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Tuesday, March 25, 2014

Sections 138 and 141 of the Negotiable Instruments Act, 1881 - failure of complainant to plead - Directors, Manager, Secretary or other officers of the company for arraying as accused there must be specific pleadings that the accused were in charge of and responsible for the conduct of the business of the company - High court rightly quashed the complaint = Mannalal Chamaria & Anr. ....Appellants Versus State of West Bengal and Anr. ...Respondents = 2014 (March.Part) judis.nic.in/supremecourt/filename=41331

  Sections  138  and  141 of    the    Negotiable    Instruments    Act,    1881  - failure of complainant to plead  - Directors,  Manager, Secretary or other officers of the company for arraying as accused there must be specific pleadings that the accused were in charge of and  responsible for the conduct of the business of the company - High court rightly quashed the complaint =

 failure (and consequential effect) of Pradip Sarkar  to
specifically state in  his  complaint  filed  under  Sections  138  and  141
 of    the    Negotiable    Instruments    Act,    1881    that    the appellants/accused  persons  were  in  charge   of   and   responsible   for the  conduct  of  the  business  of  M/s.  Heritage  Herbs  Ltd.  of  which they were said to be Directors.=

 Insofar  as  the  first
complaint is concerned, the  appellants  were  not  even  made  parties  and
therefore there is no question of any allegations being  made  against  them
in that complaint.  
As far as the second complaint is  concerned,  the  only
allegation made is to be  found  in  paragraph  6  thereof  which  reads  as
follows:-
            “That in this context your petitioner refers to  the  provisions
            of Section 141 of the Negotiable Instrument Act,  where  it  has
            been specifically stated that if the  offender  is  the  company
            then the person who at the time of the offence was committed was
            in charge of and was responsible to the company for the  conduct
            of the  business  of  the  company,  other  Directors,  Manager,
            Secretary or other officers of the company shall  be  guilty  of
            the  offence,  unless  the  persons  referred  to  above   prove
            otherwise, as per the saving clause of  the  said  section.   In
            section 5  of  the  Companies  Act,  also  made  those  officers
            responsible for crime committed by the company.”

   The law on the subject  is  now  very  well-settled  by  a  series  of
decisions rendered by this Court and it  is  not  necessary  to  repeat  the
views expressed time and again.  Suffice it to say, that the  law  has  once
again been stated in 

A.K.Singhania  vs.  Gujarat  State  Fertilizer  Company Ltd.[1] to the effect that 
it is necessary for a  complainant  to  state  in
the complaint that the person accused was in charge of and  responsible  for
the conduct of the business of the company.  Although,  no  particular  form
for making such an allegation is prescribed, and it may not be necessary  to
reproduce the language of Section 138 of  the  Negotiable  Instruments  Act,
1881, but a reading of the complaint should show that the substance  of  the
accusation  discloses  that  the  accused  person  was  in  charge  of   and
responsible for the conduct of the business of the company at  the  relevant
time.  
From the averment made in the complaint, which is  reproduced  above,
it can safely  be  said  that  there  is  no  specific  or  even  a  general
allegation made against the appellants.
10.   Under  these  circumstances,  the  complaint  against  the  appellants
deserves dismissal.  A contrary view taken  by  the  High  Court  cannot  be
accepted.  Accordingly, the appeals are allowed and the order passed by  the
High Court is set aside.

2014 (March.Part) judis.nic.in/supremecourt/filename=41331

                                                          NON-REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO. 213 OF 2006

Mannalal Chamaria & Anr.                                 ....Appellants

                                   Versus

State of West Bengal   and Anr                             ....Respondents

                                    WITH

                       CRIMINAL APPEAL NO. 215 OF 2006

                                     AND

                       CRIMINAL APPEAL NO. 217 OF 2006


                               J U D G M E N T

Madan B. Lokur, J.

1.    The question  arising  for  consideration  in  these  appeals  relates
      to the alleged failure (and consequential effect) of Pradip Sarkar  to
specifically state in  his  complaint  filed  under  Sections  138  and  141
       of    the    Negotiable    Instruments    Act,    1881    that    the
appellants/accused  persons  were  in  charge   of   and   responsible   for
the  conduct  of  the  business  of  M/s.  Heritage  Herbs  Ltd.  of   which
they were said to be Directors.
2.    In a complaint filed on 31st March, 2001, Pradip Sarkar  alleged  that
Heritage Herbs  had made an offer for collecting money from the market  with
a view to allot land to the intending  investors.    On  the  basis  of  the
offer made, Pradip Sarkar invested an amount of Rs.1,50,000/-  and  Heritage
Herbs  issued three receipt-cum-allotment letters for three  plots  of  land
to Pradip Sarkar.  At the time of  handing  over  the  receipt-cum-allotment
letters, Pradip Sarkar was also handed over three cheques  of  Rs.  61,000/-
each  post dated to 29th  October,  2000.   These  cheques  were  issued  by
Heritage Herbs and were signed by Raj Kumar  Chamaria  as  Chairman  of  the
said concern.
3.    All the three  cheques  were  deposited  by  Pradip  Sarkar  but  were
dishonoured by the concerned bank.  This led Pradip Sarkar to take steps  to
issue a notice to and initiate proceedings against  Heritage Herbs  and  Raj
Kumar Chamaria under the provisions of Section 138 read with Section 141  of
the Negotiable Instruments Act, 1881.
4.    During the pendency of the proceedings  Raj  Kumar  Chamaria  died  on
10th December, 2003.
5.    Thereafter, Pradip Sarkar moved  an  application  for  impleading  the
appellants  as  accused  persons.   The  application  was  allowed  and  the
appellants were impleaded as accused persons by the concerned Magistrate  by
an order dated 28th April, 2004 and summons issued to them.
6.    Feeling aggrieved by their impleadment and summons   issued  to  them,
the appellants preferred Criminal Revision Petitions in  the  Calcutta  High
Court, which dismissed the petitions.
7.    The appellants have challenged the order of the  Calcutta  High  Court
and the only contention urged is that  no  specific  allegations  were  made
against them either in the complaint as  originally  filed  on  31st  March,
2001 or in the amended complaint filed on 28th April 2004.
8.    We have been taken through both the complaints by learned counsel  for
the appellants and find that there is no allegation worth the  name  against
any of the appellants in either of the complaints.   Insofar  as  the  first
complaint is concerned, the  appellants  were  not  even  made  parties  and
therefore there is no question of any allegations being  made  against  them
in that complaint.  As far as the second complaint is  concerned,  the  only
allegation made is to be  found  in  paragraph  6  thereof  which  reads  as
follows:-
            “That in this context your petitioner refers to  the  provisions
            of Section 141 of the Negotiable Instrument Act,  where  it  has
            been specifically stated that if the  offender  is  the  company
            then the person who at the time of the offence was committed was
            in charge of and was responsible to the company for the  conduct
            of the  business  of  the  company,  other  Directors,  Manager,
            Secretary or other officers of the company shall  be  guilty  of
            the  offence,  unless  the  persons  referred  to  above   prove
            otherwise, as per the saving clause of  the  said  section.   In
            section 5  of  the  Companies  Act,  also  made  those  officers
            responsible for crime committed by the company.”



9.    The law on the subject  is  now  very  well-settled  by  a  series  of
decisions rendered by this Court and it  is  not  necessary  to  repeat  the
views expressed time and again.  Suffice it to say, that the  law  has  once
again been stated in A.K.Singhania  vs.  Gujarat  State  Fertilizer  Company
Ltd.[1] to the effect that it is necessary for a  complainant  to  state  in
the complaint that the person accused was in charge of and  responsible  for
the conduct of the business of the company.  Although,  no  particular  form
for making such an allegation is prescribed, and it may not be necessary  to
reproduce the language of Section 138 of  the  Negotiable  Instruments  Act,
1881, but a reading of the complaint should show that the substance  of  the
accusation  discloses  that  the  accused  person  was  in  charge  of   and
responsible for the conduct of the business of the company at  the  relevant
time.  From the averment made in the complaint, which is  reproduced  above,
it can safely  be  said  that  there  is  no  specific  or  even  a  general
allegation made against the appellants.
10.   Under  these  circumstances,  the  complaint  against  the  appellants
deserves dismissal.  A contrary view taken  by  the  High  Court  cannot  be
accepted.  Accordingly, the appeals are allowed and the order passed by  the
High Court is set aside.


                                       ……………………………………J
                                          (Ranjana Prakash Desai)

                                          ……………………………………J
                                          (Madan B. Lokur)
New Delhi;
March 25, 2014


-----------------------
[1]    MANU/SC/1081/2013



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