Judgement- 138 matter
Jagdish
(Querist) 11 July 2013
This query is : Resolved
Any supreme court judgement available in which it is held that Company Secretary is not liable for dishnoured of cheque?
Anirudh
(Expert) 11 July 2013
Please indicate who signed the cheque?
Raj Kumar Makkad
(Expert) 12 July 2013
The person who was overall incharge of day to day activities of the company and who signed the cheque are guilty.
Guest
(Expert) 12 July 2013
Your query lacks any background. Moreover, analogy of the court judgment applies only in similar cases with similar circumstances, not in all types of cases of cheque dishonour in the case of companies.
However, no judgment is required when the law is very clear on that point. If the offence has not been committed with the consent or connivance of, or is not attributable to any neglect on the part of the company secretary, he cannot be deemed to be guilty of that offence and shall not be liable to be proceeded against.
Otherwise, in other cases, the company secretary can also be treated as guilty of offence along with any director, manager, or other officer of the company ubder sec.141 of the NI Act.
ajay sethi
(Expert) 12 July 2013
you have not answered query raised by anirudh . in absence of details furnished by you it is difficult to advise
ajay sethi
(Expert) 12 July 2013
for judgement visit indian kanoon website
Jagdish
(Querist) 12 July 2013
The cheque is signed by Dierctor of the Company. But how company secretary can prove that he was neither incharge of the business, nor controlling the affairs of the company?
Guest
(Expert) 12 July 2013
How anyone here can presume that the case for issue of cheque was not processed through the secretary?
It is for the company secretary to defend his position when the prosecution tries to prove that the offence was committed with the consent or connivance of the company secretary, or due to his negligence.
Anirudh
(Expert) 12 July 2013
Dear Mr. Jagdish,
Your query is quite misleading.
You say that the cheque was signed by the Director of the Company. At best the 138 Complaint would have been against the said Director who signed the cheque. Therefore, it is for the said Director to prove that he was not incharge of the business, nor controlling the affairs of the company.
BUT instead of asking how the Director will prove, you are asking how the Company Secretary will prove? Why should a Company Secretary should prove? Is the Company Secretary the Accused in the 138 Complaint?
DEFENSE ADVOCATE.-firmaction@g
(Expert) 12 July 2013
Yes Mr JAGDISH your problem is real and there are many cases similar to you which are put for harassment due to rigors of criminal justice system.
And negative can not be proved but for this there are ample safety provisions in the law it self.
SMS PHARMA is the landmark citation in this matter by APEX COURT and same is is being followed in all recent cases. Following portion of the JUDGEMENT will be sufficient to solve your problem.
To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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.
A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That respondent falls within parameters of Section 141 has to be spelled out.
The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.
Jagdish
(Querist) 15 July 2013
Though the cheque was signed by Director of the company, but company secretary has also received the summons. Company secretary is not authorised signatory to cheque, nor sign any documents.
Guest
(Expert) 15 July 2013
A company secretary is supposed to handle and deal with the legal matters of the company. He would have to appear in the court to clear his position and apply to get exemption from further appearance.
ajay sethi
(Expert) 15 July 2013
you have not mentioned what are the averments in the complaint relating to company secretary . if he has received summons he must have been added as an accused by the complainant and specific averments must have been made regarding his role in the entire case
Jagdish
(Querist) 15 July 2013
Averment is made by complainant in the complaint is that company secretary is incharge of and responsible for days to days of affairs of the company and responsible for the business of the company. Further, it is mentioned that C.S. is principle officer of the company.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 15 July 2013
These are glitches of the CHEQUE LAW, though the pleadings are not sufficient but once the process is issued you have to face the whole trial.
SC case law is applicable in your case but irony is once the process is issued same court has no power to act on it.
Engage a competent advocate to conduct the case since there will be day to day tactics so advice on such sites will not be useful.
ajay sethi
(Expert) 15 July 2013
fight case on merits
