1. These are two petitions under Section 482 of the Code of Criminal Procedure between the same parties involving the same question of law and facts and are accordingly being disposed of by this common order.

2. The facts in the two cases are given below:

Crl.M.C.3690/2001 titled Everest Advertising Pvt. Ltd. vs. State and Ors. The petitioner filed the complaint against the respondents 2 and 3 who were the Chairman and Vice Chairman of M/s Dalmia Industries Ltd. as well as against M/s Dalmia Industries Ltd. and its three others who were the Director (Technical), Executive Director and Senior General Manager (Finance). It was alleged that the respondents 2 and 3 herein as well as the other Directors named in the complaint were in charge of and responsible to the company M/s Dalmia Industries Ltd. for the conduct of the business of the company and were liable to make the payment for the cheque in question in that complaint. The subject matter of the complaint were certain cheques mentioned in the annexures to the complaint issued by M/s Dalmia Industries Ltd. towards job done by the complainant for the accused company. The cheques were dishonoured by the respective banks with the endorsement ‘‘payment stopped by the drawer” or ‘‘exceeds arrangement”. The usual averments of a notice having been issued to the accused and of the failure on the part of the accused to comply with the notice have been made in the complaint. The accused other than the company namely the respondents 2 and3 as well as other Directors are alleged to have been responsible for the conduct of the business of the company. It is also alleged that the offence is committed by M/s Dalmia Industries Ltd. with the active connivance of accused 1 to 5. By the impugned order, the Metropolitan Magistrate has recalled the summons issued to the respondents 2 and while maintaining the summons against the other respondents who were Director (Technical), Executive Director and Senior General Manager (Finance). The ground for refusing to summon the respondents 2 and 3 was that no specific role had been assigned to them in respect of the commission of the offence by the accused company. The complainant has challenged the impugned order on the ground that there was no requirement in law to assign any specific role to the respondents who were discharged and that the allegations made against them in the complaint was sufficient for summoning them.

Crl.M.C.3691/2001 titled Everest Advertising Pvt. Ltd. vs. State and Ors. The parties in this petition are the same as the parties in the Crl.M.C.3690/2001. This complaint relates to three cheques dated 10.2.98, 14.2.98 and 20.1.98 for Rs.3,00,000/-, Rs.3,00,000/- and Rs.2,01,500 respectively which were also returned by the bank on presentation with the remarks ‘‘payment stopped by drawer’‘. As in the previous matter, the Metropolitan Magistrate found sufficient ground to proceed against all the accused but subsequently on an application, the accused 1 and 2, that is respondents 2 and 3 herein were discharged and the order of summoning passed against them was recalled vide the impugned order dated 11.7.2001. This order is challenged on the same grounds as in the Crl.M.C.3690/2001.

3. In order to examine the question as to whether such allegation is sufficient to summon respondent Nos.2 and 3, it is necessary to refer to the provisions of Section 141 of the Negotiable Instruments Act (in short the `Act) which provides for the responsibility of an offence committed by a company. Section 141 is extracted 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 art 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.

Explanation.- For the purposes of this section,-(a) ‘‘company’‘ means any body corporate and includes a firm or other association of individuals; and (b) ‘‘director’‘, in relation to a firm, means a partner in the firm.”

4. The question that arises is whether a person by virtue of his simply being the Director, Chairman or Vice Chairman of a company will become responsible for an offence of dishonour of cheque issued by the company. It can be said that the company is run by the Board of Directors and, therefore, every person who is a Director of the accused company is liable for the offence under Section 141 (1) of the. It can be seen that the Supreme Court in the case of M/s.Ashok Leyland Finance Ltd. vs. R.S. Aggarwl and Ors. reported as 2003 (10) SCALE 1000 made the following observations:

‘‘It is settled law, and no authority is required for the proposition, that in the case of a Company and particularly a Public Limited Company the persons in charge of the company and responsible to the company for the conduct of the business of the company are the Board of Directors. In other words every Director of a company is a person in charge of the company and responsible to the company for he conduct of its business.”

5. The Supreme Court, however, in the case of Ashok Leyland (Supra) did not lay down the law that every Director of the company was responsible for an offence under Section 138 of thecommitted by the company. The reason for not laying down such a law as that such a view would have been in direct contradictions to the earlier view held by the Supreme Court as given in the case of Katta Sujatha (Smt.) vs. Fertilizers and Chemicals Travancore Ltd. and Anr. reported as (2002) 7 SCC 655 [LQ/SC/2002/861] . In the case of Katta Sujatha (Supra), the complainant did not make any specific allegation against the fourth accused who had approached the Supreme Court in the Special Leave Petition. The Supreme Court examined the question as to whether in the absence of any allegation that the appellant was in charge of the business and responsible for the conduct of the business of the firm in terms of Section 141 of theand in the absence of any allegation made against her that she had connived with any other partner in the matter of issue of cheque, she, a partner, could be summoned for an offence under Section 138 of thecommitted by the firm. The Supreme Court observed in this judgment that a person could be a party to the policy being followed by a company and yet not be incharge of the business of a company or that a person may be in charge of a company but not in overall charge or that a person may be in charge of only some part of the business of the company. In this judgment the Supreme Court referred to two earlier judgments, namely, those of K.P.J.Nair vs.Jindal Menthol India Ltd. reported as (2001) 10 SCC 218 [LQ/SC/2000/1347] and Anil Hada vs. Indian Acrylic Ltd. reported as (2000) 1 SCC 1 [LQ/SC/1999/1144 ;] ">(2000) 1 SCC 1 [LQ/SC/1999/1144 ;] [LQ/SC/1999/1144 ;] .

6. Commenting upon the findings of this judgment, the Supreme Court in the case of Ashok Leyland (Supra) observed as under:

‘‘12. Our attention is, however, drawn to a decision of this Court in the case of Katta Sujatha v. Fertilizers and Chemicals Travancore Ltd., (2002) 7 SCC 655 [LQ/SC/2002/861] . In this case reliance was placed on the cases of K.P.G.Nair (supra), State of Karnataka v. Pratap Chand reported in (1981) 2 SCC 335 [LQ/SC/1981/145] , and Anil Hada v. Indian Acrylic Ltd., reported in (2000) 1 SCC 1 [LQ/SC/1999/1144 ;] ">(2000) 1 SCC 1 [LQ/SC/1999/1144 ;] [LQ/SC/1999/1144 ;] . It was held that as the complaint did not state that the accused was in charge of and responsible for the conduct of business of the company and as the complaint did not attribute any particular act to the accused the complaint could not be allowed to proceed. This Court quashed the complaint....”

7. The Supreme Court in the case of Katta Sujatha (Supra) has laid down that not all the Directors of a company will be responsible for the conduct of the business of the company for the purpose of the provisions of Sections 138 to 141 of the. This had been so held despite the general law that a company is governed by the Board of Directors. Apart from being the Director of a company the accused Director also need to have been involved either in the management of the specific part of the business of the company relating to the offence or he should be in actual overall control of the business and not merely a member of the Board of Directors and responsible for the conduct of the business of the company by virtue of his being Director of the company only. Therefore, the complainant is required to allege as to how a particular Director of a company is responsible for the offence of the company. In other words, the complainant must specify as to how the Director sought to be prosecuted was in charge of actual overall business of the company or in charge of the specific part of the business relating to the offence.

8. Indeed a complete reading of Section 141 of thealso suggests that every director, manager, secretary or other officer of the company cannot be said to be covered by Section 141 (1) of the. It has to be seen that in sub-Section (2) of Section 141 of thethe director, manager, secretary or other officer has again been included. Section 141 (2) makes a director, manager, secretary or other officer responsible for the offence only when such director, manager, secretary or other officer have consented to or connived in the commission of the offence or if the offence is attributable to any neglect on their part. If a Director or other officer is necessarily covered by sub-Section (1) of Section 141 he need not have been mentioned again in sub-Section (2) of that Section. It is clear that a Director or other officer can be prosecuted when he is covered by sub-Section (2) of Section 141. In the alternative, he can be prosecuted if he is a person in charge of and responsible to the company but not so simply on account of being a Director, Chairman or Vice Chairman. In other words, he has to be something more than simply the Director, Chairman or Vice Chairman. This leads to the conclusion that if a Director or other officer of a company is to be prosecuted for the offence under Section 138 of the Act, the complainant must show how the Director or other officer is responsible for the conduct of the day-to-day business of the company. The complainant may, on the other hand, show that the Director or other officer is responsible for the offence because the offence was committed with his consent or connivance or because the offence is attributable to his commission or omission.

9. In the case of Cdr. Shekhar Singh vs. N.K.Wahi reported as 2003 [1] JCC [NI] 52 this court expressed the opinion in this language:

‘‘10. To launch a prosecution therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in charge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the need not be reproduced and the Court can always come to a conclusion in facts of each case. After all while analyzing common sense cannot be left in cold storage. But still in the absence of any averment or specific evidence the net result would be that complaint would not be entertain able.’‘(emphasis supplied)

10. The Supreme Court in the case of Ashok Leyland (Supra) disagreeing with the proposition of Katta Sujatha (Supra) referred to a larger bench three questions which are as under:

‘‘a) whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said Section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.

b) Whether a Director of a company would be deemed to be in charge of, and responsible to, the Company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors or Joint Managing Director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against.”

11. Unfortunately these questions have not yet been answered. The criminal appeal in the case of Ashok Leyland (Supra) was, perhaps, ultimately dismissed as withdrawn as submitted at the bar. Therefore, the proposition laid down in Katta Sujatha (Supra) continues to hold the field.

12. There is yet another judgment of the Supreme Court delivered as late as 25.4.2005 in the case of S.V. Mazumdar and others vs. Gujarat State Fertilizers Co. Ltd. and another reported as 2005 V AD (S.C.) 494 dealing with the culpability of Directors and employees of a company for an offence under Section 138 of the. On a careful reading of the judgment, however, I find that this judgment in no way contradicts with the judgment in the case of Katta Sujatha (Supra). The Supreme Court has declined to refer the case to the large Bench which suggests that the sufficiency of the allegations against the accused in that case could not be questioned. As can be seen, the judgment in paragraph 6 states, ‘‘...The allegations against the accused persons were covered by Section 141 of. There were specific allegations against the appellants and, therefore, the courts below were justified in refusing to accept the prayer made by the appellants to drop the proceedings.’‘ What exactly were the allegations have not been reproduced in the judgment. The judgment merely says that the allegations were sufficient and proceeds to rule whether or not the evidence to be led would establish accusations is a matter of trial.

13. Coming back to the facts of the two cases before me, I find that the allegations in the complaint are far from sufficient to summon respondents 2 and 3 for the offence of the company - accused No.6. Apart from making an omnibus allegation that all the accused were responsible for the conduct of the business of the company and that all of them connived in the offence, there is no specific averment as to how any of the accused 1 and 2 (respondents 2 and 3 herein) were actually involved in the conduct of the business of the company relating to the transaction in question or how and on what basis it can be said that it was with the active connivance of these two accused that the offence was committed by the company. In my opinion, the petitioners could not have been summoned on the basis of the allegations made by the complainant. The Metropolitan Magistrate has not committed any mistake in declining to summon the two accused. The petitioners have no merit and, therefore, dismissed.

14. I, however, hasten to add that this order will in no way mean any restriction to the power of the CMM or any Magistrate dealing with the case at any subsequent stage to summon any of the two accused in exercise of power under Section 319 Cr.P.C., if the complainant is able to produce evidence which can fasten criminal liability for the offence on them.