LexPARESH P. RAJDA versus STATE OF MAHARASHTRA & ANR.
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[2008) 8 S.C.R. 1191 PARESH P. RAJDA A II. STATE OF MAHARASHTRA & ANR. (Criminal Appeal No. 921 of 2008) MAY 16, 2008 B ,.. [TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ.] Negotiable Instruments Act, 1881, sections 138 and 141: Dishonour of cheques - Notice summoning accused, Chairman of a company, to appear before Court - Accused c filing application for quashing of proceedings before the High Court stating that no case for summoning has been made out against him in the complaint - High Court directing the Mag- istrate to decide the application - Application dismissed by .., Magistrate - Accused filed another application before High D • Court - Dismissed by the High Court holding that specific a/legation had been levelled against him - Correctness of - Held; Liability of director/Chairman of a company could be fixed only after examining nature of averments made in the complaint and as to whether specific allegation had been lev- E elled against accused person or not - A perusal of averments made in the complaint in the instant case would show that spe- cific allegations against the accused to the effect that they were ~ responsible officers of the company made in the complaint - Moreover, trial has not yet been started, therefore, it would be F inappropriate to pass any order about quashing of the pro- ceedings - Code of Criminal Procedure, 1973 - s. 395. In connection with business dealing, accused-appel- lant had issued two cheques for certain amount in favour of a company. Since the cheques were dishonoured by· G the bank with certain remarks, notice was issued to ac- cused No.1, the company, accused No.2, the appellant, Chairman of the Company and accused No.4, appellant in connected appeal, a Director of the company. It was 1191 H 1192 SUPREME COURT REPORTS [2008] 8 S.C.R. A only after issuance of non-bailable warrants against the accused, they appeared before the Court. The accused- appellant moved an application avering therein that no case for summoning had been made out against him as no overt act with regard to the issuance of dishonoured B cheques had been attributed to him. The Magistrate dis- ,l missed the application holding that the process under Section 395 Cr.P.C. had already been issued. The High ~ Court held that specific allegations had been levelled against him as being a responsible officer of the accused c Company and he, was therefore equally liable. Hence, the present appeals. Accused-appellants contended that no allegation whatsoever had been made against him and he had been arrayed in a mechanical manner, merely because he hap- D pened to be Chairman/Director of the company; that if an "' I offence was committed by 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, would be deemed to be E guilty of the offence and would be liable to be proceeded , against and as no such allegations had been made in the complaint, the issuance of process against him was not justified. Respondents submitted that it was not possible at ~ F this stage and without evidence to reach a conclusion as to the liability of the appellant and it was, therefore, ap- propriate that the matter be left to trial, as had been ob- served by the High Court; that the allegations that the accused were in fact, responsible officers of the Company G and were also conducting its day-to-day activities, had been specifically made in the complaint; that a great deal of material had been put on record to show that the ac- cused company and its officers had issued several cheques to other organizations as well, which too had H PARESH P. RAJDA v. STATE OF 1193 MAHARASHTRA ~ bounced, and that huge sums were due from the Com- A pany on that account and, they being habitual offenders, were not entitled to any relief. Dismissing the appeal, the Court HELD: 1. In S. M. S Pharmaceuticals vs. Neeta Bhalla*, B a three Judge Bench of this Court examined the scope ... and ambit of Section 141 of the Negotiable Instruments ... Act and the liability created with respect to the Directors and other persons responsible for the affairs of the com- pany. As this matter had come before the three-Judge c Bench on a reference, the Bench reverted the matter for a discussion on facts to a Bench of two-Judges. The mat- ter was again examined by the Bench
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