What is basic concept of S 141 of Negotiable instruments Act?

 Section 141 of the Negotiable Instruments Act deals with vicarious liability when the drawer of the dishonoured cheque is a company or firm, not a natural person. It says that along with the company, every person who at the time of the offence was in charge of and responsible for the conduct of its business can also be prosecuted, subject to the statutory defence that the offence occurred without his knowledge or despite due diligence.

Interview answer

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Supreme Court: Whether the Magistrate should issue process against Managing director of company if offence is committed by Company?

 In the present case, however, this principle is applied in an exactly reverse scenario. Here, company is the accused person and the learned Special Magistrate has observed in the impugned order that since the Appellants represent the directing mind and will of each company, their state of mind is the state of mind of the company and, therefore, on this premise, acts of the company is attributed and imputed to the Appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would run contrary to the principle of vicarious liability detailing the circumstances under which a direction of a company can be held liable. {Para 36}

37. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

38. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

39. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada (supra), the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company. 

13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the Company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the Respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.

17. The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 34 of 2015.

Decided On: 09.01.2015

Sunil Bharti Mittal Vs. Central Bureau of Investigation

Hon'ble Judges/Coram:

H.L. Dattu, C.J.I., Madan B. Lokur and A.K. Sikri, JJ.

Author: A.K. Sikri, J.

Citation:  MANU/SC/0016/2015,2015 INSC 18.

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Is every claim for a license fee for the remainder of a lock-in period in a leave and license agreement considered a claim for damages?

 (e) Every claim for license fee for the remainder of a lock-in period in a leave and license agreement is not per se a claim for damages, liquidated or unliquidated. In a given case, it may be in the nature of either, or in the nature of a penalty, or it may simply be a component of the contractual consideration and therefore a debt properly so-called when the contingency in contemplation comes to pass. This will depend on an interpretation of the contract in question and an assessment of the conduct of the parties.

 IN THE HIGH COURT OF BOMBAY

Company Petition No. 496 of 2013

Decided On: 28.02.2014

 Indiabulls Properties Pvt. Ltd.  Vs. Treasure World Developers Pvt. Ltd.

Hon'ble Judges/Coram:

G.S. Patel, J.

Citation: MANU/MH/0249/2014,2014 SCCOnLine Bom 4768.

Read full Judgment here: Click here

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Is a contractual provision for a lock-in period in a leave and license agreement illegal?

The result of this discussion, in summary, is that for the purposes of Section 433 of the Companies Act, 1956:

(a) The liability of the respondent-company must be certain. Where the liability is to be adjudged, i.e., where it remains to be decided by a court whether or not the respondent-company is liable in the first place, there can be no 'debt' within the meaning of the section. The liability of a company is its obligation to pay. The debt is the amount that it is liable to pay.

(b) The debt must an ascertained, or definitely ascertainable, amount, not one that requires adjudication. 13 A claim in damages is no debt. 14

(c) The debt must be a debt now due at the time of presentation of the petition. Any contingency contemplated must be one that has come to pass; it cannot be one yet to occur. 15 It is on the happening of a contingency that a company can be said to be 'indebted'. Should the contingency never happen, there can be no debt .24

(d) A contractual provision in a leave and license agreement for a lock-in period is not per se illegal, unlawful, void or even voidable.

(e) Every claim for license fee for the remainder of a lock-in period in a leave and license agreement is not per se a claim for damages, liquidated or unliquidated. In a given case, it may be in the nature of either, or in the nature of a penalty, or it may simply be a component of the contractual consideration and therefore a debt properly so-called when the contingency in contemplation comes to pass. This will depend on an interpretation of the contract in question and an assessment of the conduct of the parties. {Para 64}

 IN THE HIGH COURT OF BOMBAY

Company Petition No. 496 of 2013

Decided On: 28.02.2014

 Indiabulls Properties Pvt. Ltd.  Vs. Treasure World Developers Pvt. Ltd.

Hon'ble Judges/Coram:

G.S. Patel, J.

Citation: MANU/MH/0249/2014,2014 SCCOnLine Bom 4768.

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Is the Company's Authorized Signatory, as the Drawer of a Cheque, Liable to Pay Interim Compensation U/S 143A of the NI Act?

 For the reasons stated above questions framed above are answered as below:-

(i) The signatory of the cheque, authorized by the "Company", is not the drawer in terms of section 143A of the NI Act and cannot be directed to pay interim compensation under section 143A.

(ii) In an appeal under section 148 of NI Act filed by persons other than "drawer" against the conviction under section 138 of the NI Act, a deposit of a minimum sum of 20% of the fine or compensation is not necessary.

However, in an appeal filed by persons other than "drawer" against the conviction under section 138 of the NI Act such power to direct deposit of compensation is available with the Appellate Court while suspending sentence under section 389 of code of criminal procedure. {Para 51}

IN THE HIGH COURT OF BOMBAY

Criminal Application No. 886 of 2022, 

Decided On: 08.03.2023

Lyka Labs Limited and Ors.  Vs. The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Amit B. Borkar, J.

Citation: MANU/MH/0799/2023,2023 Lawweb (Bom HC ) 19.

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Under which circumstances power of attorney holder can sub-delegate his powers?

 A bare perusal of the complaint filed by the appellant-company reveals that it has been filed in the name of the company through its authorised representative, Ripanjit Singh Kohli. Therefore, the complaint is by the appellant company in its own name. It has not been filed in the name of the power of attorney holder. The complainant, that is the appellant company is entitled to file the complaint in its own name through its power of attorney holder. {Para 9}

10. There is a general power of attorney of the appellant company in favour of one of its directors, Kavindersingh Anand. The said power of attorney was executed after it was duly approved by the board of directors in its meeting dated 01.05.2010. Therefore, one of the directors of the appellant-company, i.e. Kavindersingh Anand is holding power of attorney of the appellant-company and is the true and lawful attorney of the same.

11. The said power of attorney explicitly authorises him to appoint “counsel” or “special attorneys” for conducting all cases or otherwise to do all other acts and things for due prosecution or defence of legal or quasi legal proceedings anywhere in the world.

12. The aforesaid power of attorney Kavindersingh Anand, on the strength of the aforesaid power of attorney, authorised Ripanjit Singh Kohli to lodge the aforesaid complaint.

13. The law is settled that though the general power of attorney holder cannot delegate his powers to another person but the same can be delegated when there is a specific clause permitting sub-delegation. A careful reading of the general power of attorney would reveal that the appellant-company in its meeting of the board of directors held on 1st May, 2010 has resolved to appoint one of its directors Kavindersingh Anand as its attorney of the company who was specifically authorised vide paragraph 2 to appoint counsels or special attorney(s).

The language deployed, i.e., to appoint special attorneys is clear enough to indicate that the power of attorney holder has been authorised to appoint special attorneys in addition to the counsel for conducting cases and for doing other relevant and material acts in that connection. The use of the words “to appoint counsels or special attorneys” would not mean that he was authorised only to appoint counsel or special counsel for the purpose. The use of the word ‘counsel’ and ‘special attorney’ have different connotations. The use of the aforesaid words to appoint counsels or special attorneys in paragraph 2 of the power of attorney is quite distinct and refers to not only to appointment of counsel but of special attorneys other than the counsel. This is implicit upon the reading of paragraph 16 of the power of attorney which specifically deals with the appointment of solicitors, counsels, advocates, other consultants or professionals, but does not refer to attorneys. Therefore, a combined reading of paragraph 2 and paragraph 16 of the power of attorney would bring home the fact that the power of

attorney holder was authorised to appoint special attorney other than the counsel for the purposes for conducting and prosecution of cases on behalf of the appellant-company. This apart, the power of attorney holder was appointed under the resolution of the board of directors of the appellant company and the draft of the power of attorney was duly approved by the board. The said power of attorney as discussed above do provide for the sub-delegation of the functions of the general power of attorney holder and thus the filing of the complaint on behalf of the appellant company through its authorised representative Ripanjit Singh Kohli is not at all illegal or bad in law.

Non-Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. OF 2023

MITA INDIA PVT. LTD. Vs  MAHENDRA JAIN 

Author: PANKAJ MITHAL, J.

February 20, 2023.

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Whether directors of a Company can escape liability under The Drugs and Cosmetics Act on the ground that they were not involved in the production of Drugs?

More particularly, the principle laid down in Section 141 of the NI Act (which is pari materia with identical sections in other Acts like the Food Safety and Standards Act, 2006; the erstwhile Prevention of Food Adulteration Act, 1954; etc.) is susceptible to abuse by unscrupulous companies to the detriment of unsuspecting third parties."

17. The interpretation of the expressions used in Section 141 of N.I Act, cannot be applied to Section 34 of Drugs and Cosmetics Act, though if read in isolation look in pari materia. When the offences are not cognate and enabling section to prosecute the Company a juristic body, has to be necessarily read along with the offence charged. Applying the interpretation of Section 141 of N.I Act to the other Acts ignoring the nature of the offence charged will lead to miscarriage of justice.

24. The offences and the offenders in the case of this nature is manufacturing and distribution of sub-standard drugs by a Company which is managed by its Board of Directors. The decision to manufacture the drugs is the collective decision of the Board of Directors. Therefore, the Directors cannot claim that they are not directly involved in the product of the drugs, when the decision to produce the drugs itself is the outcome of their decision. Therefore, the case of Directors signing the cheque on behalf the Company and the case of Directors participating in the decision to produce sub-standard drugs are not one and the same to hold that these petitioners are not involved in day-to-day affairs of the Company.

25. This Court, on considering the facts of the case in the light of the judgments discussed above holds that the contention of the petitioners is wholly unsustainable. If the said preposition is accepted it will go against the object and reasons of the legislations namely Drugs and Cosmetics Act.

IN THE HIGH COURT OF MADRAS

Crl. O.P. No. 11184 of 2019 and Crl. M.P. No. 5726 of 2019

Decided On: 12.10.2022

Vikas Rambal and Ors.  Vs. The State

Hon'ble Judges/Coram:

Dr. G. Jayachandran, J.

Citation: MANU/TN/7622/2022

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Whether Magistrate can summon directors of Company along with Company if there are no specific allegations against them?

  No doubt, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.{Para 42}

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the

Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of “alter ego”, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.”

8.1 In the case of Maksud Saiyed v. State of Gujarat, (2008) 5 SCC

668, in paragraph 13, it is observed and held as under:

“13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company when the accused is the company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. Even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.”

8.2 As observed by this Court in the case of Pepsi Foods Ltd. v.

Special Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in

catena of decisions, summoning of an accused in a criminal case is aserious matter. Criminal Law cannot be set into motion as a matter of course. In paragraph 28 in Pepsi Foods Limited (supra), it is observed  and held as under:

“28. Summoning of an accused in a criminal case is a serious matter.

Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. 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. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient

for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.”

8.3 As held by this Court in the case of India Infoline Limited (supra), in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.1047-1048/2021

Ravindranatha Bajpe  Vs  Mangalore Special Economic Zone Ltd. & Others

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Whether court should grant eviction decree on the ground of subletting if the tenant is not in control of business of the company working in rented premises?

In Sait Nagjee Purushotham (supra), the question was whether the partnership firm which was converted into a company had all the partners of the firm as the Directors. No evidence was led to show that the Directors were the same, accordingly, the Court held that there were subletting and observed as under:

"20. In view of the ratio laid down by this Court in the aforesaid decisions, various tests were laid down obtaining in the facts of each case. But the common ratio which runs in all these cases is that if there is voluntary transfer by the company to a newly incorporated company then in that case one has to plead and prove that all the members of the old firm continued in the new firm and it is essentially the same. The only exception which has been made is that the transfer of the old company to a new one is under the statute or law. Therefore, in the present case after verifying the records of the case, we have found that all the three courts have consistently observed that the benefit of Section 11(17) of the Act cannot be extended to the appellant in this case and we are of opinion that the view taken by the courts below is correct and there is no ground to interfere in this appeal."

25. Subsequent to the judgment in Sait Nagjee Purushotham (supra), the Supreme Court considered this very issue in Santosh Ajit Sachdeva and Ors. v. Anoopi Shahani, MANU/SC/7841/2007 : (2007) 7 SCC 675 wherein, on the question of subletting the Supreme Court observed as under:

"8. All other cases referred by learned Counsel were also examined and we do not feel any need to refer any more of them. The theory of lifting the corporate veil has been accepted in certain circumstances which have already been referred by this Court in a series of decisions. However, so far as this case is concerned, as per the finding of fact recorded by the appellate court as well as by the High Court that the appellant-defendant has not been able to successfully prove that she is controlling the company, it was held by the appellate court that merely by holding a large number of shares is not sufficient but something more is required to prove that she is actually controlling and managing the business herself. That finding of the Appellate Court has been upheld by the High Court. Hence, in view of the concurrent finding of both the courts below, there is no reason for us to take a different view of the matter. Hence, we do not find any merit in this appeal and accordingly the appeal stands dismissed. No order as to costs."

Thus, as per the judgment in Santosh Ajit Sachdeva and Ors. (supra), it is merely not enough for a tenant to hold a large number of shares in a company, something more would be required.

Conclusion

26. Applying the tests laid down in the above three decisions of the Supreme Court to the facts of the present case, the admitted facts show that there are three companies functioning from the tenanted premises. Two of the companies were incorporated by third persons. The tenants became Directors in the company a few years after incorporation. The companies had their registered office in the tenanted premises since inception. The exact shareholding of these Directors and their control is not clear to the Court. No evidence has been led to show as to who is in charge of the day to day handing of the business of these companies. In any event, the fact that there are other Directors in the companies and other shareholders itself shows that the corporate reflection and image of the said companies cannot be only Mr. Arun Kumar Jain and Ms. Archana Jain. Even going by the tests laid down in Madras Bangalore Transport Co. (supra), this is a clear case of subletting in view of the third-party Directors and shareholders in the said two companies. Under these circumstances, though not on the question of res judicata, even on merits, the finding of the ARC that there is subletting does not deserve to be interfered with.

 IN THE HIGH COURT OF DELHI

CM (M) 600/2019, CM Appls. 17972, 20292 and 20409/2019

Decided On: 19.02.2020

 Arun Kumar Jain  Vs.  Bhagwant Singh Pabla 

Hon'ble Judges/Coram:

Prathiba M. Singh, J.

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Whether offence for dishonour of cheque is made out if accused company was declared as sick by BIFR order?

The submission of the learned counsel for the complainants that in view of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 coming into force w.e.f. 01.12.2016, the statutory disability to prosecute the accused is removed, cannot be countenanced. Nor it is necessary to consider the provisions of the saving clause in juxtaposition with Section 6 of the General Clauses Act, 1897. The statutory immunity available under Section 22 of the SICA may not be available w.e.f. 01.12.2016. However, in view of the observations in paragraph 19 of Kusum Ingots, it must be held that the offence under Section 138 of the Act was not complete and the order of issuance of process is unsustainable. The offence not complete, not because there was a statutory bar, but as explained by the Apex Court, because the directors of the company were prevented by reasons beyond their control from honouring the cheques. The repeal of SICA, cannot breathe life in the complaint which was still born since the offence was not complete as on the date of the issuance of process by the learned Magistrate.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Criminal Writ Petition No. 740 of 2018

Decided On: 09.07.2019

 NRC Limited  Vs.  Fuel Corporation of India 

Hon'ble Judges/Coram:

R.B. Deo, J.

Citation: 2020(1) MHLJ 269

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Whether subletting can be inferred if portion of tenanted premises is in possession of Company?

It may be recalled that the decree for eviction against the appellant has been passed on the ground that though subletting of the premises for rent has not been proved, yet the appellant must be held to have parted with possession of a portion of the premises to the club and such parting with possession would attract Section 13(1)(e) of the Rajasthan Premises (Control) of Rent & Eviction Act, 1950 (for short the Act). On a reading of Sub-clause (e) of Section 13(1), it is seen that a tenant will render himself liable for eviction if he has "assigned, sublet or otherwise parted with the possession of, the whole or any part of the premises without the permission of landlord." Consequently even if a tenant parts with possession of the whole or any part of the premises without assigning or subletting the premises, he would still be liable to be evicted from the premises under the Act. If from this perspective, the user of the premises by the club is examined, it can certainly be held that the Appellant had parted with the possession of the premises as envisaged in Clause (e) of sub-section 1 of Section 13. This conclusion is warranted by several factors. Admittedly, when the club began to function in the leased premises, a name board carrying the name of the Club came to be exhibited in the premises. It is also admitted that the members of the club assemble at the premises everyday and play cards and other indoor games from evening till about midnight Though the appellant would say that the club members cannot have access to the premises unless he or in his absence his brother or son opens the premises, there is no evidence to show that the appellant had at any time exercised his right to exclusive possession and kept the premises locked and denied the members of the club entry to the premises. That apart there is a significant fact which has escaped the notice of the Appellate Court and the High Court viz that the club has its registered office at the leased premises. Section 146 of the Indian Companies Act enjoins every company to have a registered office to which all communications and notices may be addressed . Once a company has a registered office it is bound to comply with several provisions of the Companies Act, viz. (a) the register of members is to be kept there (Section 163) ; (b) the right of inspection has to take place there (Section 163) ; (c) the register of directors, etc,, is also to be kept there (Section 303) ; (d) the account books are to be maintained there unless the directors decide otherwise (Section 20); e) the register of mortgages and charges and copies of registered documents are also to be kept there (Section 143) ; and the right of inspection of them is to be exercised there (Section 144) ; (f) service of documents should be effected there. These requirements of the Act of the have to be complied with by the club by virtue of its registered office being situated in the leased premises. The appellant cannot prevent the club from performing its statutory duties so long as the club has its registered office in the premises. Hence this factor also warrants the view that the appellant had parted with possession of the major portion of the premises to the club. In such circumstances we see no merit in the contention of the appellant that the user of a portion of the premises by the club is only of a permissive nature and that there was no parting with possession of the premises to the club. The Appellate Court and the High Court were therefore, right in holding that the user of the premises by the club would amount to the appellant having parted with possession of a portion of the premises" as contemplated under Section 13(1) (e) of the Act.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 855 of 1978 and C.M.P. No. 906 of 1979

Decided On: 29.03.1989

Roop Chand  Vs. Gopi Chand Thelia

Hon'ble Judges/Coram:

R.S. Pathak, C.J. and S. Natarajan, J.

Citation: AIR 1989 SC 183

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What are essential requirement for prosecuting director of company along with company for rash and negligent act?

 By applying the ratio laid down by this Court in the case of Sunil Bharti Mittal MANU/SC/0016/2015 : (2015) 4 SCC 609 it is clear that an individual either as a Director or a Managing Director or Chairman of the company can be made an Accused, along with the company, only if there is sufficient material to prove his active role coupled with the criminal intent. Further the criminal intent alleged must have direct nexus with the Accused. Further in the case of Maksud Saiyed v. State of Gujarat and Ors. MANU/SC/7923/2007 : (2008) 5 SCC 668 this Court has examined the vicarious liability of Directors for the charges levelled against the Company. In the aforesaid judgment this Court has held that, the Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the Company, when the Accused is a Company. It is held that vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the Statute. It is further held that Statutes indisputably must provide fixing such vicarious liability. It is also held that, even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1263 of 2019 

Decided On: 23.08.2019

Shiv Kumar Jatia  Vs. State of NCT of Delhi

Hon'ble Judges/Coram:

Abhay Manohar Sapre and R. Subhash Reddy, JJ.

Citation: AIR 2019 SC 4463

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Whether it is mandatory to issue notice to each director if dishonour of cheque is committed by company?

 Section 141 states that if the person committing an offence Under Section 138 is a Company, every director of such Company who was in charge of and responsible to that Company for conduct of its business shall also be deemed to be guilty. The reason for creating vicarious liability is plainly that a juristic entity i.e. a Company would be run by living persons who are in charge of its affairs and who guide the actions of that Company and that if such juristic entity is guilty, those who were so responsible for its affairs and who guided actions of such juristic entity must be held responsible and ought to be proceeded against. Section 141 again does not lay down any requirement that in such eventuality the directors must individually be issued separate notices Under Section 138. The persons who are in charge of the affairs of the Company and running its affairs must naturally be aware of the notice of demand Under Section 138 of the Act issued to such Company. It is precisely for this reason that no notice is additionally contemplated to be given to such directors. The opportunity to the 'drawer' Company is considered good enough for those who are in charge of the affairs of such Company. If it is their case that the offence was committed without their knowledge or that they had exercised due diligence to prevent such commission, it would be a matter of defence to be considered at the appropriate stage in the trial and certainly not at the stage of notice Under Section 138.

15. If the requirement that such individual notices to the directors must additionally be given is read into the concerned provisions, it will not only be against the plain meaning and construction of the provision but will make the remedy Under Section 138 wholly cumbersome. In a given case the ordinary lapse or negligence on part of the Company could easily be rectified and amends could be made upon receipt of a notice Under Section 138 by the Company. It would be unnecessary at that point to issue notices to all the directors, whose names the payee may not even be aware of at that stage. 

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1220 of 2009

Decided On: 06.05.2015

 Kirshna Texport and Capital Markets Ltd. Vs. Ila A. Agrawal and Ors.

Hon'ble Judges/Coram:

Pinaki Chandra Ghose and U.U. Lalit, JJ.

Citation: (2015) 8 SCC 28

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Whether Power of Attorney holder can sign and file complaint petition on behalf of complainant in cheque dishonour case?

 The three Judge Bench of the Apex Court in A.C. Narayanan tagged Cri. Appeal No. 2724 of 2008 alongwith Criminal appeal No. 73 of 2007 and in terms of the reference order formulated the following questions:

15) In terms of the reference order, the following questions have to be decided by this Bench:

(i) Whether a Power of Attorney holder can sign and file a complaint petition on behalf of the complainant?/Whether the eligibility criteria prescribed by Section 142(a) of NI Act would stand satisfied if the complaint petition itself is filed in the name of the payee or the holder in due course of the cheque?

(ii) Whether a Power of Attorney holder can be verified on oath under Section 200 of the Code?

(iii) Whether specific averments as to the knowledge of the Power of Attorney holder in the impugned transaction must be explicitly asserted in the complaint?

(iv) If the Power of Attorney holder fails to assert explicitly his knowledge in the complaint then can the Power of Attorney holder verify the complaint on oath on such presumption of knowledge?

(v) Whether the proceedings contemplated under Section 200 of the Code can be dispensed with in the light of Section 145 of the N.I. Act which was introduced by an amendment in the year 2002?"

32. While deciding whether there was any conflict between the decision in M.M.T.C. Ltd. and Anr. Vs. Medchl Chemicals and Pharma (P) Ltd. and Anr. MANU/SC/0728/2001 : (2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. Vs. Indusind Bank Ltd. and Ors., MANU/SC/1030/2004 : (2005) 2 SCC 217 the Apex Court after considering the factual details and ultimate dictum laid down in both the decisions held as under:

"19. As noticed hereinabove, though Janki Vashdeo Bhojwani (supra), relates to powers of Power of Attorney holder under CPC but it was concluded therein that a plaint by a Power of Attorney holder on behalf of the original plaintiff is maintainable provided he has personal knowledge of the transaction in question. In a way, it is an exception to a well settled position that criminal law can be put in motion by anyone [vide Vishwa Mitter (supra)] and under the Statute, one stranger to transaction in question, namely, legal heir etc., can also carry forward the pending criminal complaint or initiate the criminal action if the original complainant dies [Vide Ashwin Nanubhai Vyas vs. State of Maharashtra MANU/SC/0101/1966 : (1967) 1 SCR 807. Keeping in mind various situations like inability as a result of sickness, old age or death or staying abroad of the payee or holder in due course to appear and depose before the Court in order to prove the complaint, it is permissible for the Power of Attorney holder or for the legal representative(s) to file a complaint and/or continue with the pending criminal complaint for and on behalf of payee or holder in due course. However, it is expected that such power of attorney holder or legal representative(s) should have knowledge about the transaction in question so as to able to bring on record the truth of the grievance/offence, otherwise, no criminal justice could be achieved in case payee or holder in due course, is unable to sign, appear or depose as complainant due to above quoted reasons. Keeping these aspects in mind, in MMTC (supra), this Court had taken the view that if complaint is filed for and on behalf of payee or holder in due course, that is good enough compliance with Section 142 of N.I. Act".

........

23) In the light of the discussion, we are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the N.I. Act. An exception to the above is when the power of attorney holder of the complainant does not have a personal knowledge about the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainant-payee and the attorney holder alone is personally aware of the transactions, there is no reason why the attorney holder cannot depose as a witness. Nevertheless, an explicit assertion as to the knowledge of the Power of Attorney holder about the transaction in question must be specified in the complaint. On this count, the fourth question becomes infructuous.

...

24) In view of the discussion, we are of the opinion that the attorney holder cannot file a complaint in his own name as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. We also reiterate that where the payee is a proprietary concern, the complaint can be filed (i) by the proprietor of the proprietary concern, describing himself as the sole proprietor of the "payee"; (ii) the proprietary concern, describing itself as a sole proprietary concern, represented by its sole proprietor; and (iii) the proprietor or the proprietary concern represented by the attorney holder under a power of attorney executed by the sole proprietor.

25) Similar substantial questions were raised in the appeal arising out of S.L.P. (Crl.) No. 2724 of 2008, which stand answered as above. Apart from the above questions, one distinct query was raised as to whether a person authorized by a Company or Statute or Institution can delegate powers to their subordinate/others for filing a criminal complaint? The issue raised is in reference to validity of sub-delegation of functions of the power of attorney. We have already clarified to the extent that the attorney holder can sign and file a complaint on behalf of the complainant-payee. However, whether the power of attorney holder will have the power to further delegate the functions to another person will completely depend on the terms of the general power of attorney. As a result, the authority to sub-delegate the functions must be explicitly mentioned in the general power of attorney. Otherwise, the sub-delegation will be inconsistent with the general power of attorney and thereby will be invalid in law. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.

26) While holding that there is no serious conflict between the decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the position and answer the questions in the following manner:

(i) Filing of complaint petition under Section 138 of N.I. Act through power of attorney is perfectly legal and competent.

(ii) The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.

(iii) It is required by the complainant to make specific assertion as to the knowledge of the power of attorney

holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.

(iv) In the light of Section 145 of N.I. Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the N.I. Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act.

(v) The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person."

33. It is sought to be contended that the reference in A.C. Narayanan (supra) was made in Criminal Appeal No. 73 of 2007, which was arising from a complaint filed by an individual person. Seeking to make distinction between complaints filed by juristic and non-juristic person, the learned counsel for the Complainant-company has sought to contend that the ratio laid down by the Apex court in A.C. Narayanan (supra) is not applicable to the complaints filed by a juristic person.

34. A plain reading of the judgment in A.C. Naraynan (supra) reveals that though the reference was in Criminal Appeal No. 73 of 2007, the Apex Court had tagged and heard Criminal appeal No. 2724 of 2008 along with criminal appeal No. 73 of 2007. The Criminal Appeal No. 2724 of 2008 relates to the complaint under section 138 of the NI Act filed by the Power of Attorney on behalf of the Company. The decisions in A.C. Narayanan (supra) MANU/SC/0934/2013 : 2014 AIR SC 630 and MANU/SC/0075/2015 : 2015 AIR SC 1198 reveal that both these appeals were heard together as they involved common question of law. Hence, the distinction sought to be drawn by the learned counsel Shri Yashpal Thakur is factually incorrect.

35. It is pertinent to note that in the aforesaid decision the Apex Court has interpreted Section 142(a) of the NI Act, which provides that no Court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque. This section prescribes the procedure for taking cognizance of offences punishable under Section 138 of the NI Act. This section which is an exception to the general rule that anyone can set the criminal law in motion, mandates that no court shall take cognizance of an offence under Section 138 of NI Act unless the complaint is made in writing by a payee or by a holder in due course, as the case may be.

36. It is thus, evident that the payee/holder in due course of the cheque is alone competent to file a complaint under section 138 of the N.I. Act. In case the payee is a company, the complaint should necessarily be filed in the name of the company. However, company being a juristic person it can act only through a representative authorised by the Board of Directors either by a resolution or by executing a power of attorney.

37. In A.C. Narayanan (supra), the Apex Court after considering the scope of Section 138, 142 and 145 of N.I. Act, has held that the payee or the holder in due course can authorise his constituted attorney to make a complaint under Section 138 of the Act and depose on oath before the Court provided constituted attorney has witnessed the transaction as an agent of the payee/holder in due course or possesses due knowledge of the transaction. It is to be noted that the Act does not prescribe a separate procedure for the complaints filed by juristic and non-juristic person. Furthermore, the Apex Court has not made any such distinction in A.C. Naraynan (supra). Hence, it is not possible to accept the contention of the learned counsel for the Complainant-company that the principles enunciated in the said decision are restricted only to the complaints filed by an individual person and not by a juristic person.

38. At this stage, it would also be advantageous to refer to the provisions under Sections 118(a) and 139 of the NI Act. Section 118(a) of the NI Act raises a presumption that until contrary is constituted attorney of the proved; every negotiable instrument was made or drawn for consideration, whereas Section 139 of the NI Act raises a presumption that unless the contrary is proved, the holder of the cheque received the cheque for the discharge of whole or part of any debt or liability. The presumptions under Sections 118(a) and 139 of the NI Act are rebuttable in nature. The presumption under these provisions need not be rebutted only by adducing direct evidence but can be rebutted on the basis of the facts elicited in the cross examination. Suffice it to say that the power of attorney will not be competent to depose in respect of a transaction of which he has no knowledge. As a result thereof, the accused will be precluded from effectively cross examining the power of attorney and eliciting the required material to dislodge the statutory presumption. It is therefore imperative that the power of attorney authorised by an individual or juristic person has knowledge of the transaction. In the light of above, the contention of the learned counsel Shri Yashpal Thakur that the power of attorney appointed by a juristic person need not have personal knowledge of the transaction needs to be rejected.

39. In my considered view, the principles laid down in A.C. Narayanan that the power of attorney who files complaint for the offence punishable under section 138 of NI Act and deposes on behalf of the payee must essentially have personal knowledge of the transaction are also applicable to complaints filed by a juristic person.

40. It is to be noted that there were divergent views between various High Courts on the question whether the power of attorney could depose on behalf of the principal. In Dr. Pradeep Mohanbhai Vs. Mingel Karlos Dais 2000 volume 102 (1) Bombay L.R. 908 this High Court has held that a power of attorney can file a complaint under section 138 of the NI Act but cannot depose on behalf of the complainant. He can only appear as a witness. Similar view was taken by the Rajasthan High Court in Shambhudatta Shastri Vs. State of Rajasthan MANU/RH/0397/1985 : 1986 (2) WLN 713 and Ramprasad Vs. Harinarayan & ORs MANU/RH/0233/1998 : AIR 1998 Rajasthan 185. Whereas a contrary view was taken by this High Court in Humberto Luis & Anr. Vs. Floriano Luis Armando Luis and Anr. MANU/MH/0240/2000 : 2000 (2) BOM.C.R. 754. The Apex Court in Janki Bhojwani vs. Indusind Bank Ltd. MANU/SC/1030/2004 : (2005) 2 SCC 217 has held that the view taken by the Rajasthan High Court in the case of Shamhudatta Shastri followed and reiterated in the case of Ramprasad is the correct view. The Apex Court has held that the view taken in the case of Floraino Luis cannot be said to have laid down a correct law and accordingly overruled the same. Thus, the controversy over the issue whether the power of attorney could file a complaint and whether he could depose on behalf of the complainant was set to rest by the Apex Court in Janki Bhojwani (supra). This decision clearly sets out that the power of attorney is entitled to file a complaint and depose provided he has personal knowledge of the transaction in question.

41. In A.C. Narayanan, (supra) the Apex Court while interpreting the provisions of section 142(a) and 145 which are procedural in nature and were already existing on the statute book as on the date of filing of the complaint, reiterated that the power of attorney is competent to file a complaint under section 138 of the NI Act and to depose before the Court provided he has knowledge of the transaction in question. The Apex Court has neither laid down a new proposition of law on the subject nor upset the settled position of law. The said decision also does not affect any vested or substantial right of the parties. Hence, there is no merit in the contention of the learned counsel Shri Yashpal Thakur that the principles enunciated in A.C. Narayanan (supra) operate prospectively and not retrospectively.

42. In Girish Jaggal (supra) the accused had sought quashing of proceedings under Section 138 of the NI Act on the ground that the complaint did not contain specific assertion that the power of attorney holder had the knowledge of the transaction. The Single Judge of this Court held that the defect if any, can always be rectified even at a subsequent stage and therefore the complaint cannot be quashed on the sole ground that the complaint does not contain a specific assertion as to the knowledge of transaction. In the present case, the Complainant-company had not tried to rectify the defect and the case has well passed the stage of rectification. Hence, the said Judgment is not applicable to the facts of the case.

IN THE HIGH COURT OF BOMBAY

Criminal Revision Application No. 432 of 2015

Decided On: 14.03.2017

Jaimin Jewellery Exports Pvt. Ltd. Vs. The State of Maharashtra and Ors.

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Whether director of company can be made accused in cheque dishonour case if cheque does not bear his signature?

 Now, turning towards the second point, it is to be noted that as regards accused nos. 02 to 12, only at two places, same statement has been made by the complainant, that they are the directors of accused no. 01, who are in-charge and responsible for the conduct of the affairs of the company. The complainant has not given what is the nomenclature and how each one of accused nos. 02 to 12 is in-charge. Admittedly, accused nos. 02 to 12 are not the signatories to the disputed cheques. In fact, in para no. 05 of the complaint, the complainant has stated that accused nos. 01 to 12 issued a cheque ..... None of them i.e. accused nos. 02 to 12 had issued that cheque but somebody else is the signatory to the cheque. This fact is also suppressed by the complainant. The learned Magistrate ought to have considered as to who is the signatory to the cheque and whether he is made an accused or not before proceeding to issue process against accused nos. 02 to 12.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Application No. 2052 and 2055 of 2018

Decided On: 31.08.2018

 Rajeev Raj Kumar  Vs.  The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

Vibha Kankanwadi, J.

Citation: 2019(2) MHLJ 628

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Whether director of company can be made accused in cheque dishonour case in absence of specific allegation against him?

Mr. Chapalgaonkar has relied upon the observation in the case reported in (2012) SCC 520 wherein, it is observed that:

This Court has repeatedly held that in case of a Director, the 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 and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient.

(Vide National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another,). In the case on hand, particularly, in para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day to day affairs of the Company. We have verified the averments as regard to the same and we agree with the contention of Mr. Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day to day affairs of the Company. On this ground also, the appellant is entitled to succeed.

21. Looking to the facts and circumstances of the case and law laid down by the Supreme Court, I am of the opinion that the present applicants have already resigned from the posts of directors. Secondly there are no specific and sufficient allegation against the applicants that they were looking after and responsible for day today affairs of the company. Thus for the reasons stated above, application is allowed and the relief is granted in terms of prayer clause B. Application is disposed of.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Application No. 813 of 2017

Decided On: 25.09.2018

Baba Chandrashekhar Radhakrishnan  Vs The State of Maharashtra and Ors.

Hon'ble Judges/Coram:

K.L. Wadane, J.

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Whether independent directors of company can be summoned as accused in cheque dishonour case?

Upon hearing and on perusal of the impugned complaints,
summoning order and the decision cited, I find that Supreme Court in
Standard Chartered Bank (Supra) has permitted summoning of the
directors of accused-company, who were incharge of day to day business
of the accused-company. Since there are allegations against petitioners of
being responsible for day to day functioning of business of accusedcompany,
therefore, in the considered opinion of this Court, no case for
quashing complaint and summoning order is made out.

 IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Order: January 09, 2019
 CRL.M.C. 3982/2017 & CRL.M.A. 16054/2017

SH SOMENDRA KHOSLA
N SRINIVASA RAO Vs  STATE & ANR.

CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR

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Whether creditor can seek more than one remedy simultaneously?

 We may only end by saying that cases like the present one have to be decided by balancing the interest of creditors to whom money is owing, with a debtor company which will now go in the red since a winding up petition is admitted against it. It is not open for persons like the appellant to resist a winding up petition which is otherwise maintainable without there being any bona fide defence to the same. We may also hasten to add that the respondent cannot be said to be blowing hot and cold in pursuing a remedy under the Recovery of Debts Act and a winding up proceeding under the Companies Act, 1956 simultaneously. Here, it is important to refer to the judgment of Lord Atkin in Lissenden v. C.A.V Bosch, Ltd., [1940] 1 All E.R 425, at 436-437, which says:

“The doctrine of election could have no place in the present case. The applicant is not faced with alternative rights. It is the same right that he claims, but in larger degree. In Mills v. Duckworth, [1938] 1 All E.R 318, a plaintiff who had been awarded damages for negligence had taken the judgment sum out of a larger sum paid into Court and had then appealed against the quantum of damages, and was met by a similar objection to his appeal. Greer, L.J, in overruling the objection, pointedly said, at p. 321:

“He [the plaintiff] said: “I am not going to blow hot and cold. I am going to blow hotter.”

Here the applicant is not faced with a choice between alternative rights. He has exercised an undisputed right to compensation, and claims to have a right to more. One has not lost one's right to a second helping because one has taken the first.”

30. When secured creditors like the respondent are driven from pillar to post to recover what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not “blow hot and cold”, but they blow hot and hotter. The appeals are accordingly dismissed with no order as to costs.

In the Supreme Court of India

(Before R.F Nariman and Navin Sinha, JJ.)

Civil Appeal No. 1291 of 2019

Swaraj Infrastructure Pvt. Ltd.v.  Kotak Mahindra Bank Ltd

Citation: 2019 SCC OnLine SC 92

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Whether prosecution for dishonour of cheque against director is maintainable if company is not made accused?

A decision of a three Judge Bench of this
Court in Aneeta Hada vs. Godfather Travels and Tours Private
Limited(2012) 5 SCC 661 governs the area of dispute. The issue which fell for consideration was whether an authorized
 signatory of a
company would be liable for prosecution under Section 138 of
the Negotiable Instruments Act, 1881 without the company being
arraigned as an accused. The three Judge Bench held thus:-
“58. Applying the doctrine of strict
construction, we are of the considered opinion
that commission of offence by the company is
an express condition precedent to attract the
vicarious liability of others. Thus, the words
“as well as the company” appearing in the
section make it absolutely unmistakably clear
that when the company can be prosecuted, then
only the persons mentioned in the other
categories could be vicariously liable for the
offence subject to the averments in the
petition and proof thereof. One cannot be
oblivious of the fact that the company is a
juristic person and it has its own
respectability. If a finding is recorded
against it, it would create a concavity in its
reputation. There can be situations when the
corporate reputation is affected when a
director is indicted.”
In similar terms, the Court further held:
“59. In view of our aforesaid analysis, we
arrive at the irresistible conclusion that for
maintaining the prosecution under Section 141
of the Act, arraigning of a company as an
accused is imperative. The other categories of
offenders can only be brought in the drag-net
on the touchstone of vicarious liability as
the same has been stipulated in the provision
itself…. “

The provisions of Section 141 postulate that if the
person committing an offence under Section 138 is a company,

every person, who at the time when the offence was committed
was in charge of or 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 and shall be liable
to be proceeded against and punished.
In the absence of the company being arraigned as an
accused, a complaint against the appellant was therefore not
maintainable. The appellant had signed the cheque as a Director
of the company and for and on its behalf. Moreover, in the
absence of a notice of demand being served on the company and
without compliance with the proviso to Section 138, the High
Court was in error in holding that the company could now be
arraigned as an accused.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1465 OF 2009

HIMANSHU  Vs B. SHIVAMURTHY

Dr. Dhananjaya Y. Chandrachud, J.
Dated:January 17, 2019.
Citation: (2019) 3 SCC 797, MANU/SC/0072/2019

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Whether director of company can be prosecuted if company is not prosecuted?

Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.

43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 838 and 842 of 2008, 1483 and 1484 of 2009

Decided On: 27.04.2012

 Aneeta Hada Vs.  Godfather Travels and Tours Pvt. Ltd. and Ors.

Hon'ble Judges/Coram:

Dalveer Bhandari, S.J. Mukhopadhaya and Dipak Misra, JJ.

Citation: (2012) 5 SCC 661

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