2021 INSC 0634 NON­REPORTABLE  IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION         CRIMINAL APPEAL NO(S).  1206         OF 2021  (Arising out of SLP(Criminal) No(s). 7573 of 2014) ASHUTOSH ASHOK  PARASRAMPURIYA & ANR.  ….APPELLANT(S)                  VERSUS M/S. GHARRKUL  INDUSTRIES PVT. LTD. & ORS …RESPONDENT(S) WITH          CRIMINAL APPEAL NO(S).  1207      OF 2021  (Arising out of SLP(Criminal) No(s). 9520 of 2014) J U D G M E N T Rastogi, J. 1. Leave granted. 2. The   present   appeals   are   directed   against   the   common judgment   and   order   dated   18 th   July,   2014   filed   at   the   instance   of 1 the   appellants   under   Section   482   of   Code   of   Criminal   Procedure, 1973(herein   after   being   referred   to   as   “CrPC”)   against   the   order dated 10 th  November, 2012 pursuant to which they were summoned to answer to a charge of Section 138 of Negotiable Instruments Act, 1881(hereinafter   being   referred   to   as   the   “NI   Act”)   that   came   to   be dismissed by the High Court under the order impugned. 3. The   seminal   facts   in   brief   necessary   for   the   present   purpose are stated as under. 4. The appellant nos. 1 and 2 in Criminal Appeal @ SLP(Criminal) No. 7573 of 2014 and appellant nos. 2, 3 and 4 in Criminal Appeal @ SLP(Criminal) No. 9520 of 2014 are the Directors of the appellant no.   1(Ameya   Paper   Mills   Pvt.   Ltd.)   in   Criminal   Appeal   @ SLP(Criminal)   No.   9520   of   2014,   the   Private   Limited   Company established under the provisions of the Companies Act, 1956.   It is the case of respondent no. 1­complainant that it is a Private Limited Company   dealing   in   the   business   of   production   and   selling   spices under   the   name   and   style   of   M/s.   Gharkul   Industries   Private   Ltd. and   the   appellants   being   well   acquainted   with   respondent   no.1­ complainant   and   being   in   need   of   financial   assistance   for   their 2 business   approached   respondent   no.1­complainant   with   a   request to   provide   them   financial   assistance.     Respondent   no.   1­ complainant   considering   the   relations   and   need   of   the   appellants provided financial assistance and on negotiations, Memorandum of Understanding  was executed which was signed by appellant no. 2­ Dilip   Shrikrishna   Andhare(Appellant   no.   2   in   Criminal   Appeal   @ SLP(Criminal)   No. 9520  of  2014)  with  consent  of  all  the  appellants in the presence of two attesting witnesses. 5. It is also the case of respondent no. 1­complainant that all the appellants had agreed that the amount so received from respondent no.   1   would   be   returned   within   a   specified   time   as   agreed   in   the Memorandum   of   Understanding   and   accordingly   payments   were made by respondent no. 1­complainant as and when demanded by various   cheques   details   which   were   furnished   in   the   complaint. Accordingly,   a   total   amount   of   Rs.   1,50,19,831/­   was   received   by the   appellants   through   cheque   during   the   period   23 rd   November, 2007 to 12 th  March, 2009, the details of which are as under:­ Date Cheque No. Bank HDFC Bank Amount 23/11/07 417895 HDFC Bank 20,00,000/- 3 30/11/07 417896 HDFC Bank 16,00,000/- 18/01/08 417909 HDFC Bank 6,00,000/- 21/01/08 417915 HDFC Bank 5,00,000/- 22/01/08 417916 HDFC Bank 10,00,000/- 23/01/08 417917 HDFC Bank 5,39,831/- 30/01/08 417919 HDFC Bank 7,00,000/- 01/02/08 461840 S.B.I. 3,00,000/- 15/02/08 461840 S.B.I. 5,00,000/- 26/02/08 507485 HDFC Bank 3,00,000/- 01/03/08 507487 HDFC Bank 4,00,000/- 11/03/08 461844 S.B.I. 3,50,000/- 18/03/08 507483 HDFC Bank 80,000/- 24/03/08 507497 HDFC Bank 3,04,000/- 04/04/08 507509 HDFC Bank 3,00,000/- 0/04/08 507500 HDFC Bank 2,70,000/- 28/04/08 507506 HDFC Bank 24,000/- 01/05/08 507507 HDFC Bank 1,27,000/- 06/05/08 507514 HDFC Bank 2,25,000/- 30/05/08 461861 S.B.I. 2,50,000/- 04/06/08 507519 HDFC Bank 4,00,000/- 27/06/08 507426 HDFC Bank 2,50,000/- 12/03/09 333407 S.B.I. 10,00,000/- 12/03/09 333408 S.B.I. 10,00,000/- 12/03/09 333409 S.B.I. 10,00,000/- 4 12/03/09 333410 S.B.I. 10,00,000/- 6. It   is   the   further   case   of   the   respondent   no.   1   that   on   18 th August   2010,   a   letter   was   issued   to   the   appellants   demanding balance­sheet of the Company, which was supplied and accordingly accounts were confirmed by the appellants and on 21 st   June 2012, the appellants issued a letter admitting the outstanding balance of respondent no. 1­complainant as on 31 st  March, 2012 to the extent of Rs.1,49,94,831/­.  According to respondent no. 1, the appellants as   Directors   of   their   Company   are   responsible   for   conduct   of   their business and for the affairs of the Company. 7. Appellant No. 1­Company in Criminal Appeal @ SLP(Criminal) No.   9520   of   2014   issued   a   cheque   on   2 nd   June,   2012   in   favour   of respondent no. 1­complainant towards part payment of the amount valued   for   Rs.   10,00,000/­   drawn   on   State   Bank  of  India,   Finance Branch   at   Nagpur,   Maharashtra   which   was   deposited   by respondent   no.   1­complainant   in   UCO   Bank,   Amravati, Maharashtra for encashment.  However, the same was dishonoured due to “funds insufficient”.   The intimation of dishonour  of cheque was   received   by   respondent   no.   1­complainant   on   4 th   June,   2012. After   dishonour   of   cheque,   notice   was   issued   to   the   appellants 5 demanding   the   said   amount   of   cheque,   which   was   refused   to   be accepted by the appellants in spite of intimation given by the Postal Authorities   and,   thus,   the   notice   was   returned   with   remark   “not claimed”. 8. In the background of the above facts, respondent no. 1 filed a complaint   against   the   appellants   under   Section   138   of   NI   Act   in which   a   specific   averment   was   made   that   respondent   no.   1   by considering  the   need  of   the   appellants  for  financial   assistance  and their relations, provided such financial assistance to the appellants by executing Memorandum of Understanding, which was signed by Appellant   no.   2­Dilip   Shrikrishna   Andhare.     It   is   specifically contended   that   appellant   no.   2   signed   the   said   document   with consent   of   all   the   remaining   appellants   in   the   presence   of   two attesting witnesses.   It is the case of respondent no. 1­complainant as   revealed   from   the   complaint   that   all   the   appellants   agreed   that the amount provided by respondent no. 1 would be refunded within one or two years.  The contents of the complaint further reveal that respondent   no.   1   had   demanded   balance­sheet   of   appellant   no.   1 Company,   which   was   provided   and   the   appellants   also   confirmed 6 the   balance   in   their   accounts   by   issuing   letter   dated   21 st   June, 2012.     The   cheque   involved   in   the   criminal   case   initiated   by respondent no. 1 against the appellants is dated 2 nd  June, 2012.  It is further averred in para 5 & 7 of the complaint that all Directors of   the   appellant   Company   are   responsible   for   its   business   and   all the appellants are involved in the business of the Company and are responsible for all the affairs of the Company.   9. After contending about the fact of issuance of cheque dated 2 nd June, 2012 by the appellants to respondent no. 1 and dishonour of cheque   for   want   of   sufficient   funds,   on   receipt   of   intimation regarding dishonour of cheque on 4 th   June, 2012, respondent no. 1 issued legal notice to the appellants on the address of appellant no. 1­Company   as   well   as   on   their   residential   address   by   registered post   acknowledgment   due   on   26 th   June,   2012   demanding   amount of   Rs.10   lakhs   which   is   alleged   to   have   been   refused   by   the appellants as per endorsement made by the Postal Department.   10. In   the   light   of   the   above   averments   in   the   complaint   and documents filed on record, and so also the specific averment made in   paragraph   5   and   7   of   the   complaint   that   all   the   appellants   are 7 equally   responsible   for   the   offence   committed   by   them   and   they have issued the said cheque to discharge their legal liability towards respondent no. 1­complainant.  11. The learned trial Court taking  cognizance of the complaint by order dated 10 th  November, 2012 issued summons to the appellants herein directing them to appear before the Court on 23 rd  November, 2012 and the appellants were granted bail on furnishing security of Rs.2,000/­ by an Order dated 23 rd   November, 2012 by the Court of Chief Judicial Magistrate.  12. The   order   passed   by   the   learned   trial   Judge   summoning   the present   appellants   came   to   be   challenged   in   two   separate   criminal petitions   filed   under   Section   482   CrPC   seeking   quashing/setting aside of the criminal complaints/Summary criminal case registered against  them   as   well   as   the   summons   dated  10 th   November,   2012. Both   the   petitions   were   tagged   together   and   came   to   be   dismissed by the High Court under the order impugned dated 18 th  July, 2014. 13. Ms.   Arundhati   Katju,   learned   counsel   for   the   appellants submits   that   there   is   no   specific   averment   made   that   they   have committed the  offence and  are  responsible  for   conduct  of business 8 of   the   Company,   which   is   one   of   the   essential ingredient/requirement   and   in   the   absence   of   such   averment, merely   because   the   appellants   are   the   Directors   of   the   Company, they   are   not   to   be   held   vicariously   liable   and   cannot   be   made accused in the proceedings. 14. It was further the case of the appellants that no notice relating to dishonour  of cheque dated 2 nd   June, 2012 has been received by them  and  there  is  no  averment   made  in  the  complaint   that  on  the date of issuance of cheque, the appellants were either the Managing Directors   or   were   responsible   for   day­to­day   business   of   the Company. 15. Mr. Sidhartha Dave, learned senior counsel for the appellants in   Criminal   Appeal   @   SLP(Criminal)   No.   7573   of   2014   further submits   that   they   are   the   non­executive   Directors   of   the   Company and   were   not   responsible   for   the   conduct   of   the   business   of   the Company   which   is   the   mandatory   requirement   for   initiation   of   the proceedings under Section 138 of NI Act and submits that the pre­ condition   as   referred   to   under   Section   141   of   NI   Act   not   being complied   with,   the   order   passed   by   the   learned   trial   Judge   in 9 summoning   the  present   appellants   is  nothing   but  a   clear  abuse   of process of law and the finding which has been recorded by the High Court   in   the   impugned   judgment   is   not   legally   sustainable   in   law and   in   support   of   his   submission   has   placed   reliance   on   the judgments   of   this   Court   in   S.M.S.   Pharmaceuticals   Ltd.   Vs. Neeta Bhalla and Another    1   and   Pooja Ravinder Devidasani   Vs. State of Maharashtra and Another    2 . 16. Per   contra,   Mr.   Pallav   Shishodia,   learned   senior   counsel   for the   respondents,   while   supporting   the   order   passed   by   the   High Court in the impugned proceedings, submits that the appellants in Criminal   Appeal   @   SLP(Criminal)   No.   7573   of   2014   claimed themselves to be a non­executive Directors but the record indicates that they are the Directors of the Company and in support thereof, Form   No.   32   which   has   been   obtained   from   the   Registrar   of Companies   placed   on   record   clearly   indicates   that   all   are   the Directors   of   the   Company   as   on   1 st   April   2007   and   responsible   to the   Company   for   the   conduct   of   business   actively   involved   in   the business   of   the   Company   and   responsible   for   the   affairs   of   the 1 2005(8) SCC 89 2 2014(16) SCC 1 10 Company and there is nothing to indicate that they were appointed as non­executive Directors and what is being urged by the learned counsel for the appellants may be their defence which is a matter of trial   and   is   not   open   to   be   examined   at   this   stage   and   once   the compliance of the  statute has been  made as required by  law, their petitions have been rightly rejected by the High Court and needs no further indulgence of this Court. 17. During   the   course   of   submission,   learned   counsel   for   the respondents   submits   that   apart   from   dishonour   of   cheque   in   the instant   matters,   there   are   other   cheques   issued   by   the   appellants which   were   also   dishonoured   and   separate   complaints   have   been filed   by   the   respondent(s)   but   because   of   the   pendency   of   the present appeals before this Court, no action has been taken by the trial   Judge.     The   details   of   the   cases   including   this   case   are   as under:­ Sl. No. Case No. Court Cheque Amount(In Rupees) 1. S.C.C No. 2500/2012 3 rd JMFC, Amravati 10,00,000/­(Ten   Lakhs only)   vide   Cheque   No. 493018 dated 02.06.2012 2. S.C.C. No. 4984/2012 3rd JMFC, Amravati 10,00,000/­(Ten   Lakhs only)   vide   Cheque   No. 493017 dated 17.07.2012 3. S.C.C   No. 7 th 1,15,39,200/­(One   Crore 11 2600/2014 JMFC, Amravati Fifteen   Lakhs   Thirty   Nine Thousand   and   Two Hundred   only)   vide   Cheque No. 493007 to 493016  Cheque   No.   493020   and 493021  All dated 05.04.2014  18. Learned   counsel   for   the   respondents   have   placed   reliance   on the judgments of this Court in   A.K. Singhania   Vs.   Gujarat State Fertilizer Company Limited and Another    3    and   Gunmala Sales Private Limited  Vs.  Anu Mehta and Others    4 . 19. We  have  heard   learned   counsel   for   the   parties   and  with   their assistance perused the material available on record.  20. In   this  regard,   taking   note   of  the   three­Judge   Bench   decision of   this   Court   in   S.M.S.   Pharmaceuticals   Ltd. (supra)   would   be apposite.  While dealing with an offence under Section 138 of the NI Act,   the   Court   explaining   the   duty   of   a   Magistrate   while   issuing process   and   his   power   to   dismiss   a   complaint   under   Section   203 without even issuing process observed thus:­ 3 2013(16) SCC 630 4 2015(1) SCC 103 12 “ 5 .   … a complaint must contain material to enable the Magistrate to   make   up   his   mind   for   issuing   process.   If   this   were   not   the requirement,   consequences   could   be   far­reaching.   If   a   Magistrate had  to issue  process  in every   case,  the  burden  of  work  before  the Magistrate as well as the harassment caused to the respondents to whom process is issued would be tremendous. Even Section 204 of the Code starts with the words ‘if in the opinion of the Magistrate taking   cognizance   of   an   offence   there   is   sufficient   ground   for proceeding’.   The   words   ‘sufficient   ground   for   proceeding’   again suggest   that   ground   should   be   made   out   in   the   complaint   for proceeding against the respondent. It is settled law that at the time of issuing of the process the Magistrate is required to see only the allegations in the complaint and where allegations in the complaint or the charge­sheet  do not constitute an offence against a person, the complaint is liable to be dismissed.” 21. After so stating, the Court analysed Section 141 of the NI Act and after referring to certain other authorities answered a reference which reads as follows:­  19 ( a ) It is necessary to specifically aver in a complaint under   Section   141   that   at   the   time   the   offence   was committed,   the   person   accused   was   in   charge   of,   and responsible   for   the   conduct   of   business   of   the company. This averment is an essential requirement of Section   141   and   has   to   be   made   in   a   complaint. Without this averment being made in a complaint, the requirements   of   Section   141   cannot   be   said   to   be satisfied. ( b )   The   answer   to   the   question   posed   in   sub­para   ( b ) has to be  in  the negative.  Merely   being  a  director  of  a company   is   not   sufficient   to   make   the   person   liable under Section 141 of the Act. A director in a company cannot   be   deemed   to   be   in   charge   of   and   responsible to   the   company   for   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 13 as a fact as there is no deemed liability of a director in such cases. ( c )   The   answer   to   Question   ( c )   has   to   be   in   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.” 22. The   same   principle   has   been   reiterated   in   S.K. Alagh   Vs.   State   of   Uttar   Pradesh   &   Others    5 ;   Maharashtra   State Electricity   Distribution   Co.   Ltd.   &   Another   Vs.   Datar Switchgear Ltd. and Others    6  and   GHCL Employees Stock Option Trust   Vs.   India Infoline Limited    7 . 23. In   the   light   of   the   ratio   in   S.M.S.   Pharmaceuticals   Ltd. (supra)   and   later   judgments   of   which   a   reference   has   been   made what is to be looked into is whether in the complaint, in addition to 5 2008 (5) SCC 662 6 2010 (10) SCC 479 7 2013 (4) SCC 505 14 asserting that the appellants are the Directors of the Company and they   are   incharge   of   and   responsible   to   the   Company   for   the conduct   of   the   business   of   the   Company   and   if   statutory compliance of Section 141 of the NI Act has been made, it may not open for the High Court to interfere under Section 482 CrPC unless it   comes   across   some   unimpeachable,   incontrovertible   evidence which   is   beyond   suspicion   or   doubt   or   totally   acceptable circumstances   which   may   clearly   indicate   that   the   Director   could not  have been concerned  with  the  issuance of  cheques and  asking him to stand the trial would be abuse of process of Court.   Despite the presence of basic averment, it may come to a conclusion that no case   is   made   out   against   the   particular   Director   for   which   there could be various reasons. 24. The issue for determination before us is whether the role of the appellants in the capacity of the Director  of the defaulter  company makes   them   vicariously   liable   for   the   activities   of   the   defaulter Company   as   defined   under   Section   141   of   the   NI   Act?     In   that perception,   whether   the   appellant   had   committed   the   offence chargeable under Section 138 of the NI Act? 15 25. We   are   concerned   in   this   case   with   Directors   who   are   not signatories   to   the   cheques.     So   far   as   Directors   who   are   not   the signatories   to   the   cheques   or   who   are   not   Managing   Directors   or Joint   Managing   Directors   are   concerned,   it   is   clear   from   the conclusions drawn in the afore­stated judgment that it is necessary to   aver  in  the  complaint   filed  under   Section   138  read  with   Section 141   of   the   NI   Act   that   at   the   relevant   time   when   the   offence   was committed, the Directors were in charge of and were responsible for the conduct of the business of the company.   26. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against   the   Director.     That   is   why   this   Court   in   S.M.S. Pharmaceuticals   Ltd. (supra)   observed   that   the   question   of requirement   of   averments   in   a   complaint   has   to   be   considered   on the basis of provisions contained in Sections 138 and 141 of the NI Act   read   in   the   light   of   the   powers   of   a   Magistrate   referred   to   in Sections   200   to   204   CrPC   which   recognise   the   Magistrate’s discretion   to   take   action   in   accordance   with   law.     Thus,   it   is 16 imperative that  if this  basic  averment is  missing, the  Magistrate is legally justified in not issuing process. 27. In   the   case   on   hand,   reading   the   complaint   as   a   whole,   it   is clear   that   the   allegations   in   the   complaint   are   that   at   the   time   at which   the   cheques   were   issued   by   the   Company   and   dishonoured by the Bank, the appellants were the Directors of the Company and were   responsible   for   its   business   and   all   the   appellants   were involved   in   the   business   of   the   Company   and   were   responsible   for all the  affairs of the Company.   It may  not  be proper  to  split while reading   the   complaint   so   as   to   come   to   a   conclusion   that   the allegations as a whole are not sufficient to fulfil the requirement of Section   141   of   the   NI   Act.     The   complaint   specifically   refers   to   the point   of   time   when   the   cheques   were   issued,   their   presentment, dishonour and failure to pay in spite of notice of dishonour.  In the given   circumstances,   we   have   no   hesitation   in   overruling   the argument made by the learned counsel for the appellants. 28. Indisputedly,   on   the   presentation   of   the   cheque   of Rs.10,00,000/­(Rupees   Ten   Lakhs   only)   dated   2 nd   June   2012,   the cheque was dishonoured due to “funds insufficient” in the account 17 and   after   making   due   compliance,   complaint   was   filed   and   after recording   the   statement   of   the   complainant,   proceedings   were initiated   by   the   learned   Magistrate   and   no   error   has   been committed by the High Court in dismissing the petition filed under Section 482 CrPC under the impugned judgment.  29. The submission of learned counsel for the appellants that they are   the   non­executive   Directors   in   the   light   of   the   documentary evidence placed on record by Form No. 32 issued by the Registrar of Companies, both the appellants are shown to be the Directors of the Company,   still   open   for   the   appellants   to   justify   during   course   of the trial. 30. In   our   considered   view,   the   High   Court   has   rightly   not interfered in exercise of its jurisdiction under Section 482 CrPC for quashing of the complaint. 31. Before   concluding,   we   would   like   to   observe   that   the proceedings   could   not   be   processed   further   in   view   of   the   interim order passed by this Court dated 17 th  October 2014 and because of the instant appeals, the other cases instituted by the respondent(s)­ complainant have been held up before the trial Court.   Since these 18 are   the   old   cases   instituted   in   the   year   2012   and   could   not   be processed   further   because   of   the   pendency   of   the   appeals   in   this Court,   we   may   consider   it   appropriate   to   observe   that   let   all   the three   cases   of   which   a   reference   been   made   in   para   17   of   this Judgment  be clubbed together  and  be disposed of expeditiously  as possible   on   its   own   merits   in   accordance   with   law   without   being influenced/inhibited by the observations made by us in the present judgment   not   later   than   six   months   from   the   date   parties   record their attendance before the trial Court.   All the parties shall record their attendance before the concerned trial Court on 22 nd  November, 2021. 32. Consequently, the appeals fail and are accordingly dismissed. 33. Pending application(s), if any, stand disposed of.       ………………………..J.           (AJAY RASTOGI)       ..………………………J.       (ABHAY S. OKA) NEW DELHI OCTOBER 08, 2021 19