LexA.K. SINGHANIA versus GUJARAT STATE FERTILIZER CO. LTD. & ANR.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2013] 9 S.C.R. 1069
A.K. SINGHANIA
v.
GUJARAT STATE FERTILIZER CO. LTD. & ANR.
{Criminal Appeal Nos. 1692-1718 of 2013 etc.)
OCTOBER 17, 2013
[CHANDRAMAULI KR. PRASAD AND
KURIAN JOSEPH, JJ.]
NEGOTIABLE INSTRUMENTS ACT, 1881:
s. 141 rlw s. 138 - Complaint against a company, its
Chairman, Managing Directors and Directors - Petitions· by
two directors seeking to quash the proceedings against them
A
B
c
- Held: In case of offence by company for dishonour of
cheque, culpability of Directors has to be decided with
0
reference to s. 141 -- To bring the Directors within the mischief
of s. 138, it shall be necessary to allege that at the relevant
time they were in charge of and responsible to the conduct of
business of the Company -- It is necessary ingredient to
proceed against such Directors -- In the instant case, the
E
averments in the complaints nowhere suggest that the two
Directors concerned were incharge and responsible for
conduct of business of the company at the time when the
offence was committed - Thus, the necessary averment in the
complaints is Jacking - Therefore, prosecution of two Directors
F
concerned cannot be allowed to continue and their
prosecution in all the cases, is quashed.
Respondent no. 1 in Crl. A. No. 1726-1732 of 2013
and the appellant in Crl. A. No. 1692-1718 of 2013 were
arraigned as accused Nos. 7 and 9, respectively in
G
Complaint Case No. 331 of 1996 filed against accused
Nos. 1 to 13 alleging commission of offence u/s 138 of
the Negotiable Instruments Act, 1881. Several other
similar complaints were also filed by Gujarat State
1069
H
1070
SUPREME COURT REPORTS
[2013] 9 S.C.R.
A Fertilizer Company against Esslon Synthetics Ltd., its
Chairman, Managing Directors and other Directors
including the said accused Nos. 7 and 9. The Magistrate
took cognizance of the offence and issued process to the
accused persons. Accused Nos. 7 and 9 in Complaint
B Case No. 331 of 1996 filed petitions u/s 482 Cr.P.C. before
the High Court seeking to quash the proceedings against
them. The High Court allowed the petitions of accused
No. 7, but rejected those of accused No. 9.
c
Disposing of the appeals, the Court
HELD: 1.1 In the case of offence by company for
dishonour of cheque, culpability of the Directors has to
be decided with reference to s. 141 of the Act. To bring
the Directors within the mischief of s. 138 of the Act, it shall
D be necessary to allege that at the time the offence was
committed, they were in charge of and responsible to the
conduct of the business of the Company. It is necessary
ingredient which would be sufficient to proceed against
such Directors. If reading of the complaint shows and
E substance of accusation discloses necessary averments,
that would be sufficient to proceed against such of the
Directors and no particular form is necessary. However,
it may not be necessary to allege and prove that, in fact,
such of the Directors have any specific role in respect of
F the transaction leading to issuance of cheque. Section
141 of the Act makes the Directors in charge and
responsible to Company "for the conduct of the
business of the Company" within the mischief of s. 138
of the Act and not particular business for which the
G cheque was issued. [para 17-18] [1078-F; 1080-A-D]
H
S. M. S. Pharmaceuticals Ltd. v. Neeta Bhalla, 2005 (3)
Suppl. SCR 371 = (2005) 8 SCC 89; National Small
Industries Corpn. Ltd. v. Harmeet Singh Paintal 2010 (2) SCR
805 = (2010) 3 SCC 330; Harshendra Kumar D. v. Rebatilata
A.K. SINGHANIA v. GUJARAT STATE FERTILIZER 1071
CO. LTD.
Koley, 2011 (2) SCR 670 = (2011) 3 sec 351; N.
A
Rangachari v. Bharat Sanchar Nigam Ltd., 2007 (5) SCR 329
= (2007) 5 SCC 108; and K.K. Ahuja v. V.K. Vora, (2009) 10
sec 48 - relied on.
1.2 On facts, according to the complainant itself, it
B
was accused Nos. 1 to 5 who were taking decisions; and
the allegation was that in taking the decisions they used
to consult accused nos. 7 and 9 also. From the
allegations made in the complaint, it cannot be inferred
that there is any averment that these two accused were
C
in-charge of and responsible for the conduct of the
business of the company at the time the offence was
committed. Therefore, there is no essential averment in
the complaints. In this view of the matter, prosecution of
accused nos. 7 and 9 cannot be allowed to continue.
Accordingly, the order of the High Court quashing the
D
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