Sushil Singla v. Haripal Singh .

Harphul Singh Brar, J.:— This is petition under Section 482 of the Code of Criminal Procedure, for quashing the complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter called the Act).

2. It is stated in the petition that respondent-complainant Haripal Singh filed a complaint in respect of cheque, dated March 8, 1992 drawn on State Bank of Bikaner & Jaipur for Rs. 1,25,000/- through Qimat Rai Garg, Managing Director of the M.M Leasing Limited. It is averred in the petition that petitioners Sushil Singla and Mrs. Madhu Rai Garg were simply Directors of the company and were neither in charge of, nor responsible for the affairs of the Company. The cheque was issued by Qimat Rai Garg for and on behalf of the Company who was in charge of, and responsible to the Company for the conduct of business of the Company. The petitioners have been impleaded as accused in spite of the fact that no offence has been disclosed against them as is clear from a bare reading of the complaint.

3. Written statement has been filed by Haripal Singh-respondent. He has stated in the reply that petitioner Mrs Madhu Rai Garg is the main accused being the wife of Qimat Rai Garg and she was very closely associated with his all companies including M.M Leasing Limited. He has emphatically denied the averments made in the petition and has stated in the written statement that both the petitioners are in charge of, and responsible for the affairs of the Company.

4. The learned counsel for the petitioners submits that Section 141 of the Act deals with offences by Company and provides that only those persons in respect of the company who at the time the offence was committed were in charge of, and were responsible to the company for the conduct of the business of the company shall be deemed to be guilty of the offence.

5. According to him, there is no allegation in the complaint that the petitioners were in charge of, and were responsible for the conduct of the business of the company. Therefore, the complaint is not maintainable against the petitioners being an abuse of the process of the court and the same is, thus, liable to be quashed. In order to support his contention, the learned counsel for the petitioner relied on Harbhajan Singh Kalra v. State of Haryana, 1992 (1) Recent C.R 169 and Vyapak Puri v. State of Punjab, 1991 (3) Recent C.R 501. Section 141 of the Act which is relevant for the purpose of this case is reproduced as under:—

“141. Offences by companies - (1) If the persons 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 the punished accordingly;

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) 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 also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation…………”

6. There can be a cause against M.M Leasing Limited and Qimat Rai Garg, Managing Director, M.M Leasing Limited who are accused Nos. 1 and 2 in the complaint. So far as petitioner Mrs. Madhu Rai Garg, Director, M.M Leasing Limited and Sushil Singla, Director, M.M Leasing Limited who are accused Nos. 3 and 4 in the complaint are concerned, there is on allegation in the complaint against them that when the offence was committed by the company, they were in charge of, or were responsible to the company for the conduct of its business. The allegations in the complaint have been made only against the company and Qimat Rai Garg, its Managing Director and the Cheque was also issued by Qimat Rai, Managing Director of the Company. The plea of the petitioners finds support from the observations made in Municipal Corporation of Delhi v. Ram Kishan Rohtagi, 1983 (1) Recent Criminal Reports 73 SC : (1983) 1 SCC 1 : AIR 1983 SC 67. In that case which was under the Prevention of Food Adulteration Act, the Food Inspector visited the premises where Shri Madan Lal had kept for sale ‘Morton Toffees’. The said Inspector after purchasing the sample of the article sent it to the Public Analyst who opined that the said sample did not conform to the standard prescribed for toffees. The toffees were manufactured by M/s Upper Ganges Sugar Mill Respondent No. 1 (Ram Kishan Rohtagi) was the Manager of the company and the respondents Nos. 2 to 5 were the Directors of the Company, including the company also. A complaint was filed before the Metropolitan Magistrate who summoned all the respondents for being tried for violating the provisions of the Prevention of Food Adulteration Act. The High Court quashed the proceedings on the ground that the complaint did not disclose any offence. Ultimately, the Supreme Court held as under:—

“So far as the Manager is concerned, we are satisfied that from the very nature of his duties it can be safely inferred that he would undoubtedly be vicariously liable for the offence; vicarious liability being an incident of an offence under the Act. So far as the Directors are concerned, there is not even a whisper nor a shred of evidence nor anything to show, apart from the presumption drawn by the complaint, that there is any act committed by the Director from which a reasonable inference can be drawn that they could also be vicariously liable. In these circumstances, therefore, we find ourselves in complete agreement with the argument of the High Court that no case against the Directors (accused Nos. 4 to 7) has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed.”

7. The authority cited by the respondent i.e official Liquidator Supreme Bank Ltd. v. PA. Tendolkar (dead) by L.Rs, (1973) 1 SCC 602 : AIR 1973 S.C 1104 is not applicable to the facts of the case in hand.

8. In view of my above discussion and the pronouncement of this Court as well as the mandate of the apex Court, I find that no case is made out against the petitioners. I hereby accept the petition and the complaint annexure P1 and summoning order, Annexure P-2 of the Judicial Magistrate First Class, Chandigarh, are quashed against the petitioners.

9. The trial Court, however, may proceed against the other accused in accordance with law.