2015 ALL MR (Cri) JOURNAL 594
(HIMACHAL PRADESH HIGH COURT)

RAJIV SHARMA, J.

M/s. Terrace Pharmaceuticals & Ors. Vs. Ajay Kumar Tiwari

Cr. MMO No.4088 of 2013,Cr. MMO No.4089 of 2013,Cr. MMO No.4090 of 2013,Cr. MMO No.4091 of 2013

6th January, 2014.

Petitioner Counsel: Mr. B.C. NEGI
Respondent Counsel: Mr. RAMAKANT SHARMA

Negotiable Instruments Act (1881), S.141 - Offence by company - It is incumbent upon trial court to go through contents of complaint minutely to see whether prima facie any case made out against the accused arrayed under complaint - It is necessary for trial court to strictly comply with provisions of S.141 of NI Act before proceedings are initiated against accused. (Para 18)

Cases Cited:
S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr., 2005(5) ALL MR 1118 (S.C.)=(2005) 8 SCC 89 [Para 19,24]
N.K. Wahi Vs. Shekhar Singh & Ors., 2007 ALL MR (Cri) 1445 (S.C.)=(2007) 9 SCC 481 [Para 20]
K.K. Ahuja Vs. V.K. Vora & Anr., 2009 ALL SCR 1524=(2009) 10 SCC 48 [Para 21]
National Small Industries Corporation Limited Vs. Harmeet Singh Paintal & Anr., 2010 ALL MR (Cri) 921 (S.C.)=(2010) 3 SCC 330 [Para 22]
Central Bank of India Vs. Asian Global Limited & Ors., 2010 ALL MR (Cri) 2599 (S.C.)=(2010) 11 SCC 203 [Para 23]
Rallis India Limited Vs. Poduru Vidya Bhushan & Ors., 2011 ALL MR (Cri) 1645 (S.C.)=(2011) 13 SCC 88 [Para 24]
Anita Malhotra Vs. Apparel Export Promotion Council & Anr., 2011 ALL SCR 2910=(2012) 1 SCC 520 [Para 25]
Amit Kapoor Vs. Ramesh Chander & Anr., 2012 ALL MR (Cri) 3806 (S.C.)=2012(9) SCC 460 [Para 26]
Aparna S. Shah Vs. Sheth Developers Private Limited & Anr., 2013 ALL SCR 2824=(2013) 8 SCC 71 [Para 27]
GHCL Employees Stock Option Trust Vs. India Infoline Limited, 2013 ALL MR (Cri) 4423 (S.C.)=(2013) 4 SCC 505 [Para 28]


JUDGMENT

JUDGMENT :- Since common questions of law and facts are involved in all these petitions, the same were taken up together for hearing and are being disposed of by a common judgment. However, in order to maintain clarity, facts of all these Cr.MMO No.4088/2013, Cr.MMO No. 4089/2013, Cr.MMO No.4090/2013 and 4091/2013 have been taken into consideration.

Cr.MMO No.4088/2013

2. This petition is directed for quashing of impugned order dated 30.8.2013 and proceedings initiated against the petitioners in case tilted as Ajay Kumar Tiwari vs. M/s Terrace Pharmaceuticals and ors. before the Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P..

3. "Key facts" necessary for the adjudication of this petition are that the respondent has filed a complaint under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "Act" for the sake of convenience) against the petitioners. It is averred in the complaint that respondent is proprietor of M/s. Excipients House Village Riri Industrial Area, Sansarpur, Terrace, Tehsil Jaswan, District Kangra, H.P. and carrying on business of raw material (bulk drug) and having bank account in the name of firm. On the demand of the petitioners, the respondent supplied raw material (bulk drug) to them vide different bills of different dates. The petitioners issued 20 cheques of ICICI Bank Branch Mohali SCS 21-22, Phase 7, SAS Nagar Mohali-160059 in favour of the respondent. The respondent deposited four cheques out of 20 cheques, i.e. cheque No.314914 dated 25.2.2013 amounting to Rs.40,000/-, cheque No.314906 dated 25.1.2013 amounting to Rs.40,000/-, cheque No.314905 dated 23.1.2013 amounting to Rs.31,999/- and cheque No.314910 dated 11.2.2013 amounting to Rs.53,393/- with his banker, i.e. Punjab & Sindh Bank Branch at Baddi for collection from the banker of the petitioners, but the banker of the petitioners returned the same unpaid to the respondent with remarks "insufficient funds" vide memo dated 20.3.2013. The respondent issued legal notice to the petitioners through counsel under registered cover demanding cheque amount within fifteen days from the date of receipt of notice. The respondent also sent a registered letter on 2.4.2013 and in spite of knowledge of notice, the petitioners did not bother to collect the registered letter from the postal authorities and the postal authorities after several efforts returned the same to the respondent. The respondent has filed his affidavit in support of the complaint.

4. Learned Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P. on 27.5.2013 ordered for the presence of the respondent and preliminary evidence on 9.7.2013. Statement of the respondent was recorded and the preliminary evidence was closed on 9.7.2013. The matter was ordered to be taken up for consideration on 30.8.2013. Learned trial court passed the following order on 30.8.2013:-

"Heard. On the perusal of complaint, affidavit Ext. CW-1/A and documents i.e. cheques Ex. C1 to Ex. C4, memos Ex. C5 to Ex. C8, notice Ex.C9, postal receipts Ex. C10 to Ex. C17 and registered AD Ex. C18 to Ex.C22 placed on record, there are prima facie sufficient grounds to proceed against the accused persons under Section 138 of the Negotiable Instruments Act. Let, accused persons be summoned for 18.11.2013."

Cr.MMO No. 4089/2013

5. This petition is directed for quashing of impugned order dated 30.8.2013 and proceedings initiated against the petitioners in case tilted as Ajay Kumar Tiwari vs. M/s Terrace Pharmaceuticals and ors. before the Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P..

6. "Key facts" necessary for the adjudication of this petition are that the respondent has filed a complaint under Section 138 read with Section 142 of the Act against the petitioners. It is averred in the complaint that respondent is proprietor of M/s. Excipients House Village Riri Industrial Area, Sansarpur, Terrace, Tehsil Jaswan, District Kangra, H.P. and carrying on business of raw material (bulk drug) and having bank account in the name of firm. On the demand of the petitioners, the respondent supplied raw material (bulk drug) to them vide different bills of different dates. The petitioners issued 20 cheques of ICICI Bank Branch Mohali SCS 21-22, Phase 7, SAS Nagar Mohali-160059 in favour of the respondent. The respondent deposited three cheques out of 20 cheques, i.e. cheque No.314913 dated 21.2.2013 amounting to Rs.40,000/-, cheque No.314904 dated 17.1.2013 amounting to Rs.41,034/- and cheque No.314917 dated 5.3.2013 amounting to Rs.40,000/- with his banker, i.e. Punjab & Sindh Bank Branch at Baddi for collection from the banker of the petitioners, but the banker of the petitioners returned the same unpaid to the respondent with remarks "insufficient funds" vide memo dated 20.3.2013. The respondent issued legal notice to the petitioners through counsel under registered cover demanding cheque amount within fifteen days from the date of receipt of notice. The respondent sent a registered letter on 2.4.2013 and in spite of knowledge of notice, the petitioners did not bother to collect the registered letter from the postal authorities and the postal authorities after several efforts returned the same to the respondent. The respondent has filed his affidavit in support of the complaint.

7. Learned Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P. on 27.5.2013 ordered for the presence of the respondent and preliminary evidence on 9.7.2013. Statement of the respondent was recorded and the preliminary evidence was closed on 9.7.2013. The matter was ordered to be taken up for consideration on 30.8.2013. Learned trial court passed the following order on 30.8.2013:-

"Heard. On the perusal of complaint, affidavit Ext. CW-1/A and documents i.e. cheques Ex. C1 to Ex. C3, memos Ex. C4 to Ex. C6, notice Ex.C7, postal receipts Ex. C8 to Ex. C14 and registered AD Ex. C15 to Ex.C18 placed on record, there are prima facie sufficient grounds to proceed against the accused persons under Section 138 of the Negotiable Instruments Act. Let, accused persons be summoned for 18.11.2013."

Cr.MMO No. 4090/2013

8. This petition is directed for quashing of impugned order dated 30.8.2013 and proceedings initiated against the petitioners in case titled as Ajay Kumar Tiwari vs. M/s Terrace Pharmaceuticals and ors. before the Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P..

9. "Key facts" necessary for the adjudication of this petition are that the respondent has filed a complaint under Section 138 read with Section 142 of the Act against the petitioners. It is averred in the complaint that respondent is proprietor of M/s. Excipients House Village Riri Industrial Area, Sansarpur, Terrace, Tehsil Jaswan, District Kangra, H.P. and carrying on business of raw material (bulk drug) and having bank account in the name of firm. On the demand of the petitioners, the respondent supplied raw material (bulk drug) to them vide different bills of different dates. The petitioners issued 20 cheques of ICICI Bank Branch Mohali SCS 21-22, Phase 7, SAS Nagar Mohali-160059 in favour of the respondent. The respondent deposited three cheques out of 20 cheques, i.e. cheque No. 314916 dated 3.3.2013 amounting to Rs.47,670/-, cheque No. 314918 dated 7.32013 amounting to Rs.40,000/- and cheque No.314921 dated 12.3.2013 amounting to Rs.45,570/- with his banker, i.e. Punjab & Sindh Bank Branch at Baddi for collection from the banker of the petitioners, but the banker of the petitioners returned the same unpaid to the respondent with remarks "insufficient funds" vide memo dated 20.3.2013. The respondent issued legal notice to the petitioners through counsel under registered cover demanding cheque amount within fifteen days from the date of receipt of notice. The respondent sent a registered letter on 2.4.2013 and in spite of knowledge of notice, the petitioners did not bother to collect the registered letter from the postal authorities and the postal authorities after several efforts returned the same to the respondent. The respondent has filed his affidavit in support of the complaint.

10. Learned Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P. on 27.5.2013 ordered for the presence of the respondent and preliminary evidence on 9.7.2013. Statement of the respondent was recorded and the preliminary evidence was closed on 9.7.2013. The matter was ordered to be taken up for consideration on 30.8.2013. Learned trial court passed the following order on 30.8.2013:-

"Heard. On the perusal of complaint, affidavit Ext. CW-1/A and documents i.e. cheques Ex. C1 to Ex. C3, memos Ex. C4 to Ex. C6, notice Ex.C7, postal receipts Ex. C8 to Ex. C14 and registered AD Ex. C15 to Ex.C19 placed on record, there are prima facie sufficient grounds to proceed against the accused persons under Section 138 of the Negotiable Instruments Act. Let, accused persons be summoned for 18.11.2013."

Cr.MMO No. 4091/2013

11. This petition is directed for quashing of impugned order dated 30.8.2013 and proceedings initiated against the petitioners in case tilted as Ajay Kumar Tiwari vs. M/s Terrace Pharmaceuticals and ors. before the Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P..

12. "Key facts" necessary for the adjudication of this petition are that the respondent has filed a complaint under Section 138 read with Section 142 of the Act against the petitioners. It is averred in the complaint that respondent is proprietor of M/s. Excipients House Village Riri Industrial Area, Sansarpur, Terrace, Tehsil Jaswan, District Kangra, H.P. and carrying on business of raw material (bulk drug) and having bank account in the name of firm. On the demand of the petitioners, the respondent supplied raw material (bulk drug) to them vide different bills of different dates. The petitioners issued 20 cheques of ICICI Bank Branch Mohali SCS 21-22, Phase 7, SAS Nagar Mohali-160059 in favour of the respondent. The respondent deposited three cheques out of 20 cheques, i.e. cheque No.314907 dated 28.1.2013 amounting to Rs.40,000/-, cheque No.314908 dated 2.2.2013 amounting to Rs.40,000/- and cheque No.314911 dated 15.2.2013 amounting to Rs.34,545/- with his banker, i.e. Punjab & Sindh Bank Branch at Baddi for collection from the banker of the petitioners, but the banker of the petitioners returned the same unpaid to the respondent with remarks "insufficient funds" vide memo dated 20.3.2013. The respondent issued legal notice to the petitioners through counsel under registered cover demanding cheque amount within fifteen days from the date of receipt of notice. The respondent sent a registered letter on 2.4.2013 and in spite of knowledge of notice, the petitioners did not bother to collect the registered letter from the postal authorities and the postal authorities after several efforts returned the same to the respondent. The respondent has filed his affidavit in support of the complaint.

13. Learned Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P. on 27.5.2013 ordered for the presence of the respondent and preliminary evidence on 9.7.2013. Statement of the respondent was recorded and the preliminary evidence was closed on 9.7.2013. The matter was ordered to be taken up for consideration on 30.8.2013. Learned trial court passed the following order on 30.8.2013:-

"Heard. On the perusal of complaint, affidavit Ext. CW-1/A and documents i.e. cheques Ex. C1 to Ex. C3, memos Ex. C4 to Ex. C6, notice Ex.C7, postal receipts Ex. C8 to Ex. C13 and registered AD Ex. C14 to Ex.C18 placed on record, there are prima facie sufficient grounds to proceed against the accused persons under Section 138 of the Negotiable Instruments Act. Let, accused persons be summoned for 18.11.2013."

14. Mr. B.C. Negi, learned Advocate, has vehemently argued that the proceedings initiated against the petitioners under Section 138 read with Section 142 of the Act are against the law. He then argued that the petitioners are not involved in the alleged offence.

15. Mr. Ramakant Sharma, learned Advocate, has supported the impugned order dated 30.8.2013.

16. I have heard learned counsel for the parties and gone through the impugned order and pleadings carefully.

17. In the complaints under Section 138 read with Section 142 of the Act, there is no specific allegation against petitioners No. 3 and 4. The cheques have been signed by one of the Directors, i.e. petitioner No.2, Rajesh Chopra in the name of petitioner No.1-company. The cheques were presented by the respondent with his banker, i.e. Punjab and Sindh Bank, for collection from the banker of the petitioners, i.e. ICICI Bank Branch Mohali. However, the same were returned to the petitioner with remarks "insufficient funds" vide memo dated 20.3.2013. The respondent has served legal notice upon the petitioners to make the payment within fifteen days from the date of receipt of notice. The respondent also sent a registered letter on 2.4.2013 to the petitioners. However, the fact of the matter is that the cheque amount has not been paid to the respondent.

18. It was incumbent upon the learned trial court to go through the contents of the complaint minutely to see whether prima facie any case is made out against petitioners No. 3 and 4. Learned trial court has recorded the statement of the respondent on 9.7.2013. In the affidavit filed by the respondent, Ext.CW1/A, there is no averment at all against petitioners No. 3 and 4. It is necessary for the trial court to strictly comply with the provisions of Section 141 of the Act before the proceedings are initiated against the accused. In the instant case, the petitioner-company has already been arrayed as one of the accused. There is no specific averment made in the complaints, as noticed above, that petitioners No. 3 and 4 were in charge of and were responsible to the company for the conduct of the business of the company. It is petitioner No.2 who has signed the cheque and is liable. The respondent has not spelt out in the complaint in what manner petitioners No. 3 and 4 were responsible to the accused company for conduct of day to day business. There is no averment against them. There is no presumption that petitioners No.3 and 4 knew about the transaction. Since there is no specific averment as to the role of petitioners No. 3 and 4, impugned order dated 30.8.2013 qua petitioners No. 3 and 4 is illegal. In the instant case, the cheques have been signed by the petitioner No.2 on behalf of the company. He has rightly been summoned.

19. Their Lordships of Hon'ble Supreme Court in S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and another (2005) 8 Supreme Court Cases 89 : [2005(5) ALL MR 1118 (S.C.)] have held that the necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Under Section 141 which is required is that the persons who are sought to be made criminally liable should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. Their Lordships have further held that the Director, who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time will not be liable under the provision. Their Lordships have further held that the signatory of a cheque, which is dis-honoured, is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141 of the Act. Their Lordships have held as under:-

"9. The position of a Managing Director or a Joint Managing Director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141 (1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.

10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words

"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, as well as the company, shall be deemed to be guilty of the offence etc."

What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person" the section would have said "every Director, Manager or Secretary in a Company is liable'....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.

11. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement.

12. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable.

19. In view of the above discussion, our answers to the questions posed in the Reference are as under:

(a) It is necessary to specifically aver in a complaint under Section 141 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) The answer to question posed in sub-Para (b) has to be in negative. 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 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) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."

20. Their Lordships of Hon'ble Supreme Court in N.K. Wahi vs. Shekhar Singh and ors, (2007) 9 Supreme Court Cases 481 : [2007 ALL MR (Cri) 1445 (S.C.)] have held that liability under Section 141 lies only on such person(s) who at the time of commission of offence were in charge and were responsible to the company for conduct of the business of the company. Mere being a Director of the company would not make such person liable. Their Lordships have further held that for launching a prosecution against the alleged Directors, there must be a specific allegation in the complaint as to the part played by them in the transaction. Allegation should be clear and unambiguous as to how the Directors were in charge and responsible for the conduct of the business of the company. Their Lordships have further held that the precise words from Section 141 need not be reproduced in the complaint and the court can always come to a conclusion on facts in each case. Their Lordships have further held that for bringing application of Section 138, the complaint must show that (1) cheque was issued; (2) the same was presented; (3) it was dis-honoured on presentation; (4) a notice in terms of the provisions was served on the person sought to be made liable; and (5) despite service notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice. Their Lordships have held as under:-

"7. This provision clearly shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the company is not liable. Only such person would be held liable if at the time when offence is committed he was in charge and was responsible to the company for the conduct of the business of the company as well as the company. Merely being a Director of the company in the absence of above factors will not make him liable.

8. To launch a prosecution, therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are incharge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the Court can always come to a conclusion in facts of each case. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable.

10. In order to bring application of Section 138 the complaint must show :

(1) That Cheque was issued;

(2) The same was presented;

(3) It was dishonoured on presentation;

(4) A notice in terms of the provisions was served on the person sought to be made liable;

(5) Despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice.

21. Their Lordships of Hon'ble Supreme Court in K.K. Ahuja vs. V.K. Vora and another, (2009) 10 Supreme Court Cases 48 : [2009 ALL SCR 1524] have summarized the position under Section 141 of the Act as under:-

"27. The position under section 141 of the Act can be summarized thus:

(i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix 'Managing' to the word 'Director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.

(ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under subsection (2) of Section 141.

(iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section.

(iv) Other Officers of a company can not be made liable under sub-section (1) of section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence."

22. Their Lordships of Hon'ble Supreme Court in National Small Industries Corporation Limited vs. Harmeet Singh Paintal and another (2010) 3 Supreme Court Cases 330 : [2010 ALL MR (Cri) 921 (S.C.)] have again reiterated that not every person connected with the company, but only those in charge of and responsible for conduct of business of the company at the time of commission of offence, are vicariously liable. Their Lordships have further held that in case of a Director, complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business. Mere bald statement that he was in charge of and was responsible to the company for conduct of its business is not sufficient. There is no presumption that every Director knows about the transaction. Their Lordships have further held that where the accused is the Managing Director or a Joint/Managing Director or a Director, who had signed the cheque on behalf of the accused company, making of such specific averment is held not necessary. Their Lordships have held as under:-

"12. It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, 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. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in-charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a Company who was not in-charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in-charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.

22. Therefore, this Court has distinguished the case of persons who are in-charge of and responsible for the conduct of the business of the company at the time of the offence and the persons who are merely holding the post in a company and are not in-charge of and responsible for the conduct of the business of the company. Further, in order to fasten the vicarious liability in accordance with Section 141, the averment as to the role of the concerned Directors should be specific. The description should be clear and there should be some unambiguous allegations as to how the concerned Directors were alleged to be in- charge of and was responsible for the conduct and affairs of the company.

36. Section 291 of the Companies Act, 1956 provides that :

"291. 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 authorized to exercise and do.

A company, 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 for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other Directors are concerned, they can be prosecuted only if they were in-charge of and responsible for the conduct of the business of the company.

37. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses 24, 26, 30, 31 and 45 of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company:

(a) the Managing Director/s;

(b) the whole-time Director/s;

(c) the Manager;

(d) the Secretary;

(e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act;

(f) any person charged by the Board of Directors with the responsibility of complying with that provision; Provided that the person so charged has given his consent in this behalf to the Board;

(g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors:

Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.

38. But if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was in-charge of the business of the company" or by stating that "he was in-charge of the day-to-day management of the company" or by stating that "he was in-charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act.

39. From the above discussion, the following principles emerge:

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were incharge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.

(v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.

(vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.

(vii) 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.

42. In the light of the above discussion and legal principles, we are in agreement with the conclusion arrived at by the High Court and in the absence of specific averment as to the role of the respondents and particularly in view of the acceptable materials that at the relevant time they were in no way connected with the affairs of the company, we reject all the contentions raised by learned counsel for the appellants."

23. Their Lordships of Hon'ble Supreme Court in Central Bank of India vs. Asian Global Limited and ors. (2010) 11 Supreme Court Cases 203 : [2010 ALL MR (Cri) 2599 (S.C.)] have again reiterated that merely being a Director would not make a person liable for offence committed by the Company. There has to be a specific allegation in complaint in regard to part played by them in transaction in question. Allegations have to be clear and unambiguous showing that Directors were in charge of and responsible for business of company. Their Lordships have held as under:-

"17. The law as laid down in S.M.S. Pharmaceuticals Ltd.'s case (supra) has been consistently followed and as late as in 2007, this Court in the case of N.K. Wahi's case (supra), while considering the question of vicarious liability of a Director of a Company, reiterated the sentiments expressed in S.M.S. Pharmaceuticals Ltd.'s case (supra) that merely being a Director would not make a person liable for an offence that may have been committed by the Company. For launching a prosecution against the Directors of a Company under Section 138 read with Section 141 of the 1881 Act, there had to be a specific allegation in the complaint in regard to the part played by them in the transaction in question. It was also laid down that the allegations had to be clear and unambiguous showing that the Directors were in charge of and responsible for the business of the Company. This was done to discourage frivolous litigation and to prevent abuse of the process of Court and from embarking on a fishing expedition to try and unearth material against the Director concerned.

18. In this case, save and except for the statement that the Respondents, Mr. Rajiv Jain and Sarla Jain and some of the other accused, were Directors of the accused Companies and were responsible and liable for the acts of the said Companies, no specific allegation has been made against any of them. The question of proving a fact which had not been mentioned in the complaint did not, therefore, arise in the facts of this case. This has prompted the High Court to observe that the Bank had relied on the mistaken presumption that as Directors, Rajiv Jain, Sarla Jain and the other Directors were vicariously liable for the acts of the Company.

19. Admittedly, except for the aforesaid statement, no other material has been disclosed in the complaint to make out a case against the respondents that they had been in charge of the affairs of the Company and were responsible for its action. The High Court, therefore, rightly held that in the absence of any specific charge against the Respondents, the complaint was liable to be quashed and the respondents were liable to be discharged."

24. Their Lordships of Hon'ble Supreme Court in Rallis India Limited vs. Poduru Vidya Bhushan and ors. (2011) 13 Supreme Court Cases 88 : [2011 ALL MR (Cri) 1645 (S.C.)] have held that vicarious criminal liability can be inferred against partners of a firm when it is specifically averred in complaint about status of partners' "qua" the firm. Their Lordships have further held that caution must be kept in mind while quashing the proceedings under Section 482 Cr.P.C. Their Lordships have further held that where there are several disputed questions of fact rule of "specific averment" laid down in S.M.S. Pharmaceuticals case, (2005) 8 SCC 89 : [2005(5) ALL MR 1118 (S.C.)] must be broadly construed. Their Lordships have held as under:-

"10. Thus, in the light of the aforesaid averments as found by us in the Criminal Complaint, we are of the considered opinion that sufficient averments have been made against the Respondents that they were the partners of the firm, at the relevant point of time and were looking after day to day affairs of the partnership firm. This averment has been specifically mentioned by the Appellant in the complaint even though denied by the Respondents but the burden of proof that at the relevant point of time they were not the partners, lies specifically on them. This onus is required to be discharged by them by leading evidence and unless it is so proved, in accordance with law, in our opinion, they cannot be discharged of their liability. Consequently, High Court committed an error in discharging them. Also, at the cost of repetition, by virtue of their own submissions before the High Court (reproduced in Para 6 above), the Respondents have admitted the fact that the Appellant had referred to them in their capacity as partners who were incharge of the affairs of the firm in the initial complaints. The question as to whether or not they were partners in the firm as on 31.03.2004, is one of fact, which has to be established in trial. The initial burden by way of averment in the complaint has been made by the Appellant.

14. In the present case, there are several disputed facts involved - for instance, the date when the partnership came into being, who were the initial partners, if and when the Respondents had actually retired from the partnership firm etc. Strictly speaking, the ratio of the SMS Pharmaceuticals (supra) can be followed only, after the factum that accused were the Directors or Partners of a Company or Firm respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counter-allegations between the parties regarding the very composition of the firm, the above rule of 'specific averment' must be broadly construed.

15. Indeed, it would be nothing short of a travesty of justice if the Directors of a Company of Partners of a Firm, who, having duped a third-party by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the Company/Firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint - such a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding with respect to an offence under Section 141 of the Act, must be exercised keeping this advisory note and caveat in mind."

25. Their Lordships of Hon'ble Supreme Court in Anita Malhotra vs. Apparel Export Promotion Council and another (2012) 1 Supreme Court Cases 520 : [2011 ALL SCR 2910] have held that responsibility of Director in conducting affairs of accused company has to be strictly spelt out. Bald statement is not sufficient to proceed against the Director.

26. Their Lordships of Hon'ble Supreme Court in Amit Kapoor vs. Ramesh Chander and anr., 2012(9) Supreme Court Cases 460 : [2012 ALL MR (Cri) 3806 (S.C.)] have laid down following principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of a charge either in exercise of jurisdiction under Section 397 or Section 482 Cr.P.C. or together:

"25. Having examined the inter-relationship of these two very significant provisions of the Code, let us now examine the scope of interference under any of these provisions in relation to quashing the charge. We have already indicated above that framing of charge is the first major step in a criminal trial where the Court is expected to apply its mind to the entire record and documents placed therewith before the Court. Taking cognizance of an offence has been stated to necessitate an application of mind by the Court but framing of charge is a major event where the Court considers the possibility of discharging the accused of the offence with which he is charged or requiring the accused to face trial. There are different categories of cases where the Court may not proceed with the trial and may discharge the accused or pass such other orders as may be necessary keeping in view the facts of a given case. In a case where, upon considering the record of the case and documents submitted before it, the Court finds that no offence is made out or there is a legal bar to such prosecution under the provisions of the Code or any other law for the time being in force and there is a bar and there exists no ground to proceed against the accused, the Court may discharge the accused. There can be cases where such record reveals the matter to be so predominantly of a civil nature that it neither leaves any scope for an element of criminality nor does it satisfy the ingredients of a criminal offence with which the accused is charged. In such cases, the Court may discharge him or quash the proceedings in exercise of its powers under these two provisions.

26. This further raises a question as to the wrongs which become actionable in accordance with law. It may be purely a civil wrong or purely a criminal offence or a civil wrong as also a criminal offence constituting both on the same set of facts. But if the records disclose commission of a criminal offence and the ingredients of the offence are satisfied, then such criminal proceedings cannot be quashed merely because a civil wrong has also been committed. The power cannot be invoked to stifle or scuttle a legitimate prosecution. The factual foundation and ingredients of an offence being satisfied, the Court will not either dismiss a complaint or quash such proceedings in exercise of its inherent or original jurisdiction. In the case of Indian Oil Corporation v. NEPC India Ltd. & Ors. [(2006) 6 SCC 736], this Court took the similar view and upheld the order of the High Court declining to quash the criminal proceedings because a civil contract between the parties was pending.

27. Having discussed the scope of jurisdiction under these two provisions, i.e., Section 397 and Section 482 of the Code and the fine line of jurisdictional distinction, now it will be appropriate for us to enlist the principles with reference to which the courts should exercise such jurisdiction. However, it is not only difficult but is inherently impossible to state with precision such principles. At best and upon objective analysis of various judgments of this Court, we are able to cull out some of the principles to be considered for proper exercise of jurisdiction, particularly, with regard to quashing of charge either in exercise of jurisdiction under Section 397 or Section 482 of the Code or together, as the case may be :

(1) Though there are no limits of the powers of the Court under Section 482 of the Code but the more the power, the more due care and caution is to be exercised in invoking these powers. The power of quashing criminal proceedings, particularly, the charge framed in terms of Section 228 of the Code should be exercised very sparingly and with circumspection and that too in the rarest of rare cases.

(2) The Court should apply the test as to whether the uncontroverted allegations as made from the record of the case and the documents submitted therewith prima facie establish the offence or not. If the allegations are so patently absurd and inherently improbable that no prudent person can ever reach such a conclusion and where the basic ingredients of a criminal offence are not satisfied then the Court may interfere.

(3) The High Court should not unduly interfere. No meticulous examination of the evidence is needed for considering whether the case would end in conviction or not at the stage of framing of charge or quashing of charge.

(4) Where the exercise of such power is absolutely essential to prevent patent miscarriage of justice and for correcting some grave error that might be committed by the subordinate courts even in such cases, the High Court should be loathe to interfere, at the threshold, to throttle the prosecution in exercise of its inherent powers.

(5) Where there is an express legal bar enacted in any of the provisions of the Code or any specific law in force to the very initiation or institution and continuance of such criminal proceedings, such a bar is intended to provide specific protection to an accused.

(6) The Court has a duty to balance the freedom of a person and the right of the complainant or prosecution to investigate and prosecute the offender.

(7) The process of the Court cannot be permitted to be used for an oblique or ultimate/ulterior purpose.

(8) Where the allegations made and as they appeared from the record and documents annexed therewith to predominantly give rise and constitute a 'civil wrong' with no 'element of criminality' and does not satisfy the basic ingredients of a criminal offence, the Court may be justified in quashing the charge. Even in such cases, the Court would not embark upon the critical analysis of the evidence.

(9) Another very significant caution that the courts have to observe is that it cannot examine the facts, evidence and materials on record to determine whether there is sufficient material on the basis of which the case would end in a conviction, the Court is concerned primarily with the allegations taken as a whole whether they will constitute an offence and, if so, is it an abuse of the process of court leading to injustice.

(10) It is neither necessary nor is the court called upon to hold a full- fledged enquiry or to appreciate evidence collected by the investigating agencies to find out whether it is a case of acquittal or conviction.

(11) Where allegations give rise to a civil claim and also amount to an offence, merely because a civil claim is maintainable, does not mean that a criminal complaint cannot be maintained.

(12) In exercise of its jurisdiction under Section 228 and/or under Section 482, the Court cannot take into consideration external materials given by an accused for reaching the conclusion that no offence was disclosed or that there was possibility of his acquittal. The Court has to consider the record and documents annexed with by the prosecution.

(13) Quashing of a charge is an exception to the rule of continuous prosecution. Where the offence is even broadly satisfied, the Court should be more inclined to permit continuation of prosecution rather than its quashing at that initial stage. The Court is not expected to marshal the records with a view to decide admissibility and reliability of the documents or records but is an opinion formed prima facie.

(14) Where the charge-sheet, report under Section 173(2) of the Code, suffers from fundamental legal defects, the Court may be well within its jurisdiction to frame a charge.

(15) Coupled with any or all of the above, where the Court finds that it would amount to abuse of process of the Code or that interest of justice favours, otherwise it may quash the charge. The power is to be exercised ex debito justitiae, i.e. to do real and substantial justice for administration of which alone, the courts exist. {Ref. State of West Bengal & Ors. v. Swapan Kumar Guha & Ors. [AIR 1982 SC 949]; Madhavrao Jiwaji Rao Scindia & Anr. v. Sambhajirao Chandrojirao Angre & Ors. [AIR 1988 SC 709]; Janata Dal v. H.S. Chowdhary & Ors. [AIR 1993 SC 892]; Mrs. Rupan Deol Bajaj & Anr. v. Kanwar Pal Singh Gill & Ors. [AIR 1996 SC 309; G. Sagar Suri & Anr. v. State of U.P. & Ors. [AIR 2000 SC 754]; Ajay Mitra v. State of M.P. [AIR 2003 SC 1069]; M/s. Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors. [AIR 1988 SC 128]; State of U.P. v. O.P. Sharma [(1996) 7 SCC 705]; Ganesh Narayan Hegde v. s. Bangarappa & Ors. [(1995) 4 SCC 41]; Zundu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque & Ors. [AIR 2005 SC 9]; M/s. Medchl Chemicals & Pharma (P) Ltd. v. M/s. Biological E. Ltd. & Ors. [AIR 2000 SC 1869]; Shakson Belthissor v. State of Kerala & Anr. [(2009) 14 SCC 466]; V.V.S. Rama Sharma & Ors. v. State of U.P. & Ors. [(2009) 7 SCC 234]; Chunduru Siva Ram Krishna & Anr. v. Peddi Ravindra Babu & Anr. [(2009) 11 SCC 203]; Sheo Nandan Paswan v. State of Bihar & Ors. [AIR 1987 SC 877]; State of Bihar & Anr. v. P.P. Sharma & Anr. [AIR 1991 SC 1260]; Lalmuni Devi (Smt.) v. State of Bihar & Ors. [(2001) 2 SCC 17]; M. Krishnan v. Vijay Singh & Anr. [(2001) 8 SCC 645]; Savita v. State of Rajasthan [(2005) 12 SCC 338]; and S.M. Datta v. State of Gujarat & Anr. [(2001) 7 SCC 659]}.

(16) These are the principles which individually and preferably cumulatively (one or more) be taken into consideration as precepts to exercise of extraordinary and wide plenitude and jurisdiction under Section 482 of the Code by the High Court. Where the factual foundation for an offence has been laid down, the courts should be reluctant and should not hasten to quash the proceedings even on the premise that one or two ingredients have not been stated or do not appear to be satisfied if there is substantial compliance to the requirements of the offence."

27. Their Lordships of Hon'ble Supreme Court in Aparna S. Shah vs. Sheth Developers Private Limited and another (2013) 8 Supreme Court Cases 71 : [2013 ALL SCR 2824] have held that no one can be fastened with criminal liability for acts of others except as expressly provided by law. Their Lordships have further held that there is no vicarious liability in criminal law unless statute specifically provides for such fastening of liability. Their Lordships have held as under:-

"13. In order to constitute an offence under Section 138 of the N.I. Act, this Court, in Jugesh Sehgal vs. Shamsher Singh Gogi, (2009) 14 SCC 683, noted the following ingredients which are required to be fulfilled:

"(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;

(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;

(iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;

(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.

Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of Act."

Considering the language used in Section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, we are of the view that it is only the "drawer" of the cheque who can be made liable for the penal action under the provisions of the N.I. Act. It is settled law that strict interpretation is required to be given to penal statutes.

15. In S.K. Alagh vs. State of Uttar Pradesh and Others, (2008) 5 SCC 662, this Court held:

19. ......If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a Company or an employee cannot be held to be vicariously liable for any offence committed by the Company itself. (See Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581)"

16. In Sham Sunder and Others vs. State of Haryana, (1989) 4 SCC 630, this Court held as under:

"9. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not."

17. As rightly pointed out by learned senior counsel for the appellant, the interpretation sought to be advanced by the respondents would add words to Section 141 and extend the principle of vicarious liability to persons who are not named in it.

18. In the case on hand, we are concerned with criminal liability on account of dishonour of a cheque. It primarily falls on the drawer, if it is a Company, then Drawer Company and is extended to the officers of the company. The normal rule in the cases involving criminal liability is against vicarious liability. To put it clear, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. For example, Section 141 of the N.I. Act is an instance of specific provision that in case an offence under Section 138 is committed by a company, the criminal liability for dishonour of a cheque will extend to the officers of the company. As a matter of fact, Section 141 contains conditions which have to be satisfied before the liability can be extended. Inasmuch as the provision creates a criminal liability, the conditions have to be strictly complied with. In other words, the persons who had nothing to do with the matter, need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, the officers of the company, who are responsible for the acts done in the name of the company, are sought to be made personally liable for the acts which result in criminal action being taken against the company. In other words, it makes every person who, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. It is true that the proviso to sub- section enables certain persons to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. The liability under Section 141 of the N.I. Act is sought to be fastened vicariously on a person connected with the company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability.

21. The above discussion with reference to Section 138 and the materials culled out from the statutory notice, reply, copy of the complaint, order, issuance of process etc., clearly show that only the drawer of the cheque being responsible for the same.

28. We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the N.I. Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents. In such circumstances, it cannot be concluded that the trial is in advanced stage.

28. Their Lordships of Hon'ble Supreme Court in GHCL Employees Stock Option Trust vs. India Infoline Limited (2013) 4 SCC 505 : [2013 ALL MR (Cri) 4423 (S.C.)] have held that the order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The Magistrate has to record his satisfaction with regard to the existence of a prima facie case on the basis of specific allegations made in the complaint supported by satisfactory evidence and other material on record. Their Lordships have held as under:-

"13. There is no dispute with regard to the legal proposition that the case of breach of trust or cheating are both a civil wrong and a criminal offence, but under certain situations where the act alleged would predominantly be a civil wrong, such an act does not constitute a criminal offence.

19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against respondent Nos.2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in the case of M/s.Thermax Ltd. & Ors. vs. K.M. Johny & Ors. 2011 (11) SCALE 128, & ors. while dealing with a similar case, this Court held as under :-

"20. Though Respondent No.1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of settling his dispute with appellant-Company by initiating the criminal prosecution, it is pointed out that appellant Nos. 2 to 8 are the Ex-Chairperson, Ex-Directors and Senior Managerial Personnel of appellant No.1 - Company, who do not have any personal role in the allegations and claims of Respondent No.1. There is also no specific allegation with regard to their role

21. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant-Company."

29. Accordingly, in view of the observations and discussion made hereinabove, Cr.MMO No.4088/2013, Cr.MMO No. 4089/2013, Cr.MMO No.4090/2013 and 4091/2013 are partly allowed. The impugned order dated 30.8.2013 passed by the learned Judicial Magistrate, 1st Class, Court No.2, Nalagarh, District Solan, H.P.. qua petitioners No.3 and 4, in all the complaints filed by the respondent, is quashed. The pending application(s), if any, also stands dismissed. No costs.

Ordered accordingly.