Case Law Details
Hari Shamsher Kaushik Vs Jasbir Singh, Managing Director, M/S Accura Care Pharmaceuticals Pvt. Ltd. (Delhi High Court)
Petitioner submitted that the learned Trial Court dismissed the complaint observing that since the company had not been impleaded as an accused, the liability of the respondent as its Managing Director could not be attached under section 141 of the N.I. Act. Reliance was placed on the judgment of the Supreme Court in Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661. According to the learned counsel for the petitioner, this reliance was misplaced and instead of rectifying the error, the learned Appellate Court also concluded that the dismissal of the complaint was proper, as the Trial Court had followed the decision of the Supreme Court which had held that for maintaining the prosecution under Section 141 of the N.I. Act, the Company had to be arrayed mandatorily as an accused.
Supreme Court on the question of vicarious liability, the liability of the company, the impleadment and the prosecution of the Directors and other persons in charge of the business of the company. After consideration of all the cited judgments and the arguments advanced, it was held by the Supreme Court that on a reading of the provisions of Section 141 of the N.I. Act “it is plain as day” that where the offence has been committed by a Company, the Company as well as every person incharge and responsible for the conduct of its business at the time of commission of the offence, is “deemed” to be guilty of the offence. It further held that the word “deemed” used in Section 141 of the N.I. Act applied to the company and the persons responsible for the acts of the company, as it crystalized the criminal liability and vicarious liability of the person who is in charge of the company.
The Supreme Court referred to the decision in M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 regarding what averments would be required to make a person vicariously liable, as criminal liability on account of dishonor of the Company would primarily fall on the drawer Company, which liability would be extended to the officer of the company on account of the specific provisions extending the liability to such officers, subject to fulfillment of the conditions incorporated under Section 141 of the N.I. Act.
Thus, it is the Company upon which the primary liability rests and a person who is sought to be made vicariously liable for an offence of which the principal accused is a company, would need to have a role to play in relation to the incriminating act. Section 141 of the N.I. Act operates only when the offence under Section 138 of the N.I. Act is committed by a company. The view taken by a two judges‟ Bench of the Supreme Court in Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1 was discussed, while also observing that even in Anil Hada’s case, the view has been taken that the actual offence should have been committed by the Company and then alone the other two categories of persons would become liable for the offence. It was only if there was a legal snag, where the company, though prosecuted, cannot be proceeded against, the prosecuted persons cannot escape liability created through legal fiction as envisaged under Section 141 of the Act.
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