Anitha Varghese v. State of Kerala and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE B.SUDHEENDRA KUMAR THURSDAY, THE 26TH DAY OF JULY 2018 / 4TH SRAVANA, 1940 Crl.MC.No. 2390 of 2016 ST 3674/2015 of J.M.F.C. - I, PARAVUR ***** ## PETITIONER(S)/3RD ACCUSED ANITHA VARGHESE W/O.T.K.VARGHESE, 8B, GRAND COURT APARTMENTS, NEAR ST.THOMAS COLLEGE, TRICHUR 680001. ***** THE NAME OF THE LOWER COURT “HONOURABLE JUDICIAL FIRST CLASS MAGISTRATE COURT, PARAVOOR” OCCURRING IN CRL.M.C.2390/16 IS CORRECTED AND SUBSTITUTED AS “HONOURABLE JUDICIAL FIRST CLASS MAGISTRATE COURT. KALAMASSERY” AS PER ORDER DATED 3.5.2016 IN CRL.M.A.4470/16 IN CRL.M.C.2390/16. BY ADV.SRI.PEEYUS A.KOTTAM ## RESPONDENT(S)/STATE & COMPLAINANT & 1ST AND 2ND ACCUSED: 1. STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, COCHIN 682 031. 2. VINSOR N.V - S/O.N.P.VARGHESE, NOTTATH (H), SUNDARAGIRI ROAD, KALAMASSERY, ERNAKULAM, PROPRIETOR, OF VINSOR ELECTRIC WORKS, KALAMASSERY, PIN 682 022. 3. M/S.THOUGHGLASS INDIA PVT LTD EDAYAR INDUSTRIAL AREA, BINANIPURAM PO, ERNAKULAM 683 502. 4. T.K.VARGHES, 8B GRAND COURT APARTMENTS - NEAR ST.THOMAS COLLEGE, TRICHUR 680001. R2 BY ADV. SRI.LEO GEORGE R2 BY ADV. SRI.BINU JOHN R1 BY PUBLIC PROSECUTOR, SHRI B JAYASURYA THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 26-07-2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.MC.No. 2390 of 2016 () APPENDIX ## PETITIONER(S)' EXHIBITS ANNEXURE -A1 A CERTIFIED COPY OF THE COMPLAINT DATED 19.9.2012 BEARING NO.ST.3674/2015 ANNEXURE-A2 A PHOTO COPY OF THE JUDGMENT OF THE HONOURALE HIGH COURT OF KERALA CITED AS 2014 KHC 22. ## RESPONDENTS EXHIBITS : NIL // True Copy // PA to Judge ## **B.SUDHEENDRA KUMAR, J.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - Crl.M.C No.2390 of 2016 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - Dated this 26[th] day of July 2018 ## O R D E R The petitioner is the third accused in S.T. No.3674 of 2015 on the files of the court below. 2. The petitioner has filed this Crl.M.C. praying for quashing Annxure-A1 complaint and further proceedings against the petitioner in the above said case. 3. Heard. 4. Annexure-1 is a complaint filed by the 2[nd] respondent herein before the court below against the petitioner and two others alleging offence under Section Crl.M.C.2390/16 -: 2 :- 138 of the N.I. Act. 5. The learned counsel for the petitioner has submitted that since there is no averment in the complaint that the petitioner was in charge of and was responsible to the company for the conduct of the business of the first accused company, the prosecution against the petitioner is bad in law. The averments in the complaint against the petitioner can be extracted hereunder:- “The complainant is the proprietor of M/s.Vinsor Electric Works North Kalamassery, Ernakulam, who was entrusted to carry on the electric work of the factory at Edayar owned and run by second and third accused on behalf of first accused company. There after the second accused issued cheque bearing No.10300882 dated 25.7.2012 for an ## Crl.M.C.2390/16 -: 3 :- amount of Rs.50,000/- (Rupees fifty thousand only) drawn on Federal Bank Ltd., Edappally branch, in favour of the complainant towards the work done by the complainant, leading him to believe that the cheque will be honored on presentation.” 6. The Apex Court in S.M.S. Pharmaceuticals Ltd., v. Neeta Bhalla [(2005) 8 SCC 89] held that it is necessary to specifically aver in the 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. It was further held by the Apex Court that the said averment is an essential requirement of Section 141 and has to be made in the complaint and without the said averment being made in the complaint, the Crl.M.C.2390/16 -: 4 :- requirements of Section 141 cannot be said to be satisfied. 7. The Apex Court in National Small Industries Corporation Limited v. Harmeet Singh Paintal [(2010) 3 SCC 330], after referring to all earlier judgments of the Apex Court, summarised the legal position as follows:- 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. Crl.M.C.2390/16 -: 5 :- 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 Crl.M.C.2390/16 -: 6 :- 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.” In this case, there was not even an allegation that the petitioner was a Director of the company. However, the demand notice would show that the petitioner was the Director and the 2[nd] accused was the Managing Director of the company. The said aspect is not disputed by the petitioner also. 8. Apart from a vague allegation that the company at Crl.M.C.2390/16 -: 7 :- Edayar is owned and run by the petitioner and the other accused, there is no specific allegation that the petitioner was in charge of and was responsible for the conduct of the business of the company at the time of commission of the offence by the company. Although no particular form for making such averment is prescribed, it is not necessary to reproduce the language of Section 141 of the N.I. Act. However, a reading of the complaint must show that the substance of accusation discloses that the accused persons were in charge of and responsible for the conduct of the business of the company at the relevant time. In this case, there is absolutely no allegation that the petitioner was in charge of and was responsible for the conduct of the business of the firm during the relevant period. The Crl.M.C.2390/16 -: 8 :- petitioner also did not sign the cheque in question. In view of the above reasons, the prosecution against the petitioner cannot be sustained. In the result, this Crl.M.C. stands allowed, quashing Annexure-A1 complaint and further proceedings against the petitioner in S.T. No.3674 of 2015 on the files of the court below, in exercise of the inherent power under Section 482 Cr.P.C., to meet the ends of justice. sd **B.SUDHEENDRA KUMAR, JUDGE** _dl/27.8.18_