INTRODUCTION
Today, I will talk about the case of Ashutosh
Ashok Parasrampuriya & Another v. M/s Gharrkul Industries Pvt. Ltd.,
SLP (C) No. 7573/2014, wherein the Hon’ble Supreme Court discussed the basic
ingredients of offence punishable under S. 141 of the Negotiable Instruments Act,
1881 (in short, “NI Act”) that deals with offences by companies in
relation to dishonour of cheques. To know more about Section 141 and Section
138 of the NI Act, please refer to my earlier post accessible at the link
provided in the description below. The facts of the case are not necessary for
the purposes of this show and hence, the same are not being discussed here.
IMPORTANT PROVISIONS OF LAW
Before adverting any further, it is pertinent to
note that S. 138 provides for the stipulations to be followed in case there is dishonour
of a Cheque. In the same way, S. 141 talks about the contingency when the
offence under S. 138 is committed by a company. S. 141 further provides that a
person will not be liable under S. 141 “if he proves that the offence was
committed without his knowledge, or that he had exercised all due diligence to
prevent the commission of such offence.”
But when an offence has been alleged against a
company, who would be held liable in that company? Whether all the directors of
the company would be liable or whether some other person would be liable? In
order to understand this conundrum and S. 141 in a better manner, let us go
through the pertinent observations by the Court.
OBSERVATIONS BY THE COURT
Firstly, the Court cited the case of S.M.S.
Pharmaceuticals Ltd. vs. Neeta Bhalla & Another, (2005) 8 SCC 89,
wherein it was held that: -
a. Under S. 141, “it is necessary to
specifically aver… that at the time the offence was committed, the person
accused was in charge of, and responsible for the conduct of business of the
company. This averment is an essential requirement of Section 141 and has to be
made in a complaint. Without this averment being made in a complaint, the
requirements of Section 141 cannot be said to be satisfied.”
b. “Merely being a director of a company is
not sufficient to make the person liable under Section 141 of the Act. A
director in a company cannot be deemed to be in charge of and responsible to
the company for the conduct of its business. The requirement of Section 141 is
that the person sought to be made liable should be in charge of and responsible
for the conduct of the business of the company at the relevant time. This has
to be averred as a fact as there is no deemed liability of a director in such
cases.”
c. Thus, when a director is in charge of the
company for the conduct of its business, such director may become liable under
S. 141 of the NI Act.
Secondly, the Court observed that apart from
asserting that the ingredients of S. 141 have been fulfilled, it is also
necessary to show that at the relevant time when the offence was committed, the
Directors were in charge of and were responsible for the conduct of the
business of the company.
And lastly, the Court noted that when a Complaint is
read as a whole and discloses that certain persons or directors were
responsible for the conduct of business of company at the time when the cheque
in question was issued and dishonoured, then it would be improper to split such
complaint to conclude that the allegations are not sufficient to fulfil the requirements
under S. 141 of the NI Act. In such cases, powers under S. 482 of CrPC to quash
the complaint must not be exercised unless the Court “comes across some
unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or
totally acceptable circumstances which may clearly indicate that the Director
could not have been concerned with the issuance of cheques and asking him to
stand the trial would be abuse of process of Court.”
Those were the observations by the Court. So, what
are my concluding remarks?
SUMMARY AND CONCLUSION
After reading this case, it is clear that the
following ingredients must be satisfied to implicate a person under S. 141 of
the NI Act: -
a. There must be a specific averment in the Complaint
that the person accused was in charge of, and responsible for the conduct of
business of the company.
b. The person sought to be made liable should be
in charge at the relevant time when the cheque was issued and got dishonoured.
c. A complaint under S. 138 and S. 141 of the NI
Act can be quashed when there is incontrovertible evidence indicating that the accused
person could not have been concerned with the issuance of cheques.
Therefore, I hope that the ingredients of S. 141
of the NI Act are clear by now.
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