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2022 (6) TMI 198 - Indian Laws
Dishonor of Cheque - insufficiency of funds - vicarious liability - petitioners are not Non-executive Independent Directors of the Company - Whether the petitioners can be proceeded against in the impugned criminal case? - HELD THAT:- What is narrated is, accused Nos.2 to 6 are responsible for day-to-day affairs of accused No.1/Company. Accused Nos.2 to 6 are the brain and soul of the Company and are responsible for all the acts and omissions of the Company. With this note the entire narration is against accused Nos.3, 4 and 5 as they are Managing Directors and Joint Managing Directors of the Company. The accused Nos.4 and 5 are also signatories to the cheque - There is no whisper in any of the documents depicting the petitioners to be Non-executive Independent Directors. Therefore, if the haze has to be warded off, it is necessary for the petitioners to participate in the trial and demonstrate that they have no role to play in the day-to-day affairs of the Company and that they are not even aware of the borrowing.
It is no doubt settled principle of law that if the accused in a proceeding under Section 138 of the Act who are not signatories to the instrument are hauled into those proceedings and if they are Non-executive Independent Directors, who have no role to play in any affairs of the Company, they cannot be prosecuted. It is in those cases the Apex Court or the constitutional Courts have quashed such proceedings in favour of those Non-executive Independent Directors. The phrase "non-executive independent director" is not even shown to exist in any of the documents appended by the petitioners. The respondent has demonstrated varied nomenclature of the petitioners in several documents. Therefore, it becomes a matter of trial.
In the light of what is held by the Apex Court in N. RANGACHARI VERSUS BHARAT SANCHAR NIGAM LTD [2007 (4) TMI 621 - SUPREME COURT], the complaint clearly narrates that the petitioners were also in-charge of the affairs of the Company, they are the brain and soul of the Company and at the time when they borrowed the loan, the agreement clearly stipulated that with their permission, including others the said loan was borrowed and the cheque was issued and no where the petitioners are described as Non-executive Independent Directors. This being the factual scenario, exercise of jurisdiction under Section 482 of the Cr.P.C. in favour of the petitioners is declined.
The contention of the learned counsel for the petitioners that the complaint nor the sworn statement anywhere attributes any role of the petitioners is unacceptable as the complaint or the sworn statement cannot be read splitting hairs as it has to be read as a whole and if it is so read, it does attribute the role played by the petitioners.