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Director-“shall be deemed to be guilty”

 Negotiable Instruments Act, 1881 Section 141  Pari materia to Foreign Exchange Regulation Act, 1973 (46 of 1973), Section 68

 

Judgment delivered on 27 th July, 2020

 

 

Offences by companies - Criminal liability arises from being in charge of and responsible for the conduct of the Company at the relevant time –  Section 68(1) creates a legal fiction, i.e., “shall be deemed to be guilty” -  The legal fiction triggers on fulfilment of conditions as contained in the section - The words “every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business” has to be given some meaning and purpose -  The provision cannot be read to mean that whosoever was a Director of a company at the relevant time when contravention took place, shall be deemed to be guilty of the contravention - Had the legislature intended that all the Directors irrespective of their role and responsibilities shall be deemed to be guilty of contravention, the section could have been worded in different manner -  When a person is proceeded with for committing an offence and is to be punished, necessary ingredients of the offence as required by Section 68 should be present - Negotiable Instruments Act, 1881 Section 141. #2020 SCeJ 1118

 

Held, Negotiable Instruments Act, Section 141  contains the same conditions for a person to be proceeded with and punished for offence as contained in Section 68 of FERA, 1973.   Section 141(1) of Negotiable Instruments Act uses the same expression “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” - Section 68 of FERA, 1973 as well as Section 141 of the Negotiable Instruments Act deals with the offences by the companies in the same manner. #2020 SCeJ 1118

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Foreign Exchange Regulation Act, 1973 (46 of 1973), Section 68 - Proceeding against Director of a company  - For proceeding against a Director of a company for contravention of provisions of FERA, 1973, the necessary ingredient for proceeding shall be that at the time offence was committed, the Director was in charge of and was responsible to the company for the conduct of the business of the company -  The liability to be proceeded with for offence (under Section 68 of FERA, 1973) depends on the role one plays in the affairs of the company and not on mere designation or status - Negotiable Instruments Act, 1881 Section 141#2020 SCeJ 1118

Held,

 

It is true that with regard to any offence punishable under Section 138 of Negotiable Instruments Act with respect to offences by companies, a complaint in writing has to be filed as required by Section 142 of the Negotiable Instruments Act. A complaint as contemplated for offence under Section 138 needs to be necessarily contain all allegations constituting offence. #2020 SCeJ 1118

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Comments: 1
  • #1

    Gunwant Patira (Sunday, 02 August 2020 09:45)

    Sir,
    Would I be able to upload all of your news articles vis a vis lehal matters includinmg upload and take print out of all SCC and High court Judgemenmts as delivered to me under your mail or not ?