Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Crl.M.C. Nos.1798/2007, 1799/2007, 2192/2007 2197/2007
% Date of Decision : 14.5.2008
1. Crl.M.C. No. 1798/2007
Shambhu Kumar Aggarwal ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ...... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta, Advocates
2. Crl.M.C. No. 1799/2007
Shambhu Kumar Aggarwal ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash .....Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
3. Crl.M.C. No. 2192/2007
Shri Prakash Chand Saraf & Anr. ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ...... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
4. Crl.M.C. No. 2197/2007
Shri Prakash Chand Saraf & Anr. ..... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ..... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 1 of 13
1. Whether the Reporters of local papers may
be allowed to see the judgment?
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
VIPIN SANGHI, J. (Oral)
1. These four petitions under Section 482 of Cr.P.C. have
been heard together and are being disposed of by this common order
since they raise identical issues and the respondent in all the petitions
is common. These petitions seek quashing of the summoning order
dated 14.9.2005 in complaint case No.3891/2007 and the aforesaid
complaint case, and the summoning order dated 16.5.2005 in
complaint case No.3890/2007 as well as the said complaint case
pending in the Court of Metropolitan Magistrate, Tis Hazari Courts,
Delhi. The aforesaid two complaint cases under Section 138 read with
Section 141 and 142 of the Negotiable Instruments Act (the Act) have
been filed by the same complainant, namely, Shri Ved Prakash, who is
the respondent in all these petitions. The petitioner in Crl.M.C.
No.1798/2007 (pertaining to complaint case No.3891/2007) and Crl.M.C.
No.1799/2007 (pertaining to complaint case No.3890/2007) is Shri
Shambhu Kumar Aggarwal, whereas Crl.M.C. No.2192/2007 and
Crl.M.C. No.2197 (which arises out of complaint case No.3890/2007 and
complaint case No.3891/2007 respectively) have been preferred by Shri
Prakash Chand Saraf and Shri Amit Aggarwal.
2. The respondent Shri Ved Prakash who is the sole
proprietor of M/s N.K. Industries has preferred the aforesaid two
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 2 of 13
complaints wherein Shri Shambhu Kukmar Aggarwal is arrayed as
accused No.5 in both the complaints, and Shri Prakash Chand Saraf and
Shri Amit Gupta are arrayed as accused Nos.6 & 4 respectively in the
said complaints. Accused No.1 is the company M/s Chetak Spintex Ltd.
in both the complaint cases. I first proceed to deal with the petitions
filed by Shri Shambhu Kumar Aggarwal,i.e., Crl.M.C. No. 1798/2007 and
Crl.M.C.No.1799/2007.
3. The submission of learned counsel for the petitioner is
that a bare perusal of the complaints does not make out a case against
the petitioner Shri Shambhu Kumar Aggarwal. He submits that
respondent has, by making a sweeping averment, roped in all the
directors of the company M/s Chetak Spintex Ltd., who is accused No.1
in the aforesaid two complaints. He submits that the omnibus
statement made in paragraph 2 of the two complaints to the effect:
“that accused Nos.2 to 7 have been the directors of accused No.1. The
accused Nos.2 to 7 have been the in charge of and were responsible
to the accused No.1 company for the conduct of the business of the
said company at the time of purchasing of the goods, issuing the
cheque of and responsible for conduct of its business even at the time
of service of legal notice and continue to be so till date. ”, is not
sufficient to fix liability upon the petitioner in terms of Section 138 read
with Section 142 of the Act. Learned counsel for the petitioner has
referred various decisions of the Supreme Court which have been
rendered from time to time, namely, S.M.S. Pharmaceuticals Ltd.
vs. Neeta Bhalla & Anr. (2005) 8 SCC 89 (hereinafter referred to as
S.M.S. Pharmaceuticals Ltd. (I) , Saroj Kumar Poddar vs. State
(NCT of Delhi) and Anr. (2007) 3 SCC 693, Sabitha Ramamurthy &
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 3 of 13
Anr. vs. R.B.S. Channabasavaradhya , 2006(9) Scale 212, N.
Rangachari vs. Bharat Sanchar Nigam Ltd. 2007 V AD (SC) 210,
N.K. Wahi vs. Shekhar Singh & Ors. AIR 2007 SC 1454, K. Srikant
Singh vs. M/s North East Securities Ltd. & Anr. , 2007(3) JCC [NI]
268, Maksud Saiyed vs. State of Gujarat & Ors. JT 2007(11) SC
276 and S.K. Alag vs. State of U.P. & Ors. 2008 III AD (SC) 661
4. Based on the aforesaid decisions, submission of learned
counsel for the petitioner is that the respondent should have disclosed
in the complaint as to in what manner, and how the petitioner was
incharge of, and responsible to the accused No.1 company for conduct
of its business. He further submits that even before the issuance of the
cheques in question, namely, cheque No. 292370 dated 15.4.2005 for
Rs.5 lakhs drawn on Indian Bank, Chandni Chowk, Delhi which is the
subject matter of the complaint case No.3891/2007 to which Crl.M.C.
No.1798/2007 relates, and cheque No.292371 dated 15.3.2005 for Rs.5
lakhs drawn on Chandni Chowk, Delhi which relates to Crl.M.C.
No.1799/2007, the petitioner Shambhu Kumar has already resigned
from the directorship of the accused No.1 company. For this purpose he
refers to the resignation letter dated 10.9.2004 stated to have been
sent to the Chairman of the board of directors of the accused No.1
company as well as the acceptance of the resignation by the Chairman
communicated to him on 13.9.2004. He further submits that he was
merely a professional director who has lent his name to the accused
company and was not in any way incharge of or responsible to the said
company for the conduct of its business. He states that he has been
serving in various capacities in other organisations, and to substantiate
the same he has placed copies of his appointment letters/TDS
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 4 of 13
certificate etc. on record.
5. Learned counsel for respondent has opposed the
petitions. He submits that the complaints make sufficient averments
with regard to the involvement of the petitioner Shri Shambhu Kumar
Aggarwal. He also relies on the averments contained in paragraph 2 of
the two complaints, which are identical. Reliance is also placed on the
decisions of the Supreme Court in S.M.S. Pharmaceuticals Ltd.(I)
(supra). Learned counsel for the respondent submits that the decision
of the Supreme Court in Saroj Kumar Poddar (supra) has been
explained in S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla &
Anr. (2007) 4 SCC 70 (hereinafter referred to as S.M.S.
Pharmaceuticals Ltd. II ) which is also decided by the same Bench
consisting of Hon'ble Mr. Justice S.B. Sinha and Hon'ble Mr. Justice
Markandey Katju. He also relies on the decision in N. Rangachari
(supra).
6. It is also pointed out by learned counsel for respondent
that admittedly the alleged resignation of the petitioner has not been
formalised and Form No.32, admittedly has not been filed. He submits
that the so called resignation and its acceptance relied upon by the
petitioner are concocted merely to wriggle out the aforesaid
complaints. He has also relied on the decision in State of M.P. vs.
Awadh Kishore Gupta & Ors. (2004) 1 SCC 691 wherein the Supreme
Court has dealt with the aspect of jurisdiction of the Court under Section
482 of the Code to quash the complaints and the Supreme Court has
held that the court should not act on the annexures of the petition
under Section 482 of the Code which cannot be termed as evidence
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 5 of 13
without being tested and proved. His further submission is that in the
case of Prakash Chand Saraf and Amit Aggarwal the petitioners have
sought to rely on photocopies of Form-32 claimed to have been filed on
9.3.2005 wherein it is claimed that the said persons had resigned from
the office of the director on 16.2.2005. He submits that even if the said
position were to be accepted, for the sake of argument, it is evident
that so far as the petitioner Shambhu Kumar Aggarwal is concerned his
alleged resignation was not conveyed in Form-32 to the Registrar of
Companies even his alleged resignation is prior to the alleged filing of
Form-32 on 9.3.2005.
7. Having considered the rival submissions of the parties, I
see no merit in these petition and the same deserves to be dismissed
with costs.
8. While exercising jurisdiction under Section 482 Cr.P.C. it is
well established that the Court cannot go into disputes of fact. The
submission of the petitioner based on the so called letter of resignation
and its acceptance, photocopies whereof have been filed on record is a
matter which is in serious dispute and cannot be gone into these
proceedings. In case the certified copy of Form-32 evidencing
resignation by the director of a company is placed on record in such
like proceedings, there may still be some justification, but in the
present case admittedly the return in Form-32 has not been filed by the
company to communicate the resignation of the petitioner Shri
Shambhu Kumar Aggarwal from his position as a director of the accused
No.1 company. There is no merit in the submission of the petitioner
that the obligation to file the said form was that of the accused
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 6 of 13
company, and that the petitioner cannot be held responsible in case
the accused company had not filed the said form before the Registrar
of Companies. Admittedly, the petitioner is a chartered accountant
who would be well aware of the procedure to be adopted post
submission of the resignation of a director. In any event, these are
disputed questions of fact since the respondent has categorically denied
the correctness and genuineness of the so called resignation letters and
its acceptance and, therefore, cannot be gone into in these
proceedings.
9. The submission with regard to the averment in the
petition not being sufficient to rope in the petitioner is also devoid of
any merit. No doubt in Saroj Kumar Poddar (supra), the Supreme
Court while analysing the relevant averments made in the complaint
made the observations that “ .....there is no averment in the complaint
petitions as to how and in what manner the appellant was responsible
for the conduct of the business of the Company or otherwise
responsible to in regard to its functioning. He had not issued any
cheque. How he is responsible for dishonour of the cheque has not
been stated. The allegations made in paragraph 3, thus, in our opinion
do not satisfy the requirements of Section 141 of the Act.” However, the
same Bench of the Supreme Court while dealing with the S.M.S.
Pharmaceuticals Ltd.(II) (supra) observed as follows:
“26. A faint suggestion was made that this Court in Saroj
Kumar Poddar has laid down the law that the complaint
petition not only must contain averments satisfying the
requirements of Section 141 of the Act but must also
show as to how and in what manner the appellant was
responsible for the conduct of the business of the
company or otherwise responsible to it in regard to its
functioning. A plain reading of the said judgment would
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 7 of 13
show that no such general law was laid down therein. The
observations were made in the context of the said case
as it was dealing with a contention that although no
direct averments was made as against the appellant of
the said case fulfilling the requirements of Section 141 of
the Act but there were other case fulfilling the
requirements of Section 141 of the Act but there were
other averments which would show that the appellant
therein was liable therefor.”
The Supreme Court has clarified that no such general proposition was
laid down in Saroj Kumar Poddar (supra) that the complaint must also
show as to how and in what manner the accused was responsible for
the conduct of the business of the company or otherwise responsible to
it in regard to its functioning. The observations made in Saroj Kumar
Poddar (supra) were made in the content of that case itself. Therefore,
reliance sought to be placed by the petitioner on the decision Saroj
Kumar Poddar (supra) is of no avail.
10. Except the decision of the Supreme Court in S.M.S.
Pharmaceuticals Ltd.-(I) (supra), which has been rendered by three
Hon'ble Judges, all other decisions cited on both sides have been
rendered by two Hon'ble Judges. The larger Bench decision in S.M.S.
Pharmaceuticals Ltd.-(I) (supra) has been followed in N.
Rangachari (supra), and in N. Rangachari (supra) the Supreme
Court has extracted the legal position in para 9 to 11 which are reads as
follow:
9. After referring to a number of earlier decisions, this
court summed up the legal position and laid down: [SCC
p. 103, para 19(a)]
“(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
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 8 of 13
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.”
10. Dealing with the question whether a Director of a
company would be deemed to be in charge of, or
responsible to, the company for conduct of the business of
the company and, therefore, deemed to be guilty of the
offence unless he proves to the contrary, this Court
held:[SCCp.103, para 19(b)]
“(b) The answer to the question posed in sub-
para (b) has to be in the negative. Merely
being a director of a company it is not
sufficient to make the person liable under
Section 141 of the Act. A director in a
company cannot be deemed to be in charge of
and responsible to the company for the
conduct of its business. The requirement of
Section 141 is that the person sought to be
made liable should be in charge of and
responsible for the conduct of the business of
the company at the relevant time. This has to
be averred as a fact there is no deemed
liability of a director in such cases.”
11. Answering the question whether even in the absence
of averments the signatory of the cheque or the
Managing Directors could be taken to be in charge of the
company and responsible to the company for the conduct
of its business and could be proceeded against, the
answer was as follows: [SCC p.103 para 19(c)]
(c) The answer to Question (c) has to be in the
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 the
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 the
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.
11. From the aforesaid it is clear that a director does not get
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 9 of 13
roped in a complaint under Section 138 of the Act merely on the ground
that he is a director of the accused company. It is necessary to
specifically aver in the complaint under Section 138 of the Act that at
the time when the offence was committed, the person accused was
incharge of and responsible for the conduct of the business of the
company. This averment is essential to meet the requirement of
Section 141 of the Act and has to be made in the complaint. Without
this averment being made in the complaint, the requirement of Section
141 cannot be said to be satisfied.
12. Coming to the averments made in the two complaints
aforesaid which are identical, it is seen that the respondent had in clear
terms stated that accused Nos.2 to 7 (which includes Shri Shambhu
Kumar Aggarwal) have been the directors of accused No.1 company
and they have been incharge of and responsible to the accused No.1
company for the conduct of the business of the said company at the
time of purchasing of goods, issuing cheques and responsible for the
conduct of its business even at the time of service of legal notice and
they continue to be so till date. Therefore, the averment made in
paragraph 2 of two complaints clearly satisfies the requirement of
Section 141 of the Act as interpreted by the Supreme Court. For the
aforesaid reasons, I see no merit in these petitions filed by Shri
Shambhu Kumar Aggarwal and dismiss the same.
13. Turning to the two petitions filed by Shri Prakash Chand
Saraf and Shri Amit Aggarwal, apart from the submission that the
averments made in the complaints are deficient to meet the
requirement of Section 141 of the Act, learned counsel for the
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 10 of 13
petitioners submits that in the case of these two directors the Form-32
was duly filed on 9.3.2005 which shows that these directors have
resigned from the directorship of the company on 16.2.2005. He relies
on the photocopy of Form-32 which is placed on record.
14. Learned counsel for the respondent, to meet this
averment of the petitioner submit that firstly the certified copy itself
has not been filed and merely a photocopy has been filed on record.
Secondly, he submits that Shri Prakash Chand Saraf had in fact sworn
an affidavit on 21.9.2005 that is after the purported resignation on
16.2.2005 which has been filed before the Punjab and Haryana High
Court in Crl.M.C. No.52942-M/2005 “ J.S. Aggarwal vs. State of Haryana
& Ors.” In the said affidavit Shri Prakash Chand Saraf has described
himself as a director of M/s Chetak Spintex Ltd. i.e. the accused No.1
company and in paragraph-1 of the affidavit he states that petitioner
Nos.1 to 3, wherein he is petitioner No.2 and Shri Amit Aggarwal is
petitioner No.3 respectively, are the directors of the company known as
M/s Chetak Spintex Ltd., accused No.1 in the present complaint cases.
He submits that, therefore, the so called resignation on 16.2.2005 is an
eyewash and, in any event, is highly disputed. He submits that the
copy of Form-32 filed on record cannot be taken by this Court as a
document worthy of reliance. He also submits that the signatures in
the said documents attributed to Shri G.L. Aggarwal, the Chairman of
the accused company is on the face of it is strikingly different from
those to be found on the cheques signed and issued by the same
gentleman, namely, Shri G.L. Aggarwal, the chairman of the company.
He has referred to the three cheques bearing No.292369-71 which
purportedly bear the signature of Shri G.L. Aggarwal as the Chairman
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 11 of 13
of the accused company. He also refers to the alleged acceptance of
resignation of Shri Shambhu Kumar Aggarwal which is also allegedly
accepted by Shri G.L. Aggarwal, chairman of the accused company to
submit that the signature on the letter of resignation, and on the
acceptance of resignation, and on purported Form-32 are strikingly
different.
15. So far as the submission with regard to the averment
made in paragraph 2 of the two complaints being deficient, is
concerned, the same has already been taken care by me while dealing
with the petitions of Shri Shambhu Kumar Aggarwal. So far as the
purported resignations of Shri Prakash Chand Saraf and Shri Amit
Aggarwal from directorship of the accused company are concerned,
firstly, I may notice that only photocopies of Form-32 have been placed
on record. They can certainly not be relied upon in these proceedings
under Section 482 of the Code. Moreover, the respondent has raised
enough doubt with regard to the authenticity of the same by referring
to the affidavit dated 21.9.2005 stated to have been filed by Shri
Prakash Chand Saraf before the Punjab and Haryana High Court,
wherein he has described himself and Shri Amit Aggarwal as the
directors of the accused company. If the said directors had in fact
resigned on 16.2.2005, it does not stand to reason why Shri Prakash
Chand Saraf described himself, as well as Shri Amit Aggarwal, as
directors of the accused company on 21.9.2005. Though the original
documents are not before me, from the photocopies of Form-32 as well
as the cheques issued by Shri G.L. Aggarwal and the alleged acceptance
of resignation by Shri G.L. Aggarwal in relation to Shri Shambhu Kumar
Aggarwal, prima facie it appears that the signature of Shri G.L.
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 12 of 13
Aggarwal on Form-32 are somewhat different from the other signatures
attributed to him. This also raises disputed questions of fact. As I have
already stated, in these petitions it is not for me to proceed on the
basis of documents and averments which are disputed, and I cannot
undertake an enquiry into such facts while exercising jurisdiction under
Section 482 of the Code. For the aforesaid reasons I dismiss all these
petitions with costs quantified at Rs.5000/- in each of these petitions.
16. The costs shall be paid by each of the petitioners before
the trial court on the next date.
May 14, 2008 VIPIN SANGHI
Judge
aj
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 13 of 13
+ Crl.M.C. Nos.1798/2007, 1799/2007, 2192/2007 2197/2007
% Date of Decision : 14.5.2008
1. Crl.M.C. No. 1798/2007
Shambhu Kumar Aggarwal ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ...... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta, Advocates
2. Crl.M.C. No. 1799/2007
Shambhu Kumar Aggarwal ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash .....Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
3. Crl.M.C. No. 2192/2007
Shri Prakash Chand Saraf & Anr. ...... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ...... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
4. Crl.M.C. No. 2197/2007
Shri Prakash Chand Saraf & Anr. ..... Petitioner
Through: Mr. Rajesh Goswami, Advocate
versus
Ved Prakash ..... Respondent
Through: Mr. P.D. Gupta & Mr. Kamal
Gupta
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 1 of 13
1. Whether the Reporters of local papers may
be allowed to see the judgment?
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
VIPIN SANGHI, J. (Oral)
1. These four petitions under Section 482 of Cr.P.C. have
been heard together and are being disposed of by this common order
since they raise identical issues and the respondent in all the petitions
is common. These petitions seek quashing of the summoning order
dated 14.9.2005 in complaint case No.3891/2007 and the aforesaid
complaint case, and the summoning order dated 16.5.2005 in
complaint case No.3890/2007 as well as the said complaint case
pending in the Court of Metropolitan Magistrate, Tis Hazari Courts,
Delhi. The aforesaid two complaint cases under Section 138 read with
Section 141 and 142 of the Negotiable Instruments Act (the Act) have
been filed by the same complainant, namely, Shri Ved Prakash, who is
the respondent in all these petitions. The petitioner in Crl.M.C.
No.1798/2007 (pertaining to complaint case No.3891/2007) and Crl.M.C.
No.1799/2007 (pertaining to complaint case No.3890/2007) is Shri
Shambhu Kumar Aggarwal, whereas Crl.M.C. No.2192/2007 and
Crl.M.C. No.2197 (which arises out of complaint case No.3890/2007 and
complaint case No.3891/2007 respectively) have been preferred by Shri
Prakash Chand Saraf and Shri Amit Aggarwal.
2. The respondent Shri Ved Prakash who is the sole
proprietor of M/s N.K. Industries has preferred the aforesaid two
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 2 of 13
complaints wherein Shri Shambhu Kukmar Aggarwal is arrayed as
accused No.5 in both the complaints, and Shri Prakash Chand Saraf and
Shri Amit Gupta are arrayed as accused Nos.6 & 4 respectively in the
said complaints. Accused No.1 is the company M/s Chetak Spintex Ltd.
in both the complaint cases. I first proceed to deal with the petitions
filed by Shri Shambhu Kumar Aggarwal,i.e., Crl.M.C. No. 1798/2007 and
Crl.M.C.No.1799/2007.
3. The submission of learned counsel for the petitioner is
that a bare perusal of the complaints does not make out a case against
the petitioner Shri Shambhu Kumar Aggarwal. He submits that
respondent has, by making a sweeping averment, roped in all the
directors of the company M/s Chetak Spintex Ltd., who is accused No.1
in the aforesaid two complaints. He submits that the omnibus
statement made in paragraph 2 of the two complaints to the effect:
“that accused Nos.2 to 7 have been the directors of accused No.1. The
accused Nos.2 to 7 have been the in charge of and were responsible
to the accused No.1 company for the conduct of the business of the
said company at the time of purchasing of the goods, issuing the
cheque of and responsible for conduct of its business even at the time
of service of legal notice and continue to be so till date. ”, is not
sufficient to fix liability upon the petitioner in terms of Section 138 read
with Section 142 of the Act. Learned counsel for the petitioner has
referred various decisions of the Supreme Court which have been
rendered from time to time, namely, S.M.S. Pharmaceuticals Ltd.
vs. Neeta Bhalla & Anr. (2005) 8 SCC 89 (hereinafter referred to as
S.M.S. Pharmaceuticals Ltd. (I) , Saroj Kumar Poddar vs. State
(NCT of Delhi) and Anr. (2007) 3 SCC 693, Sabitha Ramamurthy &
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 3 of 13
Anr. vs. R.B.S. Channabasavaradhya , 2006(9) Scale 212, N.
Rangachari vs. Bharat Sanchar Nigam Ltd. 2007 V AD (SC) 210,
N.K. Wahi vs. Shekhar Singh & Ors. AIR 2007 SC 1454, K. Srikant
Singh vs. M/s North East Securities Ltd. & Anr. , 2007(3) JCC [NI]
268, Maksud Saiyed vs. State of Gujarat & Ors. JT 2007(11) SC
276 and S.K. Alag vs. State of U.P. & Ors. 2008 III AD (SC) 661
4. Based on the aforesaid decisions, submission of learned
counsel for the petitioner is that the respondent should have disclosed
in the complaint as to in what manner, and how the petitioner was
incharge of, and responsible to the accused No.1 company for conduct
of its business. He further submits that even before the issuance of the
cheques in question, namely, cheque No. 292370 dated 15.4.2005 for
Rs.5 lakhs drawn on Indian Bank, Chandni Chowk, Delhi which is the
subject matter of the complaint case No.3891/2007 to which Crl.M.C.
No.1798/2007 relates, and cheque No.292371 dated 15.3.2005 for Rs.5
lakhs drawn on Chandni Chowk, Delhi which relates to Crl.M.C.
No.1799/2007, the petitioner Shambhu Kumar has already resigned
from the directorship of the accused No.1 company. For this purpose he
refers to the resignation letter dated 10.9.2004 stated to have been
sent to the Chairman of the board of directors of the accused No.1
company as well as the acceptance of the resignation by the Chairman
communicated to him on 13.9.2004. He further submits that he was
merely a professional director who has lent his name to the accused
company and was not in any way incharge of or responsible to the said
company for the conduct of its business. He states that he has been
serving in various capacities in other organisations, and to substantiate
the same he has placed copies of his appointment letters/TDS
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 4 of 13
certificate etc. on record.
5. Learned counsel for respondent has opposed the
petitions. He submits that the complaints make sufficient averments
with regard to the involvement of the petitioner Shri Shambhu Kumar
Aggarwal. He also relies on the averments contained in paragraph 2 of
the two complaints, which are identical. Reliance is also placed on the
decisions of the Supreme Court in S.M.S. Pharmaceuticals Ltd.(I)
(supra). Learned counsel for the respondent submits that the decision
of the Supreme Court in Saroj Kumar Poddar (supra) has been
explained in S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla &
Anr. (2007) 4 SCC 70 (hereinafter referred to as S.M.S.
Pharmaceuticals Ltd. II ) which is also decided by the same Bench
consisting of Hon'ble Mr. Justice S.B. Sinha and Hon'ble Mr. Justice
Markandey Katju. He also relies on the decision in N. Rangachari
(supra).
6. It is also pointed out by learned counsel for respondent
that admittedly the alleged resignation of the petitioner has not been
formalised and Form No.32, admittedly has not been filed. He submits
that the so called resignation and its acceptance relied upon by the
petitioner are concocted merely to wriggle out the aforesaid
complaints. He has also relied on the decision in State of M.P. vs.
Awadh Kishore Gupta & Ors. (2004) 1 SCC 691 wherein the Supreme
Court has dealt with the aspect of jurisdiction of the Court under Section
482 of the Code to quash the complaints and the Supreme Court has
held that the court should not act on the annexures of the petition
under Section 482 of the Code which cannot be termed as evidence
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 5 of 13
without being tested and proved. His further submission is that in the
case of Prakash Chand Saraf and Amit Aggarwal the petitioners have
sought to rely on photocopies of Form-32 claimed to have been filed on
9.3.2005 wherein it is claimed that the said persons had resigned from
the office of the director on 16.2.2005. He submits that even if the said
position were to be accepted, for the sake of argument, it is evident
that so far as the petitioner Shambhu Kumar Aggarwal is concerned his
alleged resignation was not conveyed in Form-32 to the Registrar of
Companies even his alleged resignation is prior to the alleged filing of
Form-32 on 9.3.2005.
7. Having considered the rival submissions of the parties, I
see no merit in these petition and the same deserves to be dismissed
with costs.
8. While exercising jurisdiction under Section 482 Cr.P.C. it is
well established that the Court cannot go into disputes of fact. The
submission of the petitioner based on the so called letter of resignation
and its acceptance, photocopies whereof have been filed on record is a
matter which is in serious dispute and cannot be gone into these
proceedings. In case the certified copy of Form-32 evidencing
resignation by the director of a company is placed on record in such
like proceedings, there may still be some justification, but in the
present case admittedly the return in Form-32 has not been filed by the
company to communicate the resignation of the petitioner Shri
Shambhu Kumar Aggarwal from his position as a director of the accused
No.1 company. There is no merit in the submission of the petitioner
that the obligation to file the said form was that of the accused
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 6 of 13
company, and that the petitioner cannot be held responsible in case
the accused company had not filed the said form before the Registrar
of Companies. Admittedly, the petitioner is a chartered accountant
who would be well aware of the procedure to be adopted post
submission of the resignation of a director. In any event, these are
disputed questions of fact since the respondent has categorically denied
the correctness and genuineness of the so called resignation letters and
its acceptance and, therefore, cannot be gone into in these
proceedings.
9. The submission with regard to the averment in the
petition not being sufficient to rope in the petitioner is also devoid of
any merit. No doubt in Saroj Kumar Poddar (supra), the Supreme
Court while analysing the relevant averments made in the complaint
made the observations that “ .....there is no averment in the complaint
petitions as to how and in what manner the appellant was responsible
for the conduct of the business of the Company or otherwise
responsible to in regard to its functioning. He had not issued any
cheque. How he is responsible for dishonour of the cheque has not
been stated. The allegations made in paragraph 3, thus, in our opinion
do not satisfy the requirements of Section 141 of the Act.” However, the
same Bench of the Supreme Court while dealing with the S.M.S.
Pharmaceuticals Ltd.(II) (supra) observed as follows:
“26. A faint suggestion was made that this Court in Saroj
Kumar Poddar has laid down the law that the complaint
petition not only must contain averments satisfying the
requirements of Section 141 of the Act but must also
show as to how and in what manner the appellant was
responsible for the conduct of the business of the
company or otherwise responsible to it in regard to its
functioning. A plain reading of the said judgment would
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 7 of 13
show that no such general law was laid down therein. The
observations were made in the context of the said case
as it was dealing with a contention that although no
direct averments was made as against the appellant of
the said case fulfilling the requirements of Section 141 of
the Act but there were other case fulfilling the
requirements of Section 141 of the Act but there were
other averments which would show that the appellant
therein was liable therefor.”
The Supreme Court has clarified that no such general proposition was
laid down in Saroj Kumar Poddar (supra) that the complaint must also
show as to how and in what manner the accused was responsible for
the conduct of the business of the company or otherwise responsible to
it in regard to its functioning. The observations made in Saroj Kumar
Poddar (supra) were made in the content of that case itself. Therefore,
reliance sought to be placed by the petitioner on the decision Saroj
Kumar Poddar (supra) is of no avail.
10. Except the decision of the Supreme Court in S.M.S.
Pharmaceuticals Ltd.-(I) (supra), which has been rendered by three
Hon'ble Judges, all other decisions cited on both sides have been
rendered by two Hon'ble Judges. The larger Bench decision in S.M.S.
Pharmaceuticals Ltd.-(I) (supra) has been followed in N.
Rangachari (supra), and in N. Rangachari (supra) the Supreme
Court has extracted the legal position in para 9 to 11 which are reads as
follow:
9. After referring to a number of earlier decisions, this
court summed up the legal position and laid down: [SCC
p. 103, para 19(a)]
“(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
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 8 of 13
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.”
10. Dealing with the question whether a Director of a
company would be deemed to be in charge of, or
responsible to, the company for conduct of the business of
the company and, therefore, deemed to be guilty of the
offence unless he proves to the contrary, this Court
held:[SCCp.103, para 19(b)]
“(b) The answer to the question posed in sub-
para (b) has to be in the negative. Merely
being a director of a company it is not
sufficient to make the person liable under
Section 141 of the Act. A director in a
company cannot be deemed to be in charge of
and responsible to the company for the
conduct of its business. The requirement of
Section 141 is that the person sought to be
made liable should be in charge of and
responsible for the conduct of the business of
the company at the relevant time. This has to
be averred as a fact there is no deemed
liability of a director in such cases.”
11. Answering the question whether even in the absence
of averments the signatory of the cheque or the
Managing Directors could be taken to be in charge of the
company and responsible to the company for the conduct
of its business and could be proceeded against, the
answer was as follows: [SCC p.103 para 19(c)]
(c) The answer to Question (c) has to be in the
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 the
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 the
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.
11. From the aforesaid it is clear that a director does not get
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 9 of 13
roped in a complaint under Section 138 of the Act merely on the ground
that he is a director of the accused company. It is necessary to
specifically aver in the complaint under Section 138 of the Act that at
the time when the offence was committed, the person accused was
incharge of and responsible for the conduct of the business of the
company. This averment is essential to meet the requirement of
Section 141 of the Act and has to be made in the complaint. Without
this averment being made in the complaint, the requirement of Section
141 cannot be said to be satisfied.
12. Coming to the averments made in the two complaints
aforesaid which are identical, it is seen that the respondent had in clear
terms stated that accused Nos.2 to 7 (which includes Shri Shambhu
Kumar Aggarwal) have been the directors of accused No.1 company
and they have been incharge of and responsible to the accused No.1
company for the conduct of the business of the said company at the
time of purchasing of goods, issuing cheques and responsible for the
conduct of its business even at the time of service of legal notice and
they continue to be so till date. Therefore, the averment made in
paragraph 2 of two complaints clearly satisfies the requirement of
Section 141 of the Act as interpreted by the Supreme Court. For the
aforesaid reasons, I see no merit in these petitions filed by Shri
Shambhu Kumar Aggarwal and dismiss the same.
13. Turning to the two petitions filed by Shri Prakash Chand
Saraf and Shri Amit Aggarwal, apart from the submission that the
averments made in the complaints are deficient to meet the
requirement of Section 141 of the Act, learned counsel for the
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 10 of 13
petitioners submits that in the case of these two directors the Form-32
was duly filed on 9.3.2005 which shows that these directors have
resigned from the directorship of the company on 16.2.2005. He relies
on the photocopy of Form-32 which is placed on record.
14. Learned counsel for the respondent, to meet this
averment of the petitioner submit that firstly the certified copy itself
has not been filed and merely a photocopy has been filed on record.
Secondly, he submits that Shri Prakash Chand Saraf had in fact sworn
an affidavit on 21.9.2005 that is after the purported resignation on
16.2.2005 which has been filed before the Punjab and Haryana High
Court in Crl.M.C. No.52942-M/2005 “ J.S. Aggarwal vs. State of Haryana
& Ors.” In the said affidavit Shri Prakash Chand Saraf has described
himself as a director of M/s Chetak Spintex Ltd. i.e. the accused No.1
company and in paragraph-1 of the affidavit he states that petitioner
Nos.1 to 3, wherein he is petitioner No.2 and Shri Amit Aggarwal is
petitioner No.3 respectively, are the directors of the company known as
M/s Chetak Spintex Ltd., accused No.1 in the present complaint cases.
He submits that, therefore, the so called resignation on 16.2.2005 is an
eyewash and, in any event, is highly disputed. He submits that the
copy of Form-32 filed on record cannot be taken by this Court as a
document worthy of reliance. He also submits that the signatures in
the said documents attributed to Shri G.L. Aggarwal, the Chairman of
the accused company is on the face of it is strikingly different from
those to be found on the cheques signed and issued by the same
gentleman, namely, Shri G.L. Aggarwal, the chairman of the company.
He has referred to the three cheques bearing No.292369-71 which
purportedly bear the signature of Shri G.L. Aggarwal as the Chairman
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 11 of 13
of the accused company. He also refers to the alleged acceptance of
resignation of Shri Shambhu Kumar Aggarwal which is also allegedly
accepted by Shri G.L. Aggarwal, chairman of the accused company to
submit that the signature on the letter of resignation, and on the
acceptance of resignation, and on purported Form-32 are strikingly
different.
15. So far as the submission with regard to the averment
made in paragraph 2 of the two complaints being deficient, is
concerned, the same has already been taken care by me while dealing
with the petitions of Shri Shambhu Kumar Aggarwal. So far as the
purported resignations of Shri Prakash Chand Saraf and Shri Amit
Aggarwal from directorship of the accused company are concerned,
firstly, I may notice that only photocopies of Form-32 have been placed
on record. They can certainly not be relied upon in these proceedings
under Section 482 of the Code. Moreover, the respondent has raised
enough doubt with regard to the authenticity of the same by referring
to the affidavit dated 21.9.2005 stated to have been filed by Shri
Prakash Chand Saraf before the Punjab and Haryana High Court,
wherein he has described himself and Shri Amit Aggarwal as the
directors of the accused company. If the said directors had in fact
resigned on 16.2.2005, it does not stand to reason why Shri Prakash
Chand Saraf described himself, as well as Shri Amit Aggarwal, as
directors of the accused company on 21.9.2005. Though the original
documents are not before me, from the photocopies of Form-32 as well
as the cheques issued by Shri G.L. Aggarwal and the alleged acceptance
of resignation by Shri G.L. Aggarwal in relation to Shri Shambhu Kumar
Aggarwal, prima facie it appears that the signature of Shri G.L.
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 12 of 13
Aggarwal on Form-32 are somewhat different from the other signatures
attributed to him. This also raises disputed questions of fact. As I have
already stated, in these petitions it is not for me to proceed on the
basis of documents and averments which are disputed, and I cannot
undertake an enquiry into such facts while exercising jurisdiction under
Section 482 of the Code. For the aforesaid reasons I dismiss all these
petitions with costs quantified at Rs.5000/- in each of these petitions.
16. The costs shall be paid by each of the petitioners before
the trial court on the next date.
May 14, 2008 VIPIN SANGHI
Judge
aj
Crl.M.C. No.1799-98/2007 & 2192 & 2197/2007 page 13 of 13