Aneeta Hada Vs. M/S.
Godfather Travels & Tours Pvt. Ltd.
[Criminal Appeal No.
838 of 2008]
Anil Hada Vs. M/S.
Godfather Travels & Tours Pvt. Ltd.
[With Criminal Appeal
No. 842 of 2008]
Avnish Bajaj Vs.
State
[With Criminal Appeal
No. 1483 of 2009]
Ebay India Pvt. Ltd.
Vs. State and ANR.
[And Criminal Appeal
No. 1484 of 2009]
J U D G M E N T
1.
DIPAK
MISRA, J. In Criminal Appeal Nos. 838 of 2008 and 842 of 2008, the common proposition
of law that has emerged for consideration is whether an authorised signatory of
a company would be liable for prosecution under Section 138 of the Negotiable
Instruments Act, 1881 (for brevity ‘the Act’)without the company being
arraigned as an accused. Be it noted, these two appeals were initially heard by
a two-Judge Bench and there was difference of opinion between the two learned
Judges in the interpretation of Sections138 and 141 of the Act and, therefore,
the matter has been placed beforeus.
2.
In
Criminal Appeal Nos. 1483 of 2009 and 1484 of 2009, the issue involved pertains
to the interpretation of Section 85 of the Information Technology Act, 2000
(for short ‘the 2000 Act’) which is pari materia with Section 141 of the Act. Be
it noted, a director of the appellant-Company was prosecuted under Section 292
of the Indian Penal Code and Section 67 of the 2000 Act without impleading the company
as an accused.
The initiation of
prosecution was challenged under Section 482 of the Code of Criminal Procedure
before the High Court and the High Court held that offences are made out
against the appellant-Company along with the directors under Section 67 read
with Section 85 of the 2000 Act and, on the said base, declined to quash the
proceeding. The core issue that has emerged in these two appeals is whether the
company could have been made liable for prosecution without being impleaded as an
accused and whether the directors could have been prosecuted for offences
punishable under the aforesaid provisions without the company being arrayed as an
accused. Regard being had to the similitude of the controversy, these two appeals
were linked with Criminal Appeal Nos. 838 of 2008 and 842 of 2008.
3.
We
have already noted that there was difference of opinion in respect of the
interpretation of Sections 138 and 141 of the Act and, therefore, we shall
advert to the facts in Criminal Appeal No.838 of 2008 and, thereafter, refer to
the facts in Criminal Appeal Nos.1482 of 2009 and 1484 of 2009.
4.
The
appellant, Anita Hada, an authorised signatory of International Travels
Limited, a company registered under the Companies Act, 1956, issued a cheque
dated 17th January, 2011 for a sum of Rs.5,10,000/- in favour of the
respondent, namely, M/s. Godfather Travels & Tours Private Limited, which
was dishonoured as a consequence of which the said respondent initiated
criminal action by filing a complaint before the concerned Judicial Magistrate under
Section 138 of the Act. In the complaint petition, the Company was not arrayed as
an accused. However, the Magistrate took cognizance of the offence against the
accused appellant.
5.
Being
aggrieved by the said order, she invoked the jurisdiction of the High Court
under Section 482 of the Code of Criminal Procedure for quashing of the
criminal proceeding and the High Court, considering the scope of Sections 138
and 139 of the Act and various other factors, opined that the ground urged
would be in the sphere of defence of the accused and would not strengthen the
edifice for quashing of the proceeding. While assailing the said order before
the two-Judge Bench, the substratum of argument was that as the Company was not
arrayed as an accused, the legal fiction created by the legislature in Section
141 of the Act would not get attracted.
It was canvassed that
once a legal fiction is created by the statutory provision against the Company as
well as the person responsible for the acts of the Company, the conditions precedent
engrafted under such deeming provisions are to be totally satisfied and one such
condition is impleadment of the principal offender. S.B. Sinha, J. dissected
the anatomy of Sections 138 and 141 of the Act and referred to the decisions in
Standard Chartered Bank and others v. Directorate of Enforcement and others[1];
Madhumilan Syntex Ltd. & others v. Union of India and another[2]; S.M.S. Pharmaceuticals
Ltd. v. Neeta Bhalla and Another[3]; Sabitha Ramamurthy and Another v. R.B.S. Channabasavaradhya[4];
S.V. Mazumdar and others v. Gujarat State Fertilizer Co. Ltd. and Another[5];
Sarav Investment & Financial Consultancy Private Limited and another v.
Lloyds Register of Shipping Indian Office Staff Provident Fund and another[6];
K. Srikanth Singh v. North East Securities Ltd. and Anr.[7]; Suryalakshmi
Cotton Mills Ltd. v. Rajvir Industries Ltd.and Ors.[8]; N. Rangachari v. Bharat
Sanchar Nigam Ltd.[9]; Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi
and Ors.[10]; Saroj Kumar Poddar v. State (NCT of Delhi) and Anr.[11]; N.K. Wahi
v. ShekharSingh and Ors.[12]; and took note of the two-Judge Bench decision in Sheoratan
Agarwal and Another v. State of Madhya Pradesh[13] wherein the decision of the
three-Judge Bench in State of Madras v. C.V. Parekh and Another[14] was
distinguished and expressed the view as follows: -“28. With the greatest of
respect to the learned judges, it is difficult to agree therewith.
The findings, if
taken to its logical corollary lead us to an anomalous position. The trial
court, in a given case although the company is not an accused, would have to
arrive at a finding that it is guilty. Company, although a juristic person, is
a separate entity. Directors may come and go. The company remains. It has its
own reputation and standing in the market which is required to be maintained.
Nobody, without any authority of law, can sentence it or find it guilty of commission
of offence. Before recording a finding that it is guilty of commission of a
serious offence, it may be heard. The Director who was in charge of the company
at one point of time may have no interest in the company.
He may not even
defend the company. He need not even continue to be its Director. He may have
his own score to settle in view of change in management of the company. In a situation
of that nature, the company would for all intent and purport would stand
convicted, although, it was not an accused and, thus, had no opportunity to
defend itself.29. Any person accused of commission of an offence, whether
natural or juristic, has some rights. If it is to be found guilty of commission
of an offence on the basis whereof its Directors are held liable, the
procedures laid down in the Code of Criminal Procedure must be followed. In determining
such an issue all relevant aspects of the matter must be kept in mind. The
ground realities cannot be lost sight of.
Accused persons are being
convicted for commission of an offence under Section 138 of the Act inter alia
on drawing statutory presumptions. Various provisions contained therein lean in
favour of a drawer of the cheque or the holder thereof and against the accused.
Sections 20,118(c), 139 and 140 of the Act are some such provisions. The Act is
a penal statute. Unlike offences under the general law it provides for reverse burden.
The onus of proof shifts to the accused if some foundational facts are
established. It is, therefore, in interpreting a statute of this nature
difficult to conceive that it would be legally permissible to hold a company,
the prime offender, liable for commission of an offence although it does not
get an opportunity to defend itself.
It is against all
principles of fairness and justice. It is opposed to the Rule of Law. No
statute in view of our Constitutional Scheme can be construed in such a manner
so as to refuse an opportunity of being heard to a person. It would not only
offend a common- sense, it may be held to be unconstitutional. Such a
construction, therefore, in my opinion should be avoided. In any event in a
case of this nature, the construction which may be available in invoking
Essential Commodities Act, Prevention of Food Adulteration Act, which affects
the Society at large may not have any application when only a private
individual is involved.”
6.
Thereafter,
the learned Judge referred to Anil Hada v. Indian Acrylic Ltd.[15] and R.
Rajgopal v. S.S. Venkat [16], distinguished the decision in Anil Hada and
opined that the issue decided in the said case is to be understood in the
factual matrix obtaining therein as the Company could not have been prosecuted,
it being under liquidation.
The observations to the
effect that the Company need not be prosecuted against was regarded as obiter
dicta and not the ratio decidendi. Sinha J. clearly opined that the Bench was
bound by the three-Judge Bench decision in S.M.S. Pharmaceuticals Ltd.’s case
(supra)and C.V. Parekh’s case (supra). After stating so, he observed as under:
- “It is one thing to say that the complaint petition proceeded against the
accused persons on the premise that the company had not committed the offence
but the accused did, but it is another thing to say that although the company
was the principal offender, it need not be made an accused at all.
I have no doubt
whatsoever in our mind that prosecution of the company is a sine qua non for
prosecution of the other persons who fall within the second and third categories
of the candidates, viz., everyone who was in-charge and was responsible for the
business of the company and any other person who was a director or managing
director or secretary or officer of the company with whose connivance or due to
whose neglect the company had committed the offence.”
7.
The
learned Judge also took note of the maxim lex non cogit ad impossibilia and
expressed thus: - “True interpretation, in my opinion, of the said provision would
be that a company has to be made an accused but applying the principle
"lex non cogit ad impossibilia", i.e., if for some legal snag, the
company cannot be proceeded against without obtaining sanction of a court of
law or other authority, the trial as against the other accused may be proceeded
against if the ingredients of Section 138 as also 141 are otherwise fulfilled.
In such an event, it would not be a case where the company had not been made an
accused but would be one where the company cannot be proceeded against due to
existence of a legal bar. A distinction must be borne in mind between cases
where a company had not been made an accused and the one where despite making
it an accused, it cannot be proceeded against because of a legal bar.”
8.
Being
of the aforesaid view, he allowed the appeals.
9.
V.S.
Sirpurkar J., after narrating the facts and referring to Section141(2) of the
Act, which deals with additional criminal liability, opined that even if the
liability against the appellant is vicarious herein on account of the offence having
alleged to have been committed by M/s. International Travels, it would be
presumed that the appellant had also committed the offence and non-arraying of
M/s. International Travels as an accused would be of no consequence. His
Lordship further held that theris nothing in Standard Chartered Bank and others
(supra), S.M.S.Pharmaceuticals Limited (supra), Sabitha Ramamurthy and another (supra),S.V.
Muzumdar and others (supra), Sarav Investment and Financial Consultants Pvt.
Ltd. and another (supra) and K. Srikanth Singh (supra) to suggest that unless
the Company itself is made an accused, there cannot be prosecution of the
signatory of the cheque alone.
Thereafter, the
learned Judge referred to the decision in Anil Hada and expressed that in the
said case, the decision of C.V. Parekh (supra) and Sheoratan Agarwal (supra)
had been referred to and, therefore, it is a binding precedent and cannot be
viewed as an obiter dicta. Sirpurkar J. further proceeded to state that the principle
of lex non cogit ad impossibilia would not apply. That apart, the learned Judge
held that in the case at hand, it is yet to be decided as to whether the flaw was
that of the Company or the appellant herself and it could not be made out as to
whether the cheque issued by the accused was issued on behalf of the Company or
to discharge her personal liability.
Eventually, his Lordship
referred to the allegations in the complaint which are to the effect that the
two accused persons, namely, Anil Hada and Aneeta Hada, used to purchase the
air tickets for their clients and they had purchased for the Company from time
to time and issued cheques. The accused No. 1 used to conduct the business of
the Company and she also used to purchase the tickets from the complainant. On the
aforesaid foundation the learned Judge opined that the basic complaint is
against the two accused persons in their individual capacity and they might be purchasing
tickets for their travelling company. Being of this view, he dismissed both the
appeals.
10.
We
have heard Mr. Muneesh Malhotra, learned counsel for the appellant in Criminal
Appeal Nos. 838 and 842 of 2008, Dr. Abhishek Manu Singhvi, learned senior
counsel for the appellant in Criminal Appeal No. 1483 of2009 and for the
respondent in Criminal Appeal No. 1484 of 2009, Mr. Sidharth Luthra, learned senior
counsel for the appellant in Criminal Appeal No. 1484 of 2009, Mr. Rajesh Harnal,
learned counsel for the respondents in Criminal Appeal Nos. 838 of 2008 and 842
of 2008, Mr. P.P.Malhotra, learned Additional Solicitor General for the respondent
in Criminal Appeal No. 1483 of 2009 and Mr. Arun Mohan, learned Amicus Curiae.
11.
The
learned senior counsel appearing for the appellants, in support of the
proponement that the impleadment of the company is a categorical imperative to maintain
a prosecution against the directors, various signatories and other categories
of officers, have canvassed as follows: -
a. The language of
Section 141 of the Act being absolutely plain and clear, a finding has to be
returned that the company has committed the offence and such a finding cannot be
recorded unless the company is before the court, more so, when it enjoys the status
of a separate legal entity. That apart, the liability of the individual as per
the provision is vicarious and such culpability arises, ipso facto and ipso
jure, from the fact that the individual occupies a decision making position in
the corporate entity. It is patent that unless the company, the principal
entity, is prosecuted as an accused, the subsidiary entity, the individual, cannot
be held liable, for the language used in the provision makes the company the principal
offender.
b. The essence of
vicarious liability is inextricably intertwined with the liability of the principal
offender. If both are treated separately, it would amount to causing violence to
the language employed in the provision.
c. It is a fundamental
principle of criminal law that a penal provision must receive strict
construction. The deeming fiction has to be applied in its complete sense to
have the full effect as the use of the language in the provision really
ostracizes or gets away with the concepts like “identification”, “attribution” and
lifting the corporate veil and, in fact, puts the directors and the officers
responsible in a deemed concept compartment on certain guided parameters.
d. The company, as per
Section 141 of the Act, is the principal offender and when it is in existence, its
non-impleadment will create an incurable dent in the prosecution and further,
if any punishment is inflicted or an unfavourable finding is recorded, it would
affect the reputation of the company which is not countenanced in law.
e. The decision in
Sheoratan Agarwal and Another (supra) has incorrectly distinguished the decision
in C.V. Parekh (supra) and has also misconstrued the ratio laid down therein. That
apart, in the said decision, a part of the provision contained in Section 10(1)
of the Essential Commodities Act, 1955 (for brevity ‘the 1955 Act’) has been altogether
omitted as a consequence of which a patent mistake has occurred.
f. The decision in Anil Hada
(supra) has not appreciated in proper perspective the ratio decidendi in C.V.
Parekh and further there is an inherent contradiction in the judgment in as much
as at one point, it has been stated that “the payee can succeed in the case
only if he succeeds in showing that the offence was actually committed by the
company” but at another place, it has been ruled that “the accused can show
that the company has not committed the offence, though such company is not made
an accused”.
g. The terms used “as
well as the company” in Section 141(1) of the Act cannot mean that no offence need
be committed by the company to attract the vicarious liability of the officers in-charge
of the management of the company because the first condition precedent is commission
of the offence by a person which is the company.
12.
The
learned counsel for the respondents, resisting the submissions propounded by
the learned counsel for the appellants, have urged the following contentions: -(i)
If the interpretation placed by the appellant is accepted, the scheme, aims,
objects and the purpose of the legislature would be defeated inasmuch as
Chapter XVII of the Act as introduced by the Negotiable Instruments Laws
(Amendment) Act, 1988 (66 of 1988)is to promote efficacy of banking to ensure
that in commercial or contractual transactions, cheques are not dishonoured and
the credibility in transacting business through cheques is maintained.
The Chapter has been
inserted with the object of promoting and inculcating faith in the efficacy of the
banking system and its operations and giving credibility to negotiable instruments
in business transactions. The fundamental purpose is to discourage people from
not honouring their commitments and punish unscrupulous persons who purport to discharge
their liability by issuing cheques without really intending to do so. If the
legislative intendment is appositely understood and appreciated, the interpretation
of the various provisions of the Act is to be made in favour of the paying-complainant.
To bolster the aforesaid submission, reliance has been placed on Electronics Trade
and Technology Development Corporation Ltd., Secunderabad v. Indian Technologists
and Engineers (Electronics) (P) Ltd. and another[17], C.C. Alavi Haji v.
Palapetty Mohammedand Another[18] and Vinay Devanna Nayak v. Ryot Sewa Sahakaro
Bank Ltd.[19](ii) The reliance placed by the appellants on the decision in C.V.
Parekh (supra) is absolutely misconceived.
In the first case,
the Court was considering the question of acquittal or conviction of the accused
persons after considering the entire evidence led by the parties before the
trial court but in the present case, the challenge has been at the threshold
where summons have been issued. That apart, the 1955 Act and the Act in question
operate in different fields having different legislative intents, objects and
purposes and further deal with offences of various nature. In the case at hand,
the new dimensions of economic growth development and revolutionary changes and
the frequent commercial transactions by use of cheques are to be taken note of.
Further, Section 141
creates liability for punishment of offences under Section 138 and it is a
deemed liability whereas the criminal liability created for an offence under
Section 7 of the 1955 Act is not a deemed offence.(iii) After the amendment of the
Act, the unscrupulous drawers had endeavoured hard to seek many an escape route
to avoid the criminal liability but this Court with appropriate interpretative process
has discouraged the innovative pleas of such accused persons who had issued
cheques as the purpose is to eradicate mischief in the commercial world.
To buttress the aforesaid
submission, heavy reliance has been placed on D. Vinod Shivappa v. Nanda Belliappa[20],
M/s. Modi Cement Ltd. v. Shri Kuchil Kumar Nandi[21], Goaplast Pvt. Shri Ltd.
v. Chico Ursula D’souza and Anr.[22], NEPC Micon Ltd and Ors. v. Magma Leasing
Ltd.[23], Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders and Agencies Ltd
and Ors.[24], I.C.D.C. Ltd. v. Beena Shabeer and Anr.[25] and S.V. Majumdar and
others v. Gujarat Fertilizers Co. Ltd and Anr.[26](iv) The company being a
legal entity acts through its directors or other authorized officers and it
authorizes its directors or other officers to sign and issue cheques and
intimate the bank to honour the cheques if signed by such persons.
The legislature in its
wisdom has used the word ‘drawer’ in Sections 7 and 138 of the Act but not “an
account holder”. A notice issued to the Managing Director of the company who
has signed the cheques is liable for the offence and a signatory of a cheque is
clearly responsible for the incriminating act and, therefore, a complaint under
Section 138 of the Act against the director or authorized signatory of the cheque
is maintainable. In this regard, reliance has been placed upon M/s Bilakchand
Gyanchand Co. v. A. Chinnaswami[27], Rajneesh Aggarwal v. Amit J. Bhalla[28],
SMS Pharmaceuticals Ltd. v. Neeta Bhalla (supra), Anil Hada v. Indian Acrylic
Ltd. (supra) and R. Rajgopal v. S.S. Venkat[29].(v)
There is no postulate
under Section 141 of the Act that the director or the signatory of the cheque
cannot be separately prosecuted unless the company is arrayed as an accused. The
company, as is well-known, acts through its directors or authorised officers
and they cannot seek an escape route by seeking quashment of the proceedings under
Section 482 of the Code of Criminal Procedure solely on the foundation that the
company has not been impleaded as an accused. The words “as well as the company”
assumes significance inasmuch as the deemed liability includes both the company
and the officers in-charge and hence prosecution can exclusively be maintained
against the directors or officers in-charge depending on the averments made in
the complaint petition.
13.
The
gravamen of the controversy is whether any person who has been mentioned in
Sections 141(1) and 141(2) of the Act can be prosecuted without the company
being impleaded as an accused. To appreciate the controversy, certain
provisions need to be referred to. Section 138 of the Act, which deals with the
ingredients of the offence for dishonour of the cheque and the consequent
non-payment of the amount due thereon, reads as follows: - “138. Dishonour of
cheque for insufficiency, etc, of funds in the account –
Where any cheque
drawn by a person on account maintained by him with a banker for the payment of
any amount of money to another person from out of that account for the discharge,
in whole or in part, of any debt or other liability, is returned by the bank
unpaid, either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the amount arranged
to be paid from that account by an arrangement made with the bank, such person
shall be deemed to have committed an offence and shall without prejudice to any
other provisions of this Act, be punished with imprisonment for a term which
may be extended to two years, or with a fine which may extend to twice the amount
of the cheque, or with both: Provided that nothing contained in this section shall
apply unless –
a. the cheque has been
presented to the bank within a period of six months from the date on which it
is drawn or within the period of its validity, whichever is earlier,
b. the payee or the
holder in due course of the cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice, in writing, to the drawer
of the cheque, within thirty days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid, and
c. the drawer of such
cheque fails to make the payment of said amount of money to the payee or, as
the case may be, to the holder in due course of the cheque, within fifteen days
of the receipt of the said notice.”
14.
The
main part of the provision can be segregated into three compartments, namely,
(i) the cheque is drawn by a person, (ii) the cheque drawn on an account
maintained by him with the banker for payment of any amount of money to another
person from out of that account for the discharge, in whole or in part, of a debt
or other liability, is returned unpaid, either because the amount of money standing
to the credit of that account is insufficient to honour the cheque or it exceeds
the amount arranged to be paid from that account by an arrangement made with
the bank and (iii) such person shall be deemed to have committed an offence and
shall, without prejudice to any other provision of the Act, be punished with
imprisonment for a term which may extend to two years or with fine which may
extend to twice the amount of the cheque or with both.
The proviso to the
said section postulates under what circumstances the section shall not apply. In
the case at hand, we are not concerned with the said aspect.
It will not be out of
place to state that the main part of the provision deals with the basic ingredients
and the proviso deals with certain circumstances and lays certain conditions
where it will not be applicable. The emphasis has been laid on the factum that the
cheque has to be drawn by a person on the account maintained by him and he must
have issued the cheque in discharge of any debt or other liability. Section 7of
the Act defines ‘drawer’ to mean the maker of a bill of exchange or a cheque. An
authorised signatory of a company becomes a drawer as he has been authorised to
do so in respect of the account maintained by the company.
15.
At
this juncture, we may refer to Section 141 which deals with offences by
companies. As the spine of the controversy rests on the said provision, it is
reproduced below: - “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 deemed
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. (2) Notwithstanding anything contained in sub-section (1), where
any offence under this Act, has been committed by a company and it is proved that
the offence has been committed with the consent or connivance of, or is
attributable to, any neglect on the part of, any director, manager, secretary
or other officer of the company, such director, manager, secretary or other officer
shall also be deemed to be guilty of that offence and shall be liable to be
proceeded against and punished accordingly.”
16.
On
a reading of the said provision, it is plain as day that if a person who
commits offence under Section 138 of the Act is a company, the company as well
as every person in charge of and responsible to the company for the conduct of
business of the company at the time of commission of offence is deemed to be
guilty of the offence. The first proviso carves out under what circumstances
the criminal liability would not be fastened. Sub-section (2) enlarges the criminal
liability by incorporating the concepts of connivance, negligence and consent
that engulfs many categories of officers. It is worth noting that in both the provisions,
there is a‘ deemed’ concept of criminal liability.
17.
Section
139 of the Act creates a presumption in favour of the holder. The said
provision has to be read in conjunction with Section 118(a) which occurs in
Chapter XIII of the Act that deals with special rules of evidence. Section 140
stipulates the defence which may not be allowed in a prosecution under Section
138 of the Act. Thus, there is a deemed fiction in relation to criminal liability,
presumption in favour of the holder, and denial of a defence in respect of
certain aspects.
18.
Section
141 uses the term ‘person’ and refers it to a company. There is no trace of
doubt that the company is a juristic person. The concept of corporate criminal
liability is attracted to a corporation and company and it is so luminescent
from the language employed under Section 141 of the Act. It is apposite to note
that the present enactment is one where the company itself and certain
categories of officers in certain circumstances are deemed to be guilty of the
offence.
19.
In
Halsbury’s Laws of England, Volume 11(1), in paragraph 35, it has been laid
down that in general, a corporation is in the same position in relation to
criminal liability as a natural person and may be convicted of common law and
statutory offences including those requiring mens rea.
20.
In
19 Corpus Juris Secundum, in paragraph 1358, while dealing with liability in
respect of criminal prosecution, it has been stated that a corporation shall be
liable for criminal prosecution for crimes punishable with fine; in certain jurisdictions,
a corporation cannot be convicted except as specifically provided by statute.
21.
In
H.L. Bolton (Engineering) Co. Ltd. vs. T.J. Graham & Sons Ltd.[30]Lord
Denning, while dealing with the liability of a company, in his inimitable
style, has expressed that a company may in many ways be likened to a human
body. It has a brain and nerve centre which controls what it does. It also has
hands which hold the tools and act in accordance with directions from the
centre. Some of the people in the company are mere servants and agents who are
nothing more than hands to do the work and cannot be said to represent the mind
or will. Others are directors and managers who represent the directing mind and
will of the company, and control what it does. The state of mind of these
managers is the state of mind of the company and is treated by the law as such.
In certain cases, where the law requires personal fault as a condition of
liability in tort, the fault of the manager will be the personal fault of the company.
The learned Law Lord referred to Lord Haldane’s speech in Lennard’s Carrying Co.
Ltd. v. Asiatic Petroleum Co. Ltd.[31]. Elaborating further, he has observed
that in criminal law, in cases where the law requires a guilty mind as a
condition of a criminal offence, the guilty mind of the directors or the managers
will render the company itselfguilty.
22.
It
may be appropriate at this stage to notice the observations made by MacNaghten,
J. in Director of Public Prosecutions v. Kent and Sussex Contractors Ltd.[32] :
(AC p. 156.) “A body corporate is a “person” to whom, amongst the various
attributes it may have, there should be imputed the attribute of a mind capable
of knowing and forming an intention – indeed it is much too late in the day to suggest
the contrary. It can only know or form an intention through its human agents, but
circumstance may be such that the knowledge of the agent must be imputed to the
body corporate. Counsel for the respondents says that, although a body
corporate may be capable of having an intention, it is not capable of having a criminal
intention. In this particular case the intention was the intention to deceive. If,
as in this case, the responsible agent of a body corporate puts forward a
document knowing it to be false and intending that it should deceive. I apprehend,
according to the authorities that Viscount Caldecote, L.C.J., has cited, his
knowledge and intention must be imputed to the body corporate.
23.
In
this regard, it is profitable to refer to the decision in IridiumIndia Telecom
Ltd. v. Motorola Inc and Ors.[33] wherein it has been held that in all
jurisdictions across the world governed by the rule of law, companies and
corporate houses can no longer claim immunity from criminal prosecution on the
ground that they are not capable of possessing the necessary mens rea for commission
of criminal offences. It has been observed that the legal position in England
and United States has now been crystallized to leave no manner of doubt that the
corporation would beliable for crimes of intent. In the said decision, the
two-Judge Bench has observed thus:- “The courts in England have emphatically
rejected the notion that a body corporate could not commit a criminal offence which
was an outcome of an act of will needing a particular state of mind. The
aforesaid notion has been rejected by adopting the doctrine of attribution and
imputation. In other words, the criminal intent of the “alter ego” of the
company/body corporate i.e. the person or group of persons that guide the business
of the company, would be imputed to the corporation.”
24.
In
Standard Charted Bank (supra), the majority has laid down the view that there
is no dispute that a company is liable to be prosecuted and punished for
criminal offences. Although there are earlier authorities to the fact that the corporation
cannot commit a crime, the generally accepted modern rule is that a corporation
may be subject to indictment and other criminal process although the criminal
act may be committed through its agent. It has also been observed that there is
no immunity to the companies from prosecution merely because the prosecution is
in respect of offences for which the punishment is mandatory imprisonment and
fine.
25.
We
have referred to the aforesaid authorities to highlight that the company can
have criminal liability and further, if a group of persons that guide the
business of the companies have the criminal intent, that would be imputed to
the body corporate. In this backdrop, Section 141 of the Act has to be understood.
The said provision clearly stipulates that when a person which is a company
commits an offence, then certain categories of persons in charge as well as the
company would be deemed to be liable for the offences under Section 138. Thus, the
statutory intendment is absolutely plain.
26.
As
is perceptible, the provision makes the functionaries and the companies to be
liable and that is by deeming fiction. A deeming fiction has its own
signification.
27.
In
this context, we may refer with profit to the observations made by Lord Justice
James in Ex Parte Walton, In re, Levy[34], which is as follows: “When a statute
enacts that something shall be deemed to have been done, which, in fact and
truth was not done, the Court is entitled and bound to ascertain for what purposes
and between what persons the statutory fiction is to be resorted to.”
28.
Lord
Asquith, in East end Dwellings Co. Ltd. v. Finsbury Borough Council[35] , had
expressed his opinion as follows: “If you are bidden to treat an imaginary state
of affairs as real, you must surely, unless prohibited from doing so, also imagine
as real the consequences and incidents, which, if the putative state of affairs
had in fact existed, must inevitably have flowed from or accompanied it.... The
statute says that you must imagine a certain state of affairs; it does not say that
having done so, you must cause or permit your imagination to boggle when it
comes to the inevitable corollaries of that state of affairs.”
29.
In
The Bengal Immunity Co. Ltd. v. State of Bihar and others[36], the majority in
the Constitution Bench have opined that legal fictions are created only for
some definite purpose.
30.
In
Hira H. Advani Etc. v. State of Maharashtra[37], while dealing with a
proceeding under the Customs Act, especially sub-section (4) of Section 171-A
wherein an enquiry by the custom authority is referred to, and the language
employed therein, namely, "to be deemed to be a judicial proceeding within
the meaning of Sections 193 and 228 of the Indian Penal Code", it has been
opined as follows: “It was argued that the Legislature might well have used the
word "deemed" in Sub-section (4) of Section171 not in the first of
the above senses but in the second, if not the third. In our view the meaning
to be attached to the word "deemed" must depend upon the context in
which it is used.”
31.
In
State of Tamil Nadu v. Arooran Sugars Ltd.[38], the Constitution Bench, while
dealing with the deeming provision in a statute, ruled that the role of a provision
in a statute creating legal fiction is well settled. Reference was made to The
Chief Inspector of Mines and another v.Lala Karam Chand Thapar Etc.[39], J.K.
Cotton Spinning and Weaving Mills Ltd. and anr. v. Union of India and
others[40], M. Venugopal v. Divisional Manager, Life Insurance Corporation of India[41]
and Harish Tandon v. Addl. District Magistrate, Allahabad[42] and eventually, it
was held that when a statute creates a legal fiction saying that something shall
be deemed to have been done which in fact and truth has not been done, the
Court has to examine and ascertain as to for what purpose and between which
persons such a statutory fiction is to be resorted to and thereafter, the
courts have to give full effect to such a statutory fiction and it has to be
carried to its logical conclusion.
32.
From
the aforesaid pronouncements, the principle that can be culled out is that it
is the bounden duty of the court to ascertain for what purpose the legal
fiction has been created. It is also the duty of the court to imagine the fiction
with all real consequences and instance sunless prohibited from doing so. That
apart, the use of the term 'deemed' has to be read in its context and further
the fullest logical purpose and import are to be understood. It is because in
modern legislation, the term' deemed' has been used for manifold purposes. The
object of the legislature has to be kept in mind.
33.
The
word ‘deemed’ used in Section 141 of the Act applies to the company and the
persons responsible for the acts of the company. It crystallizes the corporate criminal
liability and vicarious liability of a person who is in charge of the company. What
averments should be required to make a person vicariously liable has been dealt
with in SMS Pharmaceuticals Ltd. (supra). In the said case, it has been opined that
the criminal liability on account of dishonour of cheque primarily falls on the
drawee company and is extended to the officers of the company and as there is a
specific provision extending the liability to the officers, the conditions
incorporated in Section 141 are to be satisfied. It has been ruled as follow:- “It
primarily falls on the drawer company and is extended to officers of the
company. The normal rule in the cases involving criminal liability is against
vicarious liability, that is, no one is to be held criminally liable for an act
of another. This normal rule is, however, subject to exception on account of specific
provision being made in the statutes extending liability to others. Section 141
of the Act is an instance of specific provision which in case an offence under
Section 138 is committed by a company, extends criminal liability for dishonor of
a cheque to officers of the company. Section 141 contains conditions which have
to be satisfied before the liability can be extended to officers of a company. Since
the provision creates criminal liability, the conditions have to be strictly complied
with. The conditions are intended to ensure that a person who is sought to be made
vicariously liable for an offence of which the principal accused is the company,
had a role to play in relation to the incriminating act and further that such a
person should know what is attributed to him to make him liable.” After so
stating, it has been further held that while analyzing Section 141 of the Act,
it will be seen that it operates in cases where an offence under Section 138 is
committed by a company. In paragraph 19 of the judgment, it has been clearly
held as follows: - “There is almost unanimous judicial opinion that necessary averments
ought to be contained in a complaint before a person can be subjected to
criminal process. A liability under Section 141 of the Act is sought to be
fastened vicariously on a person connected with a Company, the principal accused
being the company itself. It is a departure from the rule in criminal law against
vicarious liability.”
34.
Presently,
we shall deal with the ratio laid down in the case of C.V.Parekh (supra). In
the said case, a three-Judge Bench was interpreting Section 10 of the 1955 Act.
The respondents, C.V. Parekh and another, were active participants in the
management of the company. The trial court had convicted them on the ground the
goods were disposed of at a price higher than the control price by Vallabhadas
Thacker with the aid of Kamdarand the same could not have taken place without the
knowledge of the partners of the firm. The High Court set aside the order of conviction
on the ground that there was no material on the basis of which a finding could be
recorded that the respondents knew about the disposal by Kamdar and Vallabhadas
Thacker.
A contention was
raised before this Court on behalf of the State of Madras that the conviction
could be made on the basis of Section 10 of the 1955 Act. The three-Judge Bench
repelled the contention by stating thus: - “Learned counsel for the appellant, however,
sought conviction of the two respondents on the basis of Section 10 of the Essential
Commodities Act under which, if the person contravening an order made under Section
3 (which covers an order under the Iron and Steel Control Order, 1956), is a company,
every person who, at the time the contravention 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 deemed to be guilty of the contravention
and shall be liable to be proceeded against and punished accordingly.
It was urged that the
two respondents were in charge of, and were responsible to, the Company for the
conduct of the business of the Company and, consequently, they must be held
responsible for the sale and for thus contravening the provisions of clause (5)
of the Iron and Steel Control Order. This argument cannot be accepted, because
it ignores the first condition for the applicability of Section 10 to the effect
that the person contravening the order must be a company itself. In the present
case, there is no finding either by the Magistrate or by the High Court that
the sale in contravention of clause (5) of the Iron and Steel Control Order was
made by the Company. In fact, the Company was not charged with the offence at
all. The liability of the persons in charge of the Company only arises when the
contravention is by the Company itself. Since, in this case, there is no
evidence and no finding that the Company contravened clause (5) of the Iron and
Steel Control Order, the two respondents could not be held responsible.
The actual contravention
was by Kamdar and Vallabhadas Thacker and any contravention by them would not fasten
responsibility on the respondents.” (emphasis supplied) The aforesaid paragraph
clearly lays down that the first condition is that the company should be held
to be liable; a charge has to be framed; a finding has to be recorded, and the
liability of the persons in charge of the company only arises when the
contravention is by the company itself. The said decision has been
distinguished in the case of Sheoratan Agarwal and another (supra).
The two-Judge Bench in
the said case referred to Section 10 of the 1955 Act and opined that the company
alone may be prosecuted or the person in charge only may be prosecuted since
there is no statutory compulsion that the person in charge or an officer of the
company may not be prosecuted unless he be ranged alongside the company itself.
The two-Judge Bench further laid down that Section 10 of the 1955 Act indicates
the persons who may be prosecuted where the contravention is made by the
company but it does not lay down any condition that the person in-charge or an officer
of the company may not be separately prosecuted if the company itself is not prosecuted.
The two-Judge Bench referred to the paragraph from C.V. Parekh(supra), which we
have reproduced hereinabove, and emphasised on certain sentences therein and
came to hold as follows: -
“The sentences
underscored by us clearly show that what was sought to be emphasised was that
there should be a finding that the contravention was by the company before the
accused could be convicted and not that the company itself should have been prosecuted
along with the accused. We are therefore clearly of the view that the
prosecutions are maintainable and that there is nothing in Section 10 of the
Essential Commodities Act which bars such prosecutions.” For the sake of
completeness, we think it apposite to refer to the sentences which have been
underscored by the two-Judge Bench:- “because it ignores the first condition
for the applicability of Section 10 to the effect that the person contravening
the order must be a company itself.
In the present case, there
is no finding either by the Magistrate or by the High Court that the sale in
contravention of clause (5) of the Iron and Steel Control Order was made by the
Company and there is no evidence and no finding that the Company contravened
clause (5) of the Iron and Steel Control Order, the two respondents could not be
held responsible.”
35.
With
greatest respect to the learned Judges in Sheoratan Agarwal(supra), the
authoritative pronouncement in C.V. Parekh (supra) has not been appositely
appreciated. The decision has been distinguished despite the clear dictum that
the first condition for the applicability of Section10 of the 1955 Act is that
there has to be a contravention by the company itself. In our humblest view,
the said analysis of the verdict is not correct. Quite apart, the decision in C.V.
Parekh (supra) was under Section 10(a) of the 1955 Act and rendered by a three-Judge
Bench and if such a view was going to be expressed, it would have been appropriate
to refer the matter to a larger Bench. However, the two-Judge Bench chose it appropriate
to distinguish the same on the rationale which we have reproduced hereinabove. We
repeat with the deepest respect that we are unable to agree with the aforesaid
view.
36.
In
the case of Anil Had a (supra), the two-Judge Bench posed the question: when a
company, which committed the offence under Section 138 of the Act eludes from
being prosecuted thereof, can the directors of that company be prosecuted for
that offence. The Bench referred to Section 141of the Act and expressed the
view as follows: - “12. Thus when the drawer of the cheque who falls within the
ambit of Section 138 of the Act is a human being or a body corporate or even
firm, prosecution proceedings can be initiated against such drawer. In this
context the phrase "as well as" used in Sub-section (1) of Section
141 of the Act has some importance. The said phrase would embroil the persons mentioned
in the first category within the tentacles of the offence on a par with the
offending company. Similarly the words "shall also" in Sub-section
(2) are capable of bringing the third category persons additionally within the
dragnet of the offence on an equal par. The effect of reading Section 141 is that
when the company is the drawer of the cheque such company is the principal offender
under Section 138 of the Act and the remaining persons are made offenders by virtue
of the legal fiction created by the legislature as per the section.
Hence the actual
offence should have been committed by the company, and then alone the other two
categories of persons can also become liable for the offence. 13. If the
offence was committed by a company it can be punished only if the company is prosecuted.
But instead of prosecuting the company if a payee opts to prosecute only the persons
falling within the second or third category the payee can succeed in the case
only if he succeeds in showing that the offence was actually committed by the
company. In such a prosecution the accused can show that the company has not
committed the offence, though such company is not made an accused, and hence
the prosecuted accused is not liable to be punished.
The provisions do not
contain a condition that prosecution of the company is sine qua non for prosecution
of the other persons who fall within the second and the third categories
mentioned above. No doubt a finding that the offence was committed by the
company is sine qua non for convicting those other persons. But if a company is
not prosecuted due to any legal snag or otherwise, the other prosecuted persons
cannot, on that score alone, escape from the penal liability created through
the legal fiction envisaged in Section 141 of the Act.”
On a reading of both
the paragraphs, it is evincible that the two-Judge Bench expressed the view
that the actual offence should have been committed by the company and then
alone the other two categories of persons can also become liable for the
offence and, thereafter, proceeded to state that if the company is not
prosecuted due to legal snag or otherwise, the prosecuted person cannot, on that
score alone, escape from the penal liability created through the legal fiction
and this is envisaged in Section 141 of the Act.
If both the paragraphs
are appreciated in a studied manner, it can safely be stated that the conclusions
have been arrived at regard being had to the obtaining factual matrix therein. However,
it is noticeable that the Bench thereafter referred to the dictumin Sheoratan
Agarwal (supra) and eventually held as follows: - “We, therefore, hold that
even if the prosecution proceedings against the Company were not taken or could
not be continued, it is no bar for proceeding against the other persons falling
within the purview of sub-sections (1) and (2) of Section 141 of the Act.”
37.
We
have already opined that the decision in Sheoratan Agarwal (supra)runs counter
to the ratio laid down in the case of C.V. Parekh (supra)which is by a larger
Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision
in Anil Hada (supra) has to be treated as not laying down the correct law as
far as it states that the director or any other officer can be prosecuted
without impleadment of the company. Needless to emphasize, the matter would
stand on a different footing where there is some legal impediment and the doctrine
of lex noncogit ad impossibilia gets attracted.
38.
At
this juncture, we may usefully refer to the decision in U.P. Pollution Control
Board v. M/s. Modi Distillery and others[43]. In the said case, the company was
not arraigned as an accused and, on that score, the High Court quashed the proceeding
against the others. A two-Judge Bench of this Court observed as follows: - “Although
as a pure proposition of law in the abstract the learned single Judge’s view that
there can be no vicarious liability of the Chairman, Vice-Chairman, Managing
Director and members of the Board of Directors under sub-s.(1) or (2) of S.47 of
the Act unless there was a prosecution against Messers Modi Industries Limited,
the Company owning the industrial unit, can be termed as correct, the objection
raised by the petitioners before the High Court ought to have been viewed not
in isolation but in the conspectus of facts and events and not in vacuum.
We have already pointed
out that the technical flaw in the complaint is attributable to the failure of
the industrial unit to furnish the requisite information called for by the Board.
Furthermore, the legal infirmity is of such a nature which could be easily
cured. Another circumstance which brings out the narrow perspective of the
learned single Judge is his failure to appreciate the fact that the averment in
paragraph 2 has to be construed in the light of the averments contained in
paragraphs 17, 18 and 19 which are to the effect that the Chairman,
Vice-Chairman, Managing Director and members of the Board of Directors were also
liable for the alleged offence committed by the Company.”
Be it noted, the
two-Judge Bench has correctly stated that there can be no vicarious liability
unless there is a prosecution against the company owning the industrial unit
but, regard being had to the factual matrix, namely, the technical fault on the
part of the company to furnish the requisite information called for by the
Board, directed for making a formal amendment by the applicant and substitute
the name of the owning industrial unit. It is worth noting that in the said
case, M/s. Modi distilleries was arrayed as a party instead of M/s Modi
Industries Limited. Thus, it was a defective complaint which was curable but, a
pregnant one, the law laid down as regards the primary liability of the company
without which no vicarious liability can be imposed has been appositely stated.
39.
It
is to be borne in mind that Section 141 of the Act is concerned with the
offences by the company. It makes the other persons vicariously liable for
commission of an offence on the part of the company. As has been stated by us
earlier, the vicarious liability gets attracted when the condition precedent
laid down in Section 141 of the Acts tands satisfied. There can be no dispute
that as the liability is penalin nature, a strict construction of the provision
would be necessitous and, in a way, the warrant.
40.
In
this context, we may usefully refer to Section 263 of Francis Bennion’s
Statutory Interpretation where it is stated as follows: - “A principle of statutory
interpretation embodies the policy of the law, which is in turn based on public
policy. The court presumes, unless the contrary intention appears, that the legislator
intended to conform to this legal policy. A principle of statutory
interpretation can therefore be described as a principle of legal policy formulated
as a guide to legislative intention.
41.
It
will be seemly to quote a passage from Maxwell’s The Interpretation of Statutes
(12th Edition) : - “The strict construction of penal statutes seems to manifest
itself in four ways: in the requirement of express language for the creation of
an offence; in interpreting strictly words setting out the elements of an offence;
in requiring the fulfillment to the letter of statutory conditions precedent to
the infliction of punishment; and in insisting on the strict observance of
technical provisions concerning criminal procedure and jurisdiction.”
42.
We
have referred to the aforesaid passages only to highlight that there has to be
strict observance of the provisions regard being had to the legislative
intendment because it deals with penal provisions and a penalty is not to be
imposed affecting the rights of persons whether juristic entities or
individuals, unless they are arrayed as accused. It is to be kept in mind that
the power of punishment is vested in the legislature and that is absolute in Section
141 of the Act which clearly speaks of commission of offence by the company.
The learned counsel for
the respondents have vehemently urged that the use of the term “as well as” in the
Section is of immense significance and, in its tentacle, it brings in the company
as well as the director and/or other officers who are responsible for the acts of
the company and, therefore, a prosecution against the directors or other
officers is tenable even if the company is not arraigned as an accused. The
words “as well as” have to be understood in the context.
In Reserve Bank of India
v. Peerless General Finance and Investment Co. Ltd. and others[44] it has been
laid down that the entire statute must be first read as a whole, then section
by section, clause by clause, phrase by phrase and word byword. The same
principle has been reiterated in Deewan Singh and others v. Rajendra Prasad
Ardevi and others[45] and Sarabjit Rick Singh v. Union of India[46]. Applying
the doctrine of strict construction, we are of the considered opinion that
commission of offence by the company is an express condition precedent to
attract the vicarious liability of others. Thus, the words “as well as the company”
appearing in the Section make it absolutely unmistakably clear that when the
company can be prosecuted, then only the persons mentioned in the other categories
could be vicariously liable for the offence subject to the averments in the petition
and proof thereof.
One cannot be oblivious
of the fact that the company is a juristic person and it has its own respectability.
If a finding is recorded against it, it would create a concavity in its reputation.
There can be situations when the corporate reputation is affected when a director
is indicted.
43.
In
view of our aforesaid analysis, we arrive at the irresistible conclusion that
for maintaining the prosecution under Section 141 of the Act, arraigning of a
company as an accused is imperative. The other categories of offenders can only
be brought in the dragnet on the touchstone of vicarious liability as the same has
been stipulated in the provision itself. We say so on the basis of the ratio laid
down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the
view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law
and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is
overruled with the qualifier as stated in paragraph37. The decision in Modi
Distilleries (supra) has to be treated to be restricted to its own facts as has
been explained by us hereinabove.
44.
We
will be failing in our duty if we do not state that all the decisions cited by the
learned counsel for the respondents relate to service of notice, instructions
for stopping of payment and certain other areas covered under Section 138 of
the Act. The same really do not render any aid or assistance to the case of the
respondents and, therefore, we refrain ourselves from dealing with the said
authorities.
45.
Resultantly,
the Criminal Appeal Nos. 838 of 2008 and 842 of 2008 are allowed and the
proceedings initiated under Section 138 of the Act arequashed.
46.
Presently,
we shall advert to the other two appeals, i.e., Criminal Appeal Nos. 1483 of
2009 and 1484 of 2009 wherein the offence is under Section 67 read with Section
85 of the 2000 Act. In Criminal Appeal No.1483 of 2009, the director of the
company is the appellant and in Criminal Appeal No. 1484 of 2009, the company. Both
of them have called in question the legal substantiality of the same order
passed by the High Court.
In the said case, the
High Court followed the decision in Sheoratan Agarwal (supra) and, while
dealing with the application under Section 482 of the Code of Criminal
Procedure at the instance of Avnish Bajaj, the Managing Director of the
company, quashed the charges under Sections 292 and 294 of the Indian Penal
Code and directed the offences under Section 67 read with Section 85 of the
2000 Act to continue. It is apt to note that the learned single Judge has
observed that a prima facie case for the offence under Sections 292(2)(a) and
292(2)(b) of the Indian Penal Code is also made out against the company.
47.
Section
85 of the 2000 Act is as under: - “85. Offences by companies - (1) Where a
person committing a contravention of any of the provisions of this Act or of any
rule, direction or order made there under is a company, every person who, at
the time the contravention 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 guilty of the contravention and shall be liable to be proceeded
against and punished accordingly:
Provided that nothing
contained in this sub-section shall render any such person liable to punishment
if he proves that the contravention took place without his knowledge or that he
exercised all due diligence to prevent such contravention. (2) Notwithstanding
anything contained in sub-section (1), where a contravention of any of the
provisions of this Act or of any rule, direction or order made there under has
been committed by a company and it is proved that the contravention has taken place
with the consent or connivance of, or is attributable to any neglect on the
part of, any director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to be guilty
of the contravention and shall be liable to be proceeded against and punished
accordingly.”
48.
Keeping
in view the anatomy of the aforesaid provision, our analysis pertaining to
Section 141 of the Act would squarely apply to the 2000enactment. Thus
adjudged, the director could not have been held liable for the offence under
Section 85 of the 2000 Act. Resultantly, the Criminal Appeal No. 1483 of 2009
is allowed and the proceeding against the appellant is quashed. As far as the
company is concerned, it was not arraigned as an accused. Ergo, the proceeding
as initiated in the existing incarnation is not maintainable either against the
company or against the director. As a logical sequeter, the appeals are allowed
and the proceedings initiated against Avnish Bajaj as well as the company in the
present form are quashed.
49.
Before
we part with the case, we must record our uninhibited and unreserved
appreciation for the able assistance rendered by the learned counsel for the parties
and the learned amicus curiae.
50.
In
the ultimate analysis, all the appeals are allowed.
......................................................J.
[Dalveer Bhandari]
.…………………….…..……….………J.
[Sudhansu Jyoti Mukhopadhaya]
......................................................J.
[Dipak Misra]
New
Delhi;
April
27, 2012
Back