noffence has been committed with the consent or<br \/>\nconnivance of, or is attributable to, any neglect on the<br \/>\npart of, any director, manager, and secretary or other<br \/>\nofficer of the company, such director, manager,<br \/>\nsecretary or other of\ufb01cer shall also be deemed to be<br \/>\nguilty of that offence and shall be liable to be proceeded<br \/>\nagainst and punished accordingly.\n<\/p>\n<p>EXplanation- For the purposes of this section,-<br \/>\n&#8216;company&#8217; means any body corporate and includes a<br \/>\nfirm or other association of individuals; and<\/p>\n<p>&#8216;director&#8217; in relation to a firm, means a partner in the<br \/>\n\ufb01rm.\n<\/p>\n<p>It is very clear from the above provision that what<br \/>\nis required is that the persons who are sought to be<br \/>\nmade vicariously liable for a criminal offence under<br \/>\nSection 141 should be, at the time the offence was<br \/>\ncommitted, was in&#8211;charge of, and was responsible to<br \/>\nthe company for the conduct of the business of the<br \/>\ncompany.&#8221; Every person connected with the company<br \/>\nshall not fall within the ambit of the provision. Only<br \/>\nthose persons who were in-charge of and responsible<br \/>\nfor the conduct of the business of the company at the<br \/>\ntime of commission of an offence will be liable for<br \/>\ncriminal action. It follows from the fact that if a<br \/>\nDirector of a Company who was not in&#8211;charge of and<br \/>\nwas not responsible for the conduct of the business of<br \/>\nthe company at the relevant time, will not be liable for a<br \/>\ncriminal offence under the provisions. The liability<br \/>\narises from being in-charge of an responsible for the<br \/>\nconduct of the business of the company at the relevant<br \/>\ntime when the offence was committed and not on the<br \/>\nbasis of merely holding a designation or of\ufb01ce in a<\/p>\n<p>company.\n<\/p>\n<p>10. Sections 141 is a penal provision creating<br \/>\nvicarious liability, and which, as per settled law, must<br \/>\nbe strictly construed. It is therefore, not sufficient to<br \/>\nmake a bald cursory statement in a complaint that the<br \/>\nDirector (arrayed as an accused) is in charge of and<br \/>\nresponsible to the company for the conduct of the<br \/>\nbusiness of the company Without anything more as to<br \/>\nthe role of the Director. But the complaint should spell<br \/>\nout as to how and in What manner Respondent No.1<br \/>\nwas in-charge of or was responsible to the accused<br \/>\ncompany for the conduct of its business. This is in<br \/>\nconsonance with strict interpretation of penal statutes,<br \/>\nespecially, Where such statutes create vicarious liability.<br \/>\nA company may have a number of Directors and to<br \/>\nmake any or all the directors as accused&#8217; in a complaint<br \/>\nmerely on the basis of a statement that they are in-<br \/>\ncharge of and responsible for the conduct of the<br \/>\nbusiness of the company Without anything more is not<br \/>\na sufficient or adequate ful\ufb01llment of the requirements<br \/>\nunder Section 141.\n<\/p>\n<p>11. In a catena of decisions, this Court has held<br \/>\nthat for making Directors liable for the offences<br \/>\ncommitted by the company under Section 141 of the<br \/>\nAct, there must be speci\ufb01c averments against the<br \/>\nDirectors, showing as to how and in What manner the<br \/>\nDirectors were responsible for the conduct of the<\/p>\n<p>business of the company.&#8221;\n<\/p>\n<p>6. In consideration of the above, in paragraph&#8211;lO of the<br \/>\njudgment referred to by the I-Ion&#8217;b1e Supreme Court in the case of<br \/>\nMalwa Cotton (supra), the Hon&#8217;ble Supreme Court hasilaid down three<\/p>\n<p>categories of persons covered by Section 141 which are as fol1ows:&#8211;\n<\/p>\n<p>(1) The company Who committed the offence.\n<\/p>\n<p>(2) Everyone who was in charge of and was<br \/>\nresponsible for the business of the company.<br \/>\n(3) Any other person who is a director or a<br \/>\nmanager or a secretary or officer of the<br \/>\ncompany With whose connivance or due to<br \/>\nwhose neglect the company has committed the<\/p>\n<p>offence.\n<\/p>\n<p>7. In the present case the complaint petition it-self has been<br \/>\nannexed as AnneXure&#8211;l and in paragraph&#8211;7(i) the complainant has<\/p>\n<p>made the following complaint, which reads as follows:&#8211;\n<\/p>\n<p>&#8220;7(i} Since Mr. Rajendra Prasad Ram is<br \/>\nManaging Director of the company and<br \/>\nMrs. Lakshmi Devi Ram, Mr. Ashok Kumar Ram, Mr.<br \/>\nNiranjan Prasad Ram and Mr. Deepak Kumar Ram are<br \/>\nthe Directors of the company and are committed and<br \/>\nlooking after the day to day business of the company in<br \/>\ntheir respective individual capacity and jointly as<br \/>\nDirectors of the company, for which all of them are<br \/>\nresponsible in one Way and other for the conduct of the<br \/>\nbusiness of the company as well as company and the<br \/>\naccused company has issued the cheque in<br \/>\nconsultation with all Directors in order to liquidate their<br \/>\nliability but subsequently Witha View to defraud the<br \/>\nclaim of complainant knowing fully Well their liability<br \/>\npurposefully have defaulted to pay to the complainant.<br \/>\nThe complainant company officials have time to time<br \/>\ncontacted all the Directors of the accused company<br \/>\nbefore and after issue of cheque but to defraud the<br \/>\nclaim of complainant has stopped payment of the<br \/>\ncheque when they did not have suf\ufb01cient balance to<\/p>\n<p>cover the cheque amount&#8230;&#8221;\n<\/p>\n<p>8. On a reading of Section 141 of the N.I. Act vis&#8211;a-vis the<\/p>\n<p>complaint made in this application it would be clear that necessary _<\/p>\n<p>averments to implicate a Director such as the present petitioner for<br \/>\nhaving connived or neglected in committing the offence, has not been<br \/>\nclearly imade. Admittedly the Managing Director Sri Rajendra Prasad<br \/>\nRam had been impleded as accused No.2 in the complaint petition and<br \/>\nit is the said Managing Director who had issued the cheque in question<br \/>\nand the dishonour of such cheque is the subject matter of the<br \/>\ncomplaint. Further I \ufb01nd that in CRLMC Nos. 1051 85 1900 of 2008<br \/>\nHon&#8217;ble Mr. Justice B.K.Patel of this Court had also come to a<br \/>\nconclusion that Section 141 of the Act was required to be strictly<\/p>\n<p>complied With and by making ambiguous statement regarding<\/p>\n<p>involvement of other Directors other than the Managing Director, the<br \/>\nrequirement of Section 141 of the N.I. Act was not complied with and<br \/>\ntherefore, in the absence of any such statement as required under<br \/>\nSection 141 of NI. Act Vis&#8211;a&#8211;Vis the present petitioner, there is no scope<br \/>\nfor her prosecution and therefore, the cognizance order passed against<br \/>\nthe present petitioner is quashed&#8217;.\n<\/p>\n<p>The learned counsel for the O.P. states that the case has<br \/>\nremained pending before the learned SDJM, Bhubaneswar since 2008<br \/>\nand thus, more than two years have lapsed in the meantime prays for a<br \/>\ndirection for early disposal. Therefore, the learned SDJ M is directed to<br \/>\ntake up the matter and dispose of the same expeditiously in accordance<\/p>\n<p>with law preferably Within a period of four months from the date of V<\/p>\n<p>communication of this order.\n<\/p>\n<p>Interim orders, if any, stand vacated.\n<\/p>\n<p>&#8216; ~ 94-3, l\\\/&#8217;\u00a39\/l\/\\CU&#8217;T\\&#8217;l;7&#8217;)j.\n<\/p>\n<p>, , , . _ . . &#8230;.1_&#8230;.__&#8230;_&#8230;..\n<\/p>\n<p>ORISSA HIGH comer, CUTTACK<br \/>\n25m March,20lQ \/AKD<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Orissa High Court In The Matter Of An Application &#8230; vs Opp.Party on 25 March, 2010 I.Mahanty, J. HIGH COURT OFIORISSA: CUTTACK CRLMC No. 2189 of 2009 In the matter of an application under Section 482 of the Code of Criminal Procedure. &#8216; Petitioner Smt. Laxmidevi Ram -Versus- Opp.Party . . \u00bb . no Tifupati [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,25],"tags":[],"class_list":["post-177991","post","type-post","status-publish","format-standard","hentry","category-high-court","category-orissa-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>In The Matter Of An Application ... vs Opp.Party on 25 March, 2010 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/in-the-matter-of-an-application-vs-opp-party-on-25-march-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In The Matter Of An Application ... vs Opp.Party on 25 March, 2010 - Free Judgements of Supreme Court &amp; 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