Suma v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **MONDAY, THE 13TH DAY OF MARCH 2017/22ND PHALGUNA, 1938** **Crl.MC.No. 7528 of 2016 ------------------------** **CMP 3588/2016 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-III, KOZHIKODE** **.....** **PETITIONER(S)/3RD ACCUSED :** **--------------------------** ## **SUMA,** **AGED 33 YEARS, W/O. RADHAKRISHNAN, KARUVAMPOYIL, KODUVALLY P.O., KOZHIKODE DISTRICT-673 572.** **BY ADVS.SRI.P.R.SREEJITH** **SRI.M.PROMODH KUMAR SRI.K.B.SAJEESH SMT.MAYA CHANDRAN** **RESPONDENT(S)/STATE AND COMPLAINANT AND ACCUSED 2 AND 3: --------------------------------------------------------** **1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM-682 031.** **2. T.P.MUHAMMED ,** - **AGED 63 YEARS, S/O. MOIDU, KUTTAMBOOR, PUNNASSERY P.O., KOZHIKODE DISTRICT.** **3. KALPETTA JANAKSHEMAM MARUTHI CHIT FUNDS PVT. LTD., ROYAL PLAZA BUILDING, KALPETTA P.O., WAYANAD DISTRICT-673 121.** **4. KALPETTA JANAKSHEMAM MARUTHI CHIT FUNDS PVT. LTD., ROYAL PLAZA BUILDING, KALPETTA P.O., WAYANAD DISTRICT-673 121, REPRESENTED BY ITS MANAGING DIRECTOR, SUSHIL KUMAR, AGED 48 YEARS, S/O. MADHAVAN NAIR, GOKULAM, KALPETTA P.O., WAYANAD DISTRICT-673 121.** **R1 BY PUBLIC PROSECUTOR SRI.SAIGI JACOB PALATTY R2 BY ADVS. SRI.MANUEL KACHIRAMATTAM SMT.MERRY GEORGE** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 13-03-2017, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **msv/** ## **Crl.MC.No. 7528 of 2016** ## **------------------------** ## **APPENDIX** ## **PETITIONER(S)' ANNEXURES -------------------------** - **ANNEXURE 1 COPY OF THE ARTICLES OF ASSOCIATION KALPETTA JANAKSHEMAM MARUTHI CHIT FUNDS PVT. LTD.** - **ANNEXURE 2 COPY OF THE RESOLUTION DATED 10.8.2013 OF THE 3RD RESPONDENT.** - **ANNEXURE 3 CERTIFIED COPY OF THE 2ND RESPONDENT'S CMP NO.3588/2016 BEFORE THE JFCM-III, KOZHIKODE ALLEGING COMMISSION OF AN OFFENCE UNDER SECTION 138 OF THE NI ACT.** - **ANNEXURE 4 CERTIFIED COPY OF THE CHEQUE BEARING 552622 DRAWN ON STATE BANK OF TRAVANCORE, NARIKKUNI BRANCH, DATED 25.11.2015 FORMING THE SUBJECT MATTER OF ANNEXURE 3 COMPLAINT.** ## **RESPONDENT(S)' ANNEXURE** **-----------------------** ## **NIL** ## **//TRUE COPY//** **P.S.TO JUDGE** ## **Msv/** ## ALEXANDER THOMAS, J. ----------------------------- Crl.M.C.No.7528 Of 2016 --------------------------------- Dated this the 13th day of March, 2017. ## O R D E R The petitioner is the accused No.3 for the offence under Sec.138 of the Negotiable Instruments Act in Anx-3 complaint (Crl.M.P.No.3588/2016) on the file of the Judicial First Class Magistrate Court-III, Kozhikode, instituted by the 2[nd] respondent herein. The prayer in the Criminal Miscellaneous Case is to quash the impugned Anx-3 complaint to the extent the petitioner herein is arrayed as accused therein. The gist of the allegation in Anx-3 complaint was that the complainant was a subscriber of a chit conducted by the 3[rd] respondent company and that towards total amount of Rs.3 lakhs owed by the chit company to the petitioner, the cheque in question was executed and signed by the petitioner herein, who is accused No.3, in her capacity as the Branch Manager of the 3[rd] respondent company for an amount of Rs.2 lakhs and that the 3[rd] respondent had on many previous occasions had given assurances to the petitioner that the amounts will be paid and it is thereafter that the petitioner had finally issued and signed the cheque in question for an amount of Rs.2 lakhs in ::2:: Crl.M.C.No.7528 Of 2016 favour of the complainant which when presented was dishonoured, etc., and that the cheque in question has been issued from an account maintained by the 3rd respondent company, etc. 2. The petitioner would mainly contend that she is not in charge of and responsible for the affairs of the 3rd respondent company and further that the cheque has not been executed and signed by her and it was actually signed by accused No.2 (4th respondent herein), who is the Managing Director of the company and the signature in Anx-4 cheque is that of accused No.2 as can be seen from Anx-1, which contains specimen signature of accused No.2, etc. 3. Heard Sri.P.R.Sreejith, learned counsel appearing for the petitioner, Sri.Manuel Kanchiramattam, learned counsel appearing for R-2 (complainant) and the learned Prosecutor appearing for R-1 State. 4. On a perusal of Anx-3 complaint would show that the specific averment is that the petitioner herein was the Branch Manager of the 1st accused company and that the petitioner (A-3) had frequently transacted the matter with the complainant by assuring him to make the payment of money due to him, etc., and that the dishonoured cheque in question has been signed and executed by the petitioner (A-3) as the Branch Manager of the 1st accused company, etc. ::3:: Crl.M.C.No.7528 Of 2016 5. The Apex Court in the judgment in the celebrated case rendered by a 3 Judge Bench in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & anr. reported in (2005) 8 SCC 89 has considered the following question and has rendered answers to such issues as can be seen from a reading of paras 1 and 19 of that judgment. Paras 1 and 19 of the said judgment in the case in S.M.S. Pharmaceuticals' case (supra) at pages 93-94 & 103, read as follows: '1. This matter arises from a reference made by a two-Judge Bench of this Court for determination of the following questions by a larger Bench: “(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. (b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against.” xxx xxx xxx xxx 19. In view of the above discussion, our answers to the questions posed in the reference are as under: (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. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 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. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the 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 ::4:: Crl.M.C.No.7528 Of 2016 director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.' Thus it has been specifically held by the Apex Court in that judgment that that it is necessary to specifically aver in a complaint under Sec.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 and this averment is an essential requirement of Sec.141 and such averment has to be necessarily made in the complaint and without such averment being made in a complaint, the requirement of Sec.141 cannot be said to be satisfied. However, the Apex Court has held that merely being a director of a company alone would not make a person liable under Sec.141 and that a director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Sec.141 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 and this has to be averred as a fact as there is no deemed liability of a director in such cases. It has also been emphatically held by the Apex Court that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the ::5:: Crl.M.C.No.7528 Of 2016 conduct of its business and when that is so, holders of such positions in a company become liable under Sec.141 of the Act, and 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 and such persons in those position as managing director or joint managing director would get covered under Sec.141(2), etc. The said position has again been reiterated by the Apex Court in the judgment in National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal reported in (2010) 3 SCC 330 para 39 (SCC report p.p. 345-346, etc.) as follows: “39. From the above discussion, the following principles emerge: (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. (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. ::6:: Crl.M.C.No.7528 Of 2016 (vi) If the accused is a Director or an officer of a 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.” The said view has again been reiterated by the Apex Court in the decision A.K.Singhania v Gujarat State Fertilizer Company Limited and anr. reported in (2013) 16 SCC 630 para 16, Harshendra Kumar .D v. Rebatilata Koley & ors. reported in (2011) 3 SCC 351, etc. Ordinarily, for the purpose of quashment of any impugned criminal complaint by taking recourse to the extra ordinary powers under Sec.482 of the Cr.P.C, this Court would take the perspective to examine as to whether the offence is made out, even if it is assumed that the averments in the complaint are correct or true. Therefore going by the averments in the impugned complaint, it can be seen that the specific averment in the complaint is that the moneys were owed to the complainant from the 1st accused chit company and in discharge of part of the liability, the cheque in question has been issued and signed by the petitioneraccused, in her official capacity as the Branch Manager of the accused No.1 company and that the cheque in question is issued from the account of the company. On a perusal of Anx-4 cheque would also show that the seal of the company has also been affixed in the signature ::7:: Crl.M.C.No.7528 Of 2016 portion, etc. Therefore, when these are the specific averments in the complaint, even if it is assumed for argument sake, the petitioner was not in charge of and responsible for the affairs of the company, still the signatory of the cheque, who has allegedly signed the cheque of the company, can be roped in for the offence under Sec.138 of the N.I.Act and there is nothing illegal for the trial court taking cognizance of such complaint against the petitioner as the alleged signatory of the cheque. Of course, the petitioner can certainly take steps to establish before the trial court that she is not in fact the signatory of the cheque. 6. The learned counsel for the revision petitioner would then raise an alternate plea that the averments in the impugned Anx-3 complaint that the signature in the cheque is that of the petitioner is incorrect and the signatory to the cheque in question is the Managing Director of the company, who is A-2 and a mere comparison of the signature in Anx-4 cheque and the admitted signature in Anx-3 complaint and Anx-1 document would show that the signature of the cheque is that of accused No.2, etc. The said contention cannot be countenanced for more than one reason. Consideration of such arguments would require evidence, which is best left to be adjudicated at the time of trial. The specific averment in the complaint to the effect ::8:: Crl.M.C.No.7528 Of 2016 that the cheque in question was executed and signed by the petitioner (A-3) in her official capacity as the Branch Manager of the chit company, etc., should be assumed to be true, for the present proceedings under Sec.482 of the Cr.P.C. Therefore, this Court will not be justified in considering the merits of such a plea, for that would amount to transgressing into evidentiary aspects which are best left to the realm of trial court concerned, etc. For these reasons, this Court is not inclined to allow the plea of the petitioner for quashment of the impugned complaint. 7. Faced with this situation, Sri.P.R.Sreejith, learned counsel for the petitioner, would submit that this Court may issue necessary directions to the trial court to grant personal exemption under Sec.205 of the Cr.P.C and also pray to direct the trial court to complete the trial in a time bound manner. It is to be noted that these are not aspects, for which there are pleadings available on the materials on record. However, in the interest of justice, it is ordered that it will be open to the petitioner to make appropriate application under Sec.205 of the Cr.P.C before the trial court seeking personal exemption and thereupon it is for the trial court to take a considered decision thereon in accordance with the legal principles well settled in that regard as in the decision in Reddy v. Excel Glasses Ltd. reported in 2010 (3) KLT SN 11 (Case No.14) as well as the ::9:: Crl.M.C.No.7528 Of 2016 judgments in Bhaskar Industries Ltd. v. Dhiwani Denim & Apparel Ltd. reported in AIR 2001 SC 3625 & Ajith Kumar Chakravorthy & ors. v. Serampore Municipality reported in 1989 Crl.L.J. 523, etc. 8. As regards the prayer for expeditious completion of the trial, it is now brought to notice that accused No.2 was earlier in jail in connection with criminal cases initiated against the chit company, etc. If there are no other impediments, the trial court will take all reasonable endeavour possible under the circumstances to ensure that trial in the case is completed without much delay and efforts may be taken to dispose of the case within a period of 6-8 months from the date of production of a certified copy of this order. With these observations and directions, the Crl.M.C will stand dismissed. ALEXANDER THOMAS, Judge. bkn/-