D.K. Jain, J. -
By this petition under Sections 397, 401 and 482 Cr. P.C. the petitioners seek quashing of the complaint filed against them by M/s. Bajaj Auto Finance Limited the respondent (hereinafter referred to as the complainant), under Section 138 of the Negotiable Instruments Act 1881 (for short the Act). All the petitioners have been summoned by the Trial Court vide order dated 6th March, 1997.
2. Briefly stated, the facts giving rise to the present petition are that the complainant entered into a lease agreement dated 18 March, 1995 with accused No.1 company, namely M/s Prakash Industries Limited for a period of five years and under the said agreement the accused company was required to pay quarterly installments (lease rental) of Rs. 10.23.843.75 p. each to the complainant. Under the said arrangement for the quarter December 1996 - January 1997 the accused company issued a cheque, dated 28 December, 1996, in the sum of Rs. 10.23.843.75 p., which on presentation was received back unpaid by the bankers of the accused company on the ground "payment stopped by drawer". Thereupon, after issuing the requisite notice under Section 138 of the Act the complaint in question was filed against the accused company its Managing Director the authorised signatory and all other Directors constituting the Board of Directors at the relevant time. The Managing Director is petitioner No. 2 the other Directors are petitioners No.3 to 9 and the authorised signatory is petitioner No. 10 herein.
3. I have heard learned counsel for the parties.
4. The continuation of proceedings in the complaint is objected to by Mr. Arora, learned counsel for the petitioners, mainly on the ground that after the filing of the complaint a memorandum of understanding was arrived at between the accused company and the complainant. Where under a fresh schedule of payment of the lease rentals by the petitioner company was agreed to between the parties, in terms of the said agreement all legal proceedings including the present complaint initiated by the complainant were to be withdrawn; substantial payments in terms thereof have already been made and, therefore, complainant's still pursuing the complaint against the petitioners is in breach of the said arrangement which cannot be permitted. It is also urged that there are no averments/allegations in the complaint nor an iota of evidence on record to show that petitioners No.2 to 10 were incharge of and responsible to the accused company or the conduct of its business and, there fore, they cannot be made vicariously liable.
5. On the other hand, Mr. Mukul Rohatgi, learned Senior counsel for the complainant, while inviting the attention of the Court to the rejoinder-affidavit filed on behalf of the petitioners, wherein it has been stated that the complainant having gone back on the memorandum of understanding by its illegal actions, it has become in fructuous, has submitted that when the petitioners themselves feel that they are no longer bound by the terms of said memorandum, the complaint against them cannot be quashed on the basis of the same agreement. It is asserted that in view of the fact that petitioner No. 2 is the Managing Director of the accused company and petitioner No. 10 the authorised signatory had issued the cheque in question, they are obviously incharge of and responsible for the conduct of the business of the accused company and are vicariously liable for prosecution under Section 138 of the Act. It is also contended that other directors (petitioners No. 3 to 9) can also be proceeded against under Section 141 of the Act.
6. On the question of quashing of the complaint in entirety. Mr. Arora has very fairly stated that in view of the fact, that some questions regarding the applicability/validity or implementation of the terms of memorandum of understanding may arise for consideration, it may not be possible for this Court to go into these questions, in the exercise of its reversionary jurisdiction or inherent powers and quash the proceedings-at this stage, he would not press the petition to that extent with liberty to move an appropriate application before the Trial Court for quashing of the complaint on all the grounds urged in this petition. The petition is also not pressed qua petitioners No.2 and 10 with leave to move application for their discharge before the Trial Court in the first instance. It is ordered accordingly.
7. Insofar as petitioners No.3 to 9 are concerned, it is maintained that neither the averments in para 13 of the complaint nor the pre-summoning evidence even remotely suggests that the said petitioners were incharge of the conduct of the business of the company at the relevant time. I find force in the stand of learned counsel for the petitioners.
8. In Mohendra Pratap Singh Ratra & Anr. V. N.K. Metals1. I had the occasion to consider the purport and scope of Section 141 of the Act. Observing that the said section being penal in nature, has to be construed strictly, the initial onus to prove that a person was incharge of and was responsible to the company for the conduct of its business at the relevant time is obviously on the complainant and even if the complainant discharges the initial onus, as per proviso to sub-section (1) of Section 141 of the Act the person accused can still prove that the offence committed by the company was without his knowledge or that he had exercised due diligence to prevent the commission of such offence. I had said that till the complainant pleads the basic facts with regard to that person's role in the day to day affairs of the company, it will neither be possible nor permissible to the complainant to bring home the charge of vicarious liability under the said Section. Applying the broad principle of law laid down in the said decision on the facts in hand. I am of the view that petitioners No.3 to 9 cannot be roped in under Section 141 of the Act. I find that neither in the complaint nor in the pre-summoning evidence there is any averment or allegation which may even obliquely suggest that the said petitioners were at any point of time directly or indirectly incharge of and responsible to the accused company for the conduct of its day to day business. There is no material on record which may suggest that the alleged offence was committed with the consent or connivance of or was attributable to any neglect on the part of the said petitioners.
9. For the foregoing reasons proceedings against petitioners. No. 3 to 9 pending in the Court of Shri RB. Singh, M.M. Delhi are hereby quashed and they stand discharged.
10. At this stage, Mr. Arora prays that petitioners No.2 to 10 may be exempted from personal appearance before the trial Court. It will be open to the said petitioners to move appropriate application before the Trial Court for their exemption and I am confident, the same will be considered on its own merits.
11. The petition stands disposed of in the above terms. Copy of the order be given Dasti to learned counsel for the parties.
Petition allowed.
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