(Criminal Original Petitions filed under Section 482 Cr.P.C. for the reliefs as stated therein.)

COMMON ORDER

By consent of both sides, the matter has been taken up for final hearing. The petitions are filed seeking a direction to call for the records in C.C.Nos.2561, 2560 and 5268 of 2010 on the file of the learned XIII M.M, Egmore, Chennai, and IX M.M, Saidapet Chennai and quash the same.

2. The petitioner is arrayed as accused number four in a criminal complaint lodged by the respondent under Sec.138 read with Sec.141 of the Negotiable Instruments Act (hereinafter referred to as "Act") before the Court of the learned XIII M.M., and IX M.M at Saidapet, Chennai.

3. The respondent/complainant is a private limited company having its Office at Chennai. The first accused one, M/s ORG informatics Limited is also a company incorporated and represented by its Managing Director and other Directors who have been arrayed A.2 to A.6. In pursuant to a Memorandum of Understanding between the complainant company and the accused company, the accused Company placed purchase orders and issued various cheques signed by the authorised signatory/A.3. The following are the cheques issued by the accused company which are subject matters of section 138 N.I.Act proceedings against which criminal O.P.s are initiated:

Crl.O.P.No.20185 of 2010

Cheque no. Date

267107 31.8.2009

267111 31.8.2009

267108 31.8.2009

Crl.O.P.No.20184 of 2010

267106 31.8.2009

267103 31.8.2009

Crl.O.P.NO.20489 of 2010

267148 16.8.2009

267147 16.8.2009

174601 16.8.2009

4. The cheques were drawn on ICICI Bank, New Delhi. The complainant company presented these cheques on various dates with their bankers, M/s Axis Bank Limited, Mount Road, Madras. The cheques were returned with an endorsements "payment stopped by the drawer" and "account frozen". Therefore, the complainant company issued statutory notice on various dates calling upon the accused company and its Directors to pay the entire cheque amount within 15 days as per the provisions of the Act. The Company and the other Directors received the notice. The petitioner sent replies to all these notices stating that he is only a non-executive Director and he was not in-charge and was not responsible to the Company for conduct of the business and he had no knowledge about the transaction and issuance of cheques and thereby he denied the liability. Since the payments were not made within the stipulated time, the complainant company has initiated the above said proceedings. Aggrieved by taking cognizance against the petitioner, he is before this court to quash the proceedings invoking the jurisdiction under Sec.482 Cr.P.C.

5. The points raised in all these petitions are same viz; whether the petitioner was in-charge and responsible to the conduct of the business of the Company and whether necessary allegations are made in the complaints to proceed against the petitioner for an alleged offence under Sec.138 read with sec.141 of the Act.

6. Since a common point is raised in all these petitions, they are disposed of by a common order.

7. Mr. Habibullah Badsha, learned senior counsel who appeared for M/s Sivanandaraj and Aparna Mukerjee, would submit that merely being a Director of the Company would not make a person liable for the dishonour of the cheque issued by the accused Company. The learned senior counsel pointed out that for launching a prosecution against the petitioner, there must be specific allegation in the complaint as to the part played by the petitioner. In the absence of any such allegation, the liability cannot be fastened on a Director who is designated as non-executive Director. The learned senior counsel pointed out that in the complaint, a general statement was made that A.2 to A.6 are in charge and responsible for the day-to-day operation as well as responsible for taking all financial and policy decisions of A.1 company. According to the learned Senior counsel except this vague allegation, there is no other averments regarding the part played by the petitioner in the transaction for a vicarious liability. The learned senior counsel further pointed out that as per Form-32 of Registrars of Company, the petitioner is designated as non-executive Director and this fact has also been brought to the notice of the complainant company by way of reply to the statutory notice. The learned senior counsel further pointed out that in spite of that, the complainant company has chosen to prosecute the petitioner and such proceedings is an abuse of process of law which is liable to be quashed.

8. The learned senior counsel relied on the following case laws in support of his contentions:

N.K. Wahi vs Shekhar Singh and others (2007) 9 SCC 481 [LQ/SC/2007/323]

(K. Srikanth Singh vs North East Securities Ltd and another) (2007) 12 SCC 788 [LQ/SC/2007/920]

(DCM Financial Services Limited vs J.N. Sareen and another) (2008) 8 SCC 1 [LQ/SC/2008/1207]

(Ramraj Singh vs State of Madhya Pradesh and another) (2009) 6 SCC 729 [LQ/SC/2009/853]

(National Small Industries Corp Ltd vs Harmeet Singh Pairtal and another) 2010 SC 153

9. Per contra, Mr.B. Sriramulu, the learned senior counsel for Mr.A.Sasidharan counsel for the respondent/complainant would submit that clear allegations were made to show that the petitioner is a Director who was in-charge and responsible for the day-to-day operations and also responsible for taking all financial and policy decisions of the Company. The learned senior counsel further submitted that only during the course of trial, material evidence could be produced to show that the petitioner was also in-charge and responsible for the conduct of the business of the Company and quashing of the proceedings is unwarranted at this stage. He also pointed out that the petitioner and his family are holding substantial shares in the accused company, therefore, was and is, in a position to take financial and policy decision. He further pointed out that having received the statutory notice, the petitioner has failed to repay the amount and therefore, liable for the criminal prosecution.

10. The learned senior counsel relied on the following case laws:

N.K. Wahi vs Shekhar Singh and others (2007) 9 SCC 481 [LQ/SC/2007/323]

2007 5 SCC 108 [LQ/SC/2007/527] (N. Rangachari vs Bharat Sanchar Nigam Ltd)

Paresh P. Rajda vs State of Maharashtra and another (2008) 7 SCC 442 [LQ/SC/2008/1280]

Malwa Cotton and Spinning Mills Limited vs Virsa Singh Sidhu and others (2008) 17 SCC 147 [LQ/SC/2008/1655 ;] ">(2008) 17 SCC 147 [LQ/SC/2008/1655 ;] [LQ/SC/2008/1655 ;]

11. I have heard and perused the materials available on record.

12. For the dishonour of various cheques issued on behalf of the accused company, criminal proceedings were initiated against the Company and as well as against all the Directors under Sec.138 and 141 of the Act.

Sec.141 of the Act reads as follows:

141. Offences by Companies - () If the person committing an offence under Section 138 is a Company, every person who, at the time of 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.

13. The issue whether all the directors of a company is liable to be prosecuted was under the consideration of Honble Supreme Court on many occasions. There are catena of decisions rendered by the Honble Supreme Court regarding the liability of the Directors of the Company. It is well settled that to launch a prosecution for the offence by a Company and its Directors, there must be specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegations as to how the Directors were in-charge and responsible for the conduct of the business of the Company.

14. In the case of SMS Pharmaceuticals vs Neeta Bhalla (2005 8 SCC 89 [LQ/SC/2005/943] ), the Supreme Court held 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) 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 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 as a fact as there is no deemed liability of a director in such cases.

15. Following the above judgment cited supra, the Apex Court has held in N.K. Wahi vs Shekhar Singh and others (2007) 9 SCC 481 [LQ/SC/2007/323]

"7. This provision clearly shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the Company is not liable. Only such person would be held liable if at the time when offence is committed he was in charge and was responsible to the company for the conduct of the business of the company as well as the Company. Merely being a Director of the Company in the absence of above factors will not make him liable.

8. 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 Act need not be reproduced and the court can always come to a conclusion in facts of each case. But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable.

16. In the case of (K. Srikanth Singh vs North East Securities Ltd and another) (2007) 12 SCC 788 [LQ/SC/2007/920] , the Apex Court has held as follows:

"4. It is not in dispute that for showing a vicarious liability of a Director of a company upon the complaint it is incumbent to plead that the accused was responsible to the Company for the conduct of the business of the company. No such allegation having been made in the complaint petition, in our opinion, the High Court was not correct in passing the impugned judgment. The allegation contained in the complaint petition was that all the accused Directors participated in the negotiations for obtaining financial help for Accused 1, which in our opinion, would not give rise to an inference that the appellant was responsible for day-today- affairs of the Company......

Every person connected with the Company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the Company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time...."

5. Negotiation for obtaining financial assistance on behalf of the by its Directors itself is not an ingredient for the purpose of constituting an offence under Sec.138 of the Negotiable Instruments Act. Furthermore, a vicarious liability on the part of a person must be pleaded and proved. It cannot be a subject matter of mere inference".

17. In (DCM Financial Services Limited vs J.N. Sareen and another) (2008) 8 SCC 1 [LQ/SC/2008/1207] , which is a case where proceedings were initiated against the accused company and also against the person who signed the cheque when he was Director of the accused company and later resigned from the accused company before bouncing of the cheque. The Honble Supreme Court held,

""19. Section 141 of the Act provides for a constructive liability. A legal fiction has been created thereby. The statute being a penal one, should receive strict construction. It requires strict compliance with the provision. Specific averments in the complaint petition so as to satisfy the requirements of Section 141 of the Act are imperative. Mere fact that at one point of time some role has been played by the accused may not be itself by sufficient to attract the constructive liability under Section 141 of the Act".

18. In (Ramraj Singh vs State of Madhya Pradesh and another) (2009) 6 SCC 729 [LQ/SC/2009/853] , the Apex court has again followed the principle laid down in SMS Pharmaceuticals vs Neeta Bhalla (2005 8 SCC 89 [LQ/SC/2005/943] ), and Sabitha Ramamurthiy vs R.B.S Channabasavaradhya (2006) (10) SCC 581 [LQ/SC/2006/824] and held that when there was no evidence that the appellant was in-charge and was responsible for the conduct of the business of the Company, the conviction cannot be maintained.

19. In (National Small Industries Corp Ltd vs Harmeet Singh Pairtal and another) 2010 SC 153, the Supreme Court held

"25. From the above discussion, the following principles emerge:

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company.

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.

(v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.

(vi) If accused is a Director or an Officer of a Company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.

(vii) 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 as a fact as there is no deemed liability of a Director in such cases."

20. Placing strong reliance on the above decisions, Mr. Habibullah Badsha, the learned Senior Counsel would submit that the complaint is bereft of any averments against the petitioner and merely the petitioner being a director and that too a non executive director the vicarious liability can not be fastened against him. According to the Senior counsel the continuance of the proceeding is abuse of process of law.

21. On the other hand, the line of argument of Mr. Sriramulu, the learned Senior Counsel, for the complainant is that necessary averments have been made in the complaint to show that the petitioner was in charge of and responsible to the conduct of the business of the company and only during the course of the trail the liability could be proved and this court need not interfere at this stage. The learned Senior Counsel relied on N.K. Wahi vs Shekhar Singh and others (2007) 9 SCC 481 [LQ/SC/2007/323] where the Apex Court has held "it is true that precise words from the provisions of the Act need not be reproduced and the court can always come to the conclusion on facts of each case".

22. In 2007 5 SCC 108 [LQ/SC/2007/527] (N. Rangachari vs Bharat Sanchar Nigam Ltd) , the Apex Court has held

"19. Therefore, a person in the commercial world having a transaction with a company is entitled to presume that the Directors of the company are in-charge of the affairs of the company. If any restrictions on their powers are placed by the memorandum or articles of the company, it is for the Directors to establish it at the trial. It is in that context that Section 141 of the Negotiable Instruments Act provides that when the offender is a company, every person, who at the time when the offence was committed was in-charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty of the offence along with the company. It appears to us that an allegation in the complaint that the named accused are Directors of the company itself would usher in the element of their acting for and on behalf of the company and of their being in charge of the company.

23. In Malwa Cotton and Spinning Mills Limited vs Virsa Singh Sidhu and others (2008) 17 SCC 147 [LQ/SC/2008/1655 ;] ">(2008) 17 SCC 147 [LQ/SC/2008/1655 ;] [LQ/SC/2008/1655 ;] , the Apex Court held as follows:

"We find that the prayers before the courts below essentially were to drop the proceedings on the ground that the allegations would not constitute a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract culpability is a matter for adjudication at the trial."

24. In Paresh P. Rajda vs State of Maharashtra and another (2008) 7 SCC 442 [LQ/SC/2008/1280] , the Apex Court has held as follows:

"A perusal of the aforesaid paragraphs would show that accused 2 is Paresh Rajda, the Chairman of the Company, and as per the impugned judgment of the High Court, the question of his responsibility for the business of the Company has not been seriously challenged. We, nonetheless, find clear allegations against both the appellant-accused to the effect that they were officers and responsible for the affairs of the Company. We are of the opinion that at a stage where the trial has not yet started, it would be inappropriate to quash the proceedings against them in the light of the observations of this court quoted above. We, accordingly, find no merit in the appeals. They are dismissed."

25. The basic principles to bring an action against the directors of the accused company is well settled. In Sabitha Ramamurthiy vs R.B.S Channabasavaradhya (2006) (10) SCC 581 [LQ/SC/2006/824] and Saroj Kumar Poddar vs State (NCT of Delhi (2007) (3) SCC 693 [LQ/SC/2007/58] , the Supreme court held,

"14. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the Company. Before a person can be made vicariously liable, strict compliance with the statutory requirements would be insisted".

26. In SMS Pharmaceuticals vs Neeta Bhalla (2005 8 SCC 89 [LQ/SC/2005/943] ), the Apex Court has held that

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) 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 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 as a fact as there is no deemed liability of a director in such cases.

27. In N.K. Wahi vs Shekhar Singh and others (2007) 9 SCC 481 [LQ/SC/2007/323] , the Apex Court reiterated the principles laid down in Sabitha Ramamurthis case and SMS Pharmaceuticals case.

28. However, there is slight digression in the judgments in S.V.Mazumdars case and N.Rangacharis case wherein it was held,

"a person in the commercial world having a transaction with a company is entitled to presume that the Directors of the company are in-charge of the affairs of the company. If any restrictions on their powers are placed by the memorandum or articles of the company, it is for the Directors to establish it at the trial. It is in that context that Section 141 of the Negotiable Instruments Act provides that when the offender is a company, every person, who at the time when the offence was committed was in-charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty of the offence along with the company.

29. In Malwa Cotton and Spinning Mills Limited vs Virsa Singh Sidhu and others (2008) 17 SCC 147 [LQ/SC/2008/1655 ;] ">(2008) 17 SCC 147 [LQ/SC/2008/1655 ;] [LQ/SC/2008/1655 ;] , the Honble Supreme Court relied on the above principles and held "Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements for the application of the deeming provision exist or not is again a matter for adjudication during trial." The judgement was rendered by Honble Justice Arjit Pasayat ( as he then was)

30. However His Lordship, in 2009(6) SCC 729 (Ramraj Singh vs State of Madhya Pradesh) while considering the case of an appellant/Director, who was convicted, found that there was no evidence that the appellant was in-charge and responsible for the conduct of the business of the company and held that the conviction cannot be maintained. The principles laid down in Sabitha Ramamurthys case, SrojKumar Poddars case, S.M.S. Pharmaceuticals case and N.K.Wahis case were applied. According to Mr.B.Sriramulu, the learned Senior Counsel for respondent, this decision need not to be followed as it was considered after trail.

31. (National Small Industries Corp Ltd vs Harmeet Singh Pairtal and another) 2010 SC 153 is a case where the issue before the Apex Court was, what should be the averments in the complaint under Section 138 read with Section 141 of the Act against the Director of a Company before he can be subjected to criminal proceedings(per para 7 of the judgement). The Honble Supreme court has referred all the decisions of the Supreme court on this subject. However the decisions in S.V.Mazumdars and Malwa Cotton Mills case were not referred. The apex court has laid down seven principles which are already referred above.

32. Therefore, while initiating proceeding under section 138 and 141 of the Act, the complainant shall make specific averments in a complaint that at the time the offence was committed the person/accused was in-charge of and responsible for the conduct of the business of the Company. This basic principle stands unaltered.

33. In Malwa Cotton Mills s case, the Supreme Court held

10. The three categories of persons covered by Section 141 are as follows:

(1) The company which committed the offence.

(2) Everyone who was in charge of and was responsible for the business of the company

(3) Any other person who is a Director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence.

34. The decisions referred above would show that there must be specific averments against a Director for a vicarious liability; for fastening the criminal liability, there is no presumption that every Director knows about the transaction; once the specific averments are made, it is deemed that every person who is in-charge and responsible to the company for conduct of the business of the company are guilty of the offence. A person who establishes that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of proviso under sub sec.1 of sec.141 of the Act. The burden in this regard has to be discharged by the accused.

35. Therefore, the questions before this court are whether specific averments are made against the petitioner as required under the law in the complaint and whether the allegations contained are sufficient to attract culpability which calls for an adjudication at the trial.

36. Malwas case was not referred by the subsequent Bench in the case of (National Small Industries Corp Ltd vs Harmeet Singh Pairtal and another) 2010 SC 153, where the Division Bench held that there is no presumption that every Director knows about the transaction and Sec.141 does not make all the Directors liable for the offence.

37. In my considered view, the primary responsibility of the complainant is to make specific averment as required under Sec.141 of the Act. If the court is satisfied that it is not made, then the court can and should exercise its power under Sec.482 of the Code in quashing the proceedings as otherwise it would amount to harassment and abuse of process of law. If the court is satisfied that specific averment has been made, then it is deemed that the accused is guilty of the offence. If such person pleads that the offence was committed without his knowledge or he was not in-charge and was not responsible for the conduct of the business of the company or that he had exercised all due diligence to prevent the commission of an offence, then it is a matter for trial. The court can not and should not exercise its power under 482 of the code.

38. It is well settled that to constitute an offence under Sec.138, the following ingredients are necessary;

1. That cheque was issued;

2. the same was presented;

3. it was dishonoured on presentation;

4. a notice in terms of the provisions was served on the person sought to be made liable and

5. despite service of notice, neither any payment was made nor other obligations, if any, were complied with within fifteen days from the date of receipt of the notice.

39. Issuance of cheque per se is not an offence. Dishonour of cheque on presentation may be the starting point for an offence. Issuing a statutory notice is mandatory within the specified time demanding payment within 15 days from the date of receipt of the notice and if the drawer or the person responsible repays the amount, there ends the matter. If not complied within the stipulated time, the offence is said to be committed.

40. Sec.141 of the Act relates to an offence committed by the Company. As stated earlier, issuance of cheque is not an offence, but the offence is completed when the Company and every person who is in-charge of and is responsible for the business of the Company failed to comply with the demand made in the statutory notice. A director, who is in-charge of and is responsible for the business of the Company, is expected to exercise all due diligence to prevent the commission of an offence.

41. Any person who is in-charge and is responsible for the business of the Company, may be a person who can direct such payment or make such payment. If any person pleads that he has no knowledge about the transaction or is not in-charge and is also not responsible for the business of the Company or has exercised all due diligence to comply the demand made in the statutory notice, has to prove by material evidence and it is a matter for trial.

42. That being the legal position, let us see whether the specific or necessary averment as required under the law has been made in the complaint which is challenged before this court. In paragraph 2 of the complaint, it is stated "the 4th and 5th accused are the Directors of the 1st accused company, the accused 2 to 6 are in-charge and responsible for the day today operations as well as responsible for taking all financial and policy decisions of the accused company".

43. In paragraph-9 of the complaint, the objection raised by the petitioner in his reply has been produced and it is stated that the information provided by the Bombay Stock Exchange shows that the key officials of the 1st accused company are 7 persons including the petitioner and the petitioner and his family together hold considerable shares of the 1st accused company. These averments are made in response to the reply issued by the petitioner.

44. In the reply to the statutory notice, the 1st paragraph is devoted to the petitioners reputation and his family back ground and in paragraph No.2 the petitioner would state that he is a business man, primarily engaged with various business enterprises and holding various positions in various companies. In Paragraphs 3 and 4, he would state that he is a non-executive Director of the accused Company and has attended only few board meetings and never participated in the actual running of the Company and is not responsible for the conduct of the business of the accused company.

45. This court is at a loss to understand that the petitioner being a reputed personality and engaged in various business enterprises, has not chosen to exercise due diligence to prevent the commission of an offence. He has not even stated that he made an attempt to contact accused company or its Managing Director or any other person to verify about the transactions or direct payment to avoid prosecution, when a huge claim of crores of rupees was demanded in the statutory notices.

46. As stated earlier, there are specific averments to the effect that the petitioner is in-charge of and responsible for the day-today operation as well as responsible for taking all financial and policy decision and he along with his family members are holding substantial share in the accused company and the contact information provided by the Bombay Stock Exchange in their web site showed that the key officials of the accused company are seven persons including the petitioner.

47. I am satisfied that the above averments are enough for the complainant to presume that the petitioner was in-charge and responsible for the conduct of the business of the accused company and since he pleads otherwise, it has to be established by him that he was not in-charge and responsible and he has no knowledge about the transaction and has exercised due diligence in prevention of commission of the offence.

48. Therefore, I am of the considered view, that it is a matter for trial.

49. Accordingly, in the facts and circumstances of the present case, I do not find any valid and sufficient ground to interfere with the proceedings pending before the courts below in C.C.Nos.2561, 2560 and 5268 of 2010.

50. In the result, the criminal original petition is dismissed. Consequently, connected Mps are closed.