Sooraj C.K. v. R. Reghunath and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **MONDAY, THE 20TH DAY OF JANUARY 2020 / 30TH POUSHA, 1941** ## **Crl.MC.No.6853 OF 2019(F)** **AGAINST THE JUDGMENT IN CC 1070/2015 OF JUDICIAL MAGISTRATE OF FIRST CLASS -III,TRIVANDRUM** ## **PETITIONER/2ND ACCUSED:** **SOORAJ C.K. AGED 45 YEARS S/O. C.K. KUNJUKUNJUKUTTY, DIRECTOR, M/S. ACCENTIA EDUCATION SERVICE AND PRODUCTS PRIVATE LIMITED, D- 207, SECOND FLOOR, INTERNATIONAL INFOTECH PARK BELPUR RAILWAY STATION, SECTOR-II, CBD BELAPUR, NAVI MUMBAI, RESIDNG AT TC 3/1548, MAR IVANIOS NAGAR, 4TH LANE, KESADAVASAPURAM, THIRUVANANTHAPURAM 695 004, SRA 87A, BEHIND LIBRARY, SAMSKARIKA NILAYAM, KURISSADI JUNCTION NALANCHIRA, THIRUVANANTHAPURAM 695 015.** ## **BY ADV. SRI.NIREESH MATHEW** ## **RESPONDENTS/COMPLAINANT & STATE:** **1 R.REGHUNATH AGED 49 YEARS MANAGING DIRECTOR, M/S. MEDIAMATE ADVERTISING INDIA PRIVATE LIMITED, P.B. NO. 2237, TEMPLE ROAD, SASTHAMANGALAM, THIRUVANANTHAPURAM 695 010, REPRESENTED BY M.A. AJITH KUMAR, VICE PRESIDENT OPERATIONS, M/S. MEDIAMATE ADVERTISING INDIA PRIVATE LIMITED. 2 STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI 682 031.** **R1 BY ADV. SRI.SHAJIN S.HAMEED R2 BY ADV. SRI C.K PRASAD,PP** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 17-012020, THE COURT ON 20-01-2020 PASSED THE FOLLOWING:** **Crl.M.C.No.6853 of 2019** **2** ## **R. NARAYANA PISHARADI, J** ## **------------------------------------------Crl.M.C.No.6853 of 2019 --------------------------------------------** Dated this the 20[th] day of January, 2020 ## **O R D E R** The petitioner is the second accused in the case C.C No. 1070/2015 on the file of the Court of the Judicial First Class Magistrate -III, Thiruvananthapuram. 2. The aforesaid case was instituted upon Annexure-A complaint filed against the accused by the first respondent (hereinafter referred to as the 'the complainant') for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act'). 3. The material averments in Annexure-A complaint are as follows: The complainant is a company and it is represented by its Vice President, Operations. The complainant company is engaged in the business of publishing advertisements of their customers in print and electronic media. The first accused is a private limited company. Accused 2 to 4 are the directors of the first accused company. The accused placed orders of advertisement of the first accused company **Crl.M.C.No.6853 of 2019** **3** with the complainant undertaking to pay the costs of such advertisement. There was an amount of Rs.5,34,910/- due from the accused to the complainant as on 30.11.2014. The accused had issued a cheque dated 05.05.2013 for Rs.5,24,212/- towards part payment of the amount due to the complainant. The complainant presented the aforesaid cheque in the bank but it was dishonoured for want of sufficient funds in the account. The complainant had filed a case as C.C No. 2420/2013. On 27.11.2014, the complaint in the aforesaid case was returned by the court with the observation that the drawee bank was situated at Bangalore and that the court had no jurisdiction to try the offence. Meanwhile, the accused approached the complainant and issued another cheque dated 15.03.2015 for Rs.99,735/- for repayment of the debt due to the complainant. The complainant presented the aforesaid cheque in the bank. It was returned unpaid for the reason that there was no sufficient amount in the account of the accused. The complainant sent a lawyer notice to the accused demanding payment of the amount of the cheque. The second and the third accused received the notice. The notice sent to the first and the fourth accused was returned unserved. The accused did not pay the amount of the cheque. **Crl.M.C.No.6853 of 2019** **4** 4. This petition is filed under Section 482 Cr.P.C by the second accused in the case for quashing all proceedings against him in the case C.C No. 1070/2015 initiated on the basis of Annexure-A complaint. 5. Heard the learned counsel for the petitioner and also the first respondent. 6. There are several grounds mentioned in the petition in support of the prayer for quashing the proceedings against the petitioner in the case. However, at the time of the hearing of the petition, none of the aforesaid grounds was projected by the learned counsel for the petitioner. However, learned counsel for the petitioner contended that Annexure-A complaint does not contain the ingredients of an offence punishable under Section 138 of the Act against the petitioner, who is only a director of the first accused company. Learned counsel for the petitioner contended that, the complaint lacks necessary averments to make the petitioner liable for any act of the first accused company. Learned counsel for the petitioner also pointed out that nowhere in Annexure-A complaint it is mentioned who has signed or issued the cheque. 7. _Per contra_ , learned counsel for the first respondent submitted that the complaint contains necessary averments as **Crl.M.C.No.6853 of 2019** **5** required under law to constitute an offence punishable under Section 138 of the Act. 8. Section 141 of the Act deals with offences by companies. Section 141(1) of the Act states that, 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. 9. In **SMS Pharmaceuticals Limited v. Neeta Bhalla : AIR 2005 SC 3512** , the Supreme Court has considered the scope of the provision contained in Section 141 of the Act and the following principles have been laid down: (1) 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. (2) Merely being a director of a company is not sufficient to make the person liable under Section **Crl.M.C.No.6853 of 2019** **6** 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 of the Act is that 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. (3) But, the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141 of the Act. (4) So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act. 10. In the instant case, the only averment in Annexure-A complaint against the petitioner is that he is a director of the first accused company. 11. There is no averment in Annexure-A complaint that the petitioner is the person who has signed the cheque. In fact, there is **Crl.M.C.No.6853 of 2019** **7** no averment in the complaint as to who among accused 2 to 4 had signed the cheque. 12. There is no plea or averment in Annexure-A complaint that the petitioner is the Managing Director or Joint Director of the first accused company. 13. There is no averment in Annexure-A complaint that the second accused was in charge of, or responsible for the conduct of business of the company. There is not even an averment in the complaint that the petitioner is/was in charge of the day to day affairs of the company. 14. Annexure-A complaint does not contain any averment regarding any act allegedly committed by the petitioner in connection with the transaction in question. There is absolutely no averment in Annexure-A complaint that the petitioner had any role in the transaction. 15. In the absence of the requisite basic averment in the complaint imputing vicarious liability on the petitioner for the offence allegedly committed by the first accused company, the proceedings in the case, which have been initiated against the petitioner on the basis of Annexure-A complaint, are are liable to be quashed. 16. Consequently, the petition is allowed. All proceedings **Crl.M.C.No.6853 of 2019** **8** against the petitioner alone in the case C.C No. 1070/2015 on the file of the Court of the Judicial First Class Magistrate-III, Thiruvananthapuram, based on Annexure-A complaint, are hereby quashed. **Sd/-R. NARAYANA PISHARADI JUDGE** lsn **9** ## **Crl.M.C.No.6853 of 2019** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE A TRUE COPY OF COMPLAINT FILED BY THE 1ST RESPONDENT DATED 4.7.2015. ANNEXURE B TRUE PHOTOCOPY OF THE ORDER IN COMPANY PETITION NO. 127/2014 PASSED BY THE HONBLE HIGH COURT OF BOMBAY DATED 6.1.2017.** ## **RESPONDENTS EXHIBITS: NIL** ## **TRUE COPY** **P.A TO JUDGE** ## **LSN**