LexK.K. AHUJA versus V.K. VORA AND ANR.
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[2009] 9 S.C.R. 1144 ; 1 "'- A K.K. AHUJA v. '111 V.K. VORA AND ANR. (Criminal Appeal Nos.1130-31 of 2003) ._<.:-- B JULY 6, 2009 [R.V. RAVEENDRAN AND DR. MUKUNDAKAM SHARMA, JJ.] Negotiable Instruments Act, 1881: ss.141(1) and (2), 138 c - Vicarious liability - Liability of Deputy General Manager of the Company which issued the dishonoured cheque - Held: A person is vicariously liable under sub-section (1) of s.141, if he is responsible to the company for the conduct of the business of the company and was also incharge of business D of the company - Sub-section (2) of s.141 provides that t- Director, Manager, Secretary or other officer though not in charge of conduct of the company would be liabfe if offence was committed in connivance or consent or was a result of negligence on his part - Deputy General Manager is not a E person responsible to the company for conduct of business of company - Question whether he was incharge of the business of the company or not becomes irrelevant Thus, he cannot be made vicariously liable under s.141(1) - To make him liable under s.141(2), necessary averments relating to F consent/connivance/negligence should be made - Since no such averments were made in the complaint, there was no error in the order quashing the summons against him - Companies Act, s.291 - Interpretation of statutes - Liability - Vicarious liability - Code of Criminal Procedure, 1973 - G s.482. ~. Interpretation of statutes: Strict interpretation - Penal statutes - Held:" To be construed "Strictly - Penal statutes providing constructive vicarious liability to be construed much more strictly- Negotiable Instruments Act, 1881 - s.138. H 1144 - K.K. AHUJA v. V.K. VORA AND ANR. 1145 The appellant filed a complaint under s.138 of A Negotiable Instruments Act, 1881 against a company and eight others including the first respondent. The Magistrate directed issue of summons against all the accused persons. The first respondent filed petitions for quashing the proceedings against him on the ground that B he was only a Deputy General Manager who was not in- charge of the company. The High Court quashed the orders summoning the respondent holding that he was not a signatory to the· C cheques nor was a party to the decision to allow the cheques to be dishonoured. Aggrieved appellant filed these appeals. Dismissing the appeals, the Court D HELD: 1. The criminal liability for the offence by a - COIJlpany under section 138 of the Negotiable Instruments Act, 1881, is fastened vicariously on the persons referred to in sub-section (1) of section 141 by virtue of a legal fiction. Penal statutes are to be construed E strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific F averment complying with _the requirements of section 141 is imperative. [Para 11] [1159-F-H; 1160-A] K. Srikanth Singh vs. North East Securities Ltd. 2007 (12) SCC 788; Sabitha Ramamurthy vs. RBS G Channabasavaradhya 2006 (10) SCC 581; Saroj Kumar Poddar v State (NCT of Delhi) 2007 (3) SCC 693; SMS Pharmaceuticals v. Neeta Bhalla 2007 (4) SCC 70; Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi (2007) 5 sec 54; N.K. Wahi vs. Shekhar Singh 2001 (9) sec 481; H 1146 SUPREME COURT REPORTS [2009) 9 S.C.R. -f A DCM Financial Services Ltd. vs. J. N. Sareen 2008 (8) SCC 1; Ramraj Singh vs. State of MP (2009 (5) SCALE 670; K. c Srikanth Singh vs. North East Securities Ltd 2007 (12) SCC 788, relied on. ' c B 2. Section 291 of the Companies Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company c though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in· charge of and responsible Jor. the company's business and affairs and can be prosecuted ..- for offences by the company. But insofar as other D directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct ~ of th ... e company's busines
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