Alfa One Global Builders Pvt. Ltd. Vs. Nirmala Padmanabhan Limited & Ors. - Under Section 142(2)(a) of the Negotiable Instruments Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account.

HC Kerala (21.08.2023) In Alfa One Global Builders Pvt. Ltd. Vs. Nirmala Padmanabhan Limited & Ors. [WP(Crl.) No. 1196 of 2022 (Neutral Citation No.: 2023/KER/49774)] held that;

• Under Section 142(2)(a) of the Negotiable Instruments Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account. 

Excerpts of the Order;    

This writ petition is at the instance of accused Nos.1 and 3 in C.C.No.290/2022 on the files of the Judicial First Class Magistrate Court – 1, Chengannur.

# 2. The respondents herein are the complainant as well as accused Nos.2 and 4, in the above case.

# 3. The writ petitioners seek the following reliefs:

• i. Quashing all proceedings in C.C 290 /2022 on the file of Judicial First-Class Magistrate Court, Chengannur which lacks jurisdiction to entertain Exhibit-P3, Complaint.

• ii. Declare that the jurisdiction to entertain the Complaint under Sec. 138 of the Negotiable Instruments Act, 1881 is a Special Jurisdiction conferred by Sec. 142 of the NI Act, Notwithstanding anything contained in Criminal Procedure Code, must be strictly construed and only the Court Specified in Sec. 142(2) alone shall have the jurisdiction to entertain the complaint.

• iii. Declare that the dispute between the Complainant, Writ petitioners and Respondents 2 & 3 are Civil Disputes arising out of Exhibit-P2, agreement for Specific Performance of Construction of Commercial Building in immovable property and the delay in performing the act agreed will only entail the civil consequences.

• iv. Declare that the liability under the Cheque and NI Act proceedings taken over by the contracting parties, Respondents 2 & 3 the proceedings against the petitioners who are erstwhile partners is not maintainable.

• v. That by virtue of the agreement between the Complainant and Accused, mediation and Arbitration are provided in the agreement and criminal prosecution is not contemplated with respect to any dispute arising and incidental to the rights arising under the agreement.

# 4. Heard the learned counsel for the petitioners as well as the learned counsel for the respondents.

# 5. I have perused the relevant records and provisions of law in this connection.

# 6. The learned counsel for the petitioners argued at length, to convince this Court that Judicial First Class Magistrate Court – 1, Chengannur, lacks jurisdiction to entertain Ext.P3 complaint, as per which, the complainant launched prosecution, alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act (for short, ‘the NI Act’ hereinafter), by the accused. In support of this contention, the learned counsel for the petitioners submitted that, as per Ext.P3, copy of the complaint, the address of the complainant is shown as ‘Deepam House, Thayineri, Payyannur Village, Kannur District.’ At the same time, in Ext.P3, it has been stated that ‘Now residing at “Pournami”, Thriperumthura P.O.,Mavelikkara, Alappuzha.’ It is submitted by the learned counsel for the petitioners that, the cheque amount involved in the complaint is Rs.1,41,48,939/- (Rupees One Crore Forty One Lakh Forty Eight Thousand Nine Hundred and Thirty Nine only) and the said cheque was issued, pursuant to an agreement entered into between the petitioners and partners of the firm ‘M/s Thana Square’ and the complainant. Ext.P2 is the copy of the said agreement. In the said agreement, the address of the complainant is shown as ‘Mrs.Nirmala Padmanabhan, W/o.Mr.Padmanabhan, permanently residing at ‘601, Saishubham BLD.Plot No.7, Sec.8B.C.B.D, Belapur, Navi Mumbai, Maharashtra State, India.’ It is also submitted that the cheque was delivered at Kannur by the petitioners, drawn on South Indian Bank Ltd., Kannur. 

# 7. The sum and substance of the argument tendered by the learned counsel for the petitioners is that, since the cheque was delivered for collection through an account maintained by the drawer of the cheque at Kannur, the complainant at present residing within the jurisdiction of Chengannur Court, could not launch prosecution before the Judicial First Class Magistrate Court-1, Chengannur, merely on the ground that the cheque was presented for collection through State Bank of India, Chennithala branch, Alappuzha District, within the jurisdiction of Judicial First Class Magistrate Court-1, Chengannur. It is argued further that, either Section 142(2)(a) or (b) of the NI Act, does not confer jurisdiction to the Judicial First Class Magistrate Court-1, Chengannur.

# 8. According to the learned counsel for the petitioners, ‘if the cheque is delivered for collection through an account’ contemplated under Section 142(2) (a)of the NI Act, is intended to confer jurisdiction to a court where the payee or holder in due course presents the cheque for collection and the cheque shall be one issued through an account maintained by the payee or holder in due course and the definition of the word ‘delivered’ is to be understood from the word ‘delivery’ as defined under Section 46 of the NI Act. It is submitted that, as per Section 46 of the NI Act, ‘delivery’ means, ‘the making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive’. It is also argued that, in the instant case, the cheque was not issued through an account maintained by the payee in State Bank of India, Chennithala, though the cheque is a crossed cheque to be encashed only through an account. As such, Section 142(2)(a) of the NI Act does not confer jurisdiction to the Judicial First Class Magistrate Court – 1, Chengannur, merely because the cheque was presented through an account maintained in a Bank, within the jurisdiction of the said court. Therefore, the complaint is liable to be to quashed for want of inherent lack of jurisdiction, is the submission of the learned counsel for the petitioners. 

# 9. Whereas, the learned counsel for the 1 st respondent/original complainant placed a decision of the Apex Court in Tr.P(Crl.) No.273/2020, M/s Himalaya Self Farming Group & Anr. v M/s Goyal Feed Suppliers, to beat the contention of the learned counsel for the petitioners and submitted that, as per Section 142(2)(a) of the NI Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account maintained by the complainant. In the said decision, the Apex Court held as under:

The fact that the respondent has its Head Office at Siliguri and that there is no reason why it chose to file a complaint in Agra except to harass the petitioners, cannot also be a ground for seeking transfer. Under Section 142(2)(a) of the Negotiable Instruments Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account. 

It is also argued by the learned counsel for the 1st respondent that, in the present case, the cheque was presented by the complainant through her account in State Bank of India, Chennithala branch and accordingly, the complaint was lodged before the Judicial First Class Magistrate Court – 1, Chengannur. Therefore, the complaint is perfectly maintainable before the Judicial First Class Magistrate Court – 1, Chengannur, as provided under Section 142(2)(a) of the NI Act.

# 10. The learned counsel appearing for the other respondents, who are joining hands with the petitioners, also supported the contentions raised by the learned counsel for the petitioners.

# 11. Now, the question to be considered herein is; when the payee or holder in due course presents a cheque through an account maintained by the payee or holder in due course in a bank within the jurisdiction of a court, whether the court, where the cheque was presented for collection, has jurisdiction to entertain the complaint, alleging commission of offence under Section 138 of the NI Act?

# 12. In this regard, it is relevant to extract Section 142(2)(a) and (b) of the NI Act and the explanation provided to Section 142(2)(a).

• Section 142(2): The offence under section 138 shall be inquired into and tried only by a Court within whose local jurisdiction, –

• (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or

• (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.

• Explanation.- For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account. 

# 13. In this connection, it is relevant to refer the circumstances, which led to amendment of Section 142 and introduction of Section 142-A of the NI Act, with effect from 15.06.2015.

# 14. As per the decision in Dashrath Rupsingh Rathod v. State of Maharashtra and Anr. reported in [AIR 2014 SUPREME COURT 3519], the Apex Court, while overruling the ratio of the decision in K.Bhaskaran v. Sankaran Vaidhyan Balan reported in [AIR 1999 SC 3762], held as under:

• The proviso to S.138 features three factors which are additionally required for prosecution to be successful. In this aspect S.142 correctly employs the term ’cause of action’ as compliance with the three factors contained in the proviso are essential for the cognizance of the offence, even though they are not part of the action constituting the crime. The concatenation of all these concomitants, constituents or ingredients of S.138 is essential for the successful initiation or launch of the prosecution. However, so far as the offence itself the proviso has no role to play. Accordingly a reading of S.138 in conjunction with S.177, Cr.P.C. leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed. Therefore the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located. The law should not be warped for commercial exigencies. As it is 3.138 has introduced a deeming fiction of culpability, even though, S.420 IPC is still available in case the payee finds it advantageous or convenient to proceed under that provision. An interpretation should not be imparted to S.138 which will render it as a device of harassment i.e. by sending notices from a place which has no casual connection with the transaction itself, and/or by presenting the cheque(s) at any of the banks where the payee may have an account.

# 15. Indubitably, Section 142 of the NI Act was amended and Section 142-A was introduced with effect from 15.06.2015, to clarify the jurisdictional issue and to address the crisis of transfer of cases as per the ratio in Dashrath Rupsingh’s case (supra).

# 16. To be on the core issue, reading Section 142(2) (a) and the explanation to clause (a), it is emphatically clear that, for the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.

# 17. A conjoint reading of Section 142(2)(a) along with explanation thereof, makes the position emphatically clear that, when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and within the jurisdiction of the court, where such cheque was presented for collection, will have jurisdiction to entertain complaint alleging commission of offence punishable under Section 138 of the NI Act. In view of the above finding, the word ‘delivered’ used in Section 142(2)(a) of the NI Act has no significance and significance must be given to the text ‘for collection through an account’. That is to say, delivery of the cheque takes place where the cheque was issued and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction. Therfore, challenge raised by the learned counsel for the petitioners referring definition of the word ‘delivered’ contemplated under Section 46 of the NI Act could not succeed.

# 18. Regarding relief Nos.3 to 5, nothing argued by the learned counsel for the petitioners to substantiate the same. It appears that those reliefs cannot be granted, since the penal consequence on dishonour of the cheque should have to be suffered by the person who issued the cheque and the same cannot be delegated to another person, in any manner.

# 19. In fact, as per Section 143(2)of the NI Act, the trial of a case under this Section shall, so far as practicable, consistently with the interests of justice, be continued from day to day until its conclusion, unless the Court finds the adjournment of the trial beyond the following day to be necessary for reasons to be recorded in writing. As per Section 143(3) of the NI Act, every trial under this section shall be conducted as expeditiously as possible and an endeavour shall be made to conclude the trial within six months from the date of filing of the complaint. Despite the statutory mandate, trial of the cases being stalled for years and the same, no doubt, would defeat the legislative intention.

# 20. Before parting, it is pertinent to observe that when question of jurisdiction to be decided, the said challenge should be raised before the same court and the said court has jurisdiction to decide the question of jurisdiction and the question of jurisdiction never be a subject matter of challenge in a writ petition. However, since this Court admitted this writ petition earlier, the legal question is answered, in the interest of justice and to avoid multiplicity of proceedings. 

# 21. Resultantly, this petition is found to be meritless and is accordingly dismissed. There shall be a direction to the trial court to expedite the trial and dispose of the case, at any rate, within a period of 3 months from the date of receipt of a copy of this judgment.

Registry is directed to forward a copy of this judgment to the trial court for information and compliance. 

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Ashok Shewakramani & Ors. Vs. State of Andhra Pradesh & Anr. - In a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act.

 SCI (03.08.2023) In Ashok Shewakramani & Ors. Vs. State of Andhra Pradesh & Anr. [Criminal Appeal No. 879 of 2023. (2023) ibclaw.in 87 SC] held that;

• Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision. The vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 are satisfied.

• The most important averment which is required by sub-Section (1) of Section 141 of the NI Act is that the directors were in charge of, and were responsible for the conduct of the company. The appellants are neither the signatories to the cheques nor are whole-time directors.

• The requirement of sub-section 1 of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section 1 of Section 141 NI Act must be a person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company

• Merely because somebody is managing the affairs of the company, per se, he does not become in charge of the conduct of the business of the company or the person responsible for the company for the conduct of the business of the company.

• For example, in a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act.

Excerpts of the Order;    

# 1. We have heard the learned senior counsel appearing for the appellants. The appellants are Accused Nos.5, 6 and 7 in a complaint filed by the second Respondent under Section 138 of the Negotiable Instruments Act, 1881 (for short, `the NI Act’).

# 2. By the impugned Judgment, the High Court has dismissed a petition filed by the appellants under Section 482 of the Code of Criminal Procedure, 1973 (for short, `the Code’) for quashing the complaint. By the impugned Judgment, several petitions under Section 482 of the Code were decided arising out of different complaints filed by the same complainant.

# 3. At the outset, we may note here that in paragraph 10 of the impugned Judgment, the High Court has purported to quote the relevant paragraph from the complaint bearing CC No.1/2012, which is the subject matter of this appeal. We, however, find that the averments made in this complaint are different.

# 4. The main issue canvassed by the learned Senior Counsel appearing for the appellants is that though the appellants were directors of the first accused company at a relevant time, the mandatory averments which are required to be made in terms of sub-section (1) of Section 141 of the NI Act have not been made. The response of the learned counsel appearing for Respondent No.2 is that in substance, in paragraph 7 of the complaint, the said averments are found. Secondly, the learned counsel submitted that the appellants have not replied to the statutory notice issued under Section 138 of the NI Act. In support of the second contention regarding the failure of the appellants to give a reply to the statutory notice, he relies upon a decision of this Court in the case of “S.P. Mani and Mohan Diary Versus Dr Snehalatha Elangovan”1.

# 5. We have carefully perused the complaint and the affidavit in support of the complaint. In paragraph 4 of the complaint, it is stated that the accused No.1 is the Company on whose account the two cheques were issued and accused No.2 is the Managing Director of the accused No.1. The present appellants have been described as the Directors of the accused No.1 – Company. The cheques were signed by accused No.2 who is the Managing Director of the accused No.1 company. The only material averments even according to the case of learned counsel for Respondent No.2 are found in paragraph 7 of the complaint which read thus:

• “7. The Accused 2 to 7 are fully aware of the business transactions of the Accused No.1 company. They are all jointly and severally liable for the transactions of the Accused No. 1 company. All the accused are fully aware of the issuance of the above cheques without balance in the account. They are also fully aware that the cheques will be dishonoured. It clearly establishes that all the Accused with an intention to deceive and defraud the complainant have issued the cheques and directed the complainant to present the cheques. So, the accused have issued the above cheques knowing fully well, that there are no funds in their account. The accused have not the cheques amount within 15 days after receipt of the notice. The cheques are issued towards legally enforceable debt and liability of the complainant. So, they have committed an offence, punishable under section 138 of N.I. Act.”

# 6. It is also necessary to note the averments made in Paragraph 8 of the complaint in which the second respondent stated that the statutory notice of demand was not served on the accused. In fact, the second respondent has relied upon the returned postal covers. Even in the affidavit in support of the complaint, the second respondent has come out with a case that the demand notice was not served.

# 7. In fact, the service of notice of demand is a condition precedent for filing a complaint in view of clause (c) of Section 138 of the NI Act. This is one ground on which the complaint must fail.

# 8. Now we come to the averments made in Paragraph 7. Firstly, it is stated that all the Directors were liable for the transactions of the accused No.1 company. Secondly, it is stated that all the accused were fully aware of the issuance of the cheques subject matter of the complaint, and they were also aware that the cheques will be dishonoured. Further, it is alleged that all the accused knew that there were no funds in the account of accused No.1 – company.

# 9. Sub-section 1 of Section 141 of the NI Act required the complainant to aver that the present appellants at the time of the commission of the offence were in charge of, and were responsible to the company for the conduct of the business of the company. In the present case, all that the second respondent has alleged is that the appellants were liable for transactions of the company and that they were fully aware of the issuance of the cheques and dishonour of the cheques.

# 10. Therefore, even if we decide to take a broad and liberal view of the pleadings in the complaint, we are unable to draw a conclusion that compliance with the requirements of sub-Section 1 of Section 141 N.I. Act was made by the second respondent. The most important averment which is required by sub-Section (1) of Section 141 of the NI Act is that the directors were in charge of, and were responsible for the conduct of the company. The appellants are neither the signatories to the cheques nor are whole-time directors. The decision in the case of “S.P. Mani and Mohan Diary Versus Dr. Snehalatha Elangovan”1 will have no application as in the present case, the statutory notice was admittedly not served to the accused. Obviously, the High Court has not adverted to aforesaid two glaring deficiencies in the complaint.

# 11. In the circumstances, the appeal must succeed and the impugned Order is quashed and set aside, only in so far as the present appellants are concerned. Accordingly, a complaint bearing CC No.1/12 pending in the Court of Judicial Magistrate, First Class, Nandyal is quashed only in so far as present appellants are concerned.

# 12. The appeal is accordingly allowed on the above terms.

CRIMINAL APPEAL NOS.884 and 882 of 2023

# 13. This appeal takes exception to the order of the High Court by which the prayer made by the present appellants for quashing a complaint under Section 138 of the NI Act has been rejected. With the assistance of the learned counsel appearing for the parties, we have perused the averments made in the complaints (Complaint Case Nos.963 and 692 of 2011). The present appellants are the accused Nos. 5 to 7. In two places in the complaint in paragraphs Nos. 2 and 4, the second respondent-complainant has averred that accused No.2 is the Managing Director of the accused No.1 company and accused Nos. 3 and 9 are the directors of the accused No.1 company. Therefore, the present appellants are not even described as the directors of the first accused company. Moreover, we find that the averments in terms of Section 141(1) of the NI Act are not found at all in the entire complaint. These facts were not noticed by the High court. Hence, the appeals must succeed and the impugned judgment insofar as the appellants are concerned is set aside. Complaint Nos.963 and 692 of 2011 pending in the Court of Judicial Magistrate First Class, Nandyal is quashed so far as the present appellants are concerned.

# 14. The appeals are accordingly allowed.

CRIMINAL APPEAL NOS.880, 881 and 883 OF 2023

# 15. The facts leading to the filing of these three appeals are identical. The prayer made by the appellants under Section 482 of the Code of Criminal Procedure, 1973 for quashing the complaint filed by the second respondent has been rejected by the High Court by the impugned judgment. The present appellants have been arrayed as accused Nos.5 to 7 in the complaint filed by the second respondent under Section 138 of the NI Act. The accused No.1 in the complaint is a limited company. The accused No.2 is the Chairman of the company, and the accused No.3 is the Managing Director of the Company. The accused Nos. 5 to 7 have been described as directors of the accused No.1 company. The only issue which we are called upon to decide is whether the second respondent has incorporated the averments which are necessary to be incorporated in a complaint under Section 138 of the NI Act in view of sub-section 1 of Section 141 of the NI Act. The averments made in the complaints which are the subject matter of these three appeals are identical. We are referring to the averments made in one of the three complaints (in Complaint Case No.74 of 2011) in paragraph 1:

• “1) It is submitted that the complainant is the proprietor of Sri Chakra Cotton Traders, doing business in Cotton, resident of bearing Door Number 3/917-I, Sri Chackra Nilayam, Y.M.R. Colony, Proddatur Town-516360, Kadapa Distrcit, A.P. The accused No.1 is the Private Limited concerned Company and registered under Companies Act. The Accused No.2 is Chairman of Accused No.1. Accused No.3 is the Managing Director of Accused No.2 Accused No.4 to 7 are the directors of the accused No.1 Company and Accused No. 2 to 7 are Managing the Company and busy with day to day affairs of the Company and all are managing the company and also in charge of the company and all are jointly and severally liable for the acts of accused No.1 Company.”

# 16. The learned counsel appearing for the appellants has relied upon various decisions of this Court in support of his plea that the material averments which are required to be incorporated in terms of sub-section (1) of Section 141 of NI Act are completely lacking in these cases. He mainly relied upon a decision of this Court in the case of Ashoke Mal Bafna v. M/s. Upper India Steel Mfg. & Engg. Co.Ltd.2 He would submit that for attracting vicarious liability under sub-section 1 of Section 141 of the NI Act, it is mandatory to make averments as specified therein.

# 17. The learned counsel appearing for the second respondent-complainant firstly relied upon a decision of this Court in the case of S.P.Mani and Mohan Dairy v. Dr Snehalatha Elangovan1 and especially what is held in the concluding part of the said judgment in paragraph 47. He also placed reliance on various decisions which were considered by the High Court while rejecting the prayer made by the appellants under Section 482 of the Code for quashing the complaints.

# 18. After having considered the submissions, we are of the view that there is non-compliance on the part of the second respondent with the requirements of sub-section 1 of Section 141 of the NI Act. We may note here that we are dealing with the appellants who have been alleged to be the Directors of the accused No.1 company. We are not dealing with the cases of a Managing Director or a whole-time Director. The appellants Have not signed the cheques. In the facts of these three cases, the cheques have been signed by the Managing Director and not by any of the appellants.

# 19. Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision. The vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 are satisfied. The Section provides that every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the company, as well as the company shall be deemed to be guilty of the offence under Section 138 of the NI Act. In the light of sub-section 1 of Section 141, we have perused the averments made in the complaints subject matter of these three appeals. The allegation in paragraph 1 of the complaints is that the appellants are managing the company and are busy with day to day affairs of the company. It is further averred that they are also in charge of the company and are jointly and severally liable for the acts of the accused No.1 company. The requirement of sub-section 1 of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section 1 of Section 141 NI Act must be a person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business of the company. Merely because somebody is managing the affairs of the company, per se, he does not become in charge of the conduct of the business of the company or the person responsible for the company for the conduct of the business of the company. For example, in a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act. The second allegation in the complaint is that the appellants are busy with the day-to-day affairs of the company. This is hardly relevant in the context of sub-section 1 of Section 141 of the NI Act. The allegation that they are in charge of the company is neither here nor there and by no stretch of the imagination, on the basis of such averment, one cannot conclude that the allegation of the second respondent is that the appellants were also responsible to the company for the conduct of the business. Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section 1 of Section 141 of the NI Act. Sub-section 1 of Section 141 reads thus:

• “141. Offences by companies.- 

• (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deeded to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

• Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

• Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

# 20. On a plain reading, it is apparent that the words “was in charge of” and “was responsible to the company for the conduct of the business of the company” cannot be read disjunctively and the same ought be read conjunctively in view of use of the word “and” in between.

# 21. Therefore, even by giving a liberal construction to what is averred in paragraph 1 of the complaints, we are unable to accept the submission made by the learned counsel appearing for the second respondent that these averments substantially comply with sub-section (1) of Section 141 of the NI Act.

# 22. Accordingly, appeals are allowed. The impugned judgment is set aside insofar as the appellants are concerned.

# 23. Complaint Nos.25, 169 and 74 of 2011 stand quashed only insofar as accused Nos. 5 to 7 are concerned.

# 24. There will be no order as to costs.

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