Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 779 - DELHI HIGH COURT

2015 (12) TMI 779 - DELHI HIGH COURT - TMI - Criminal Complaint under Sections 138 of Negotiable Instruments Act, 1881 - whether a person simply being a Director of a Company is liable to be prosecuted by virtue of the provisions of Section 141 NI Act or the person who at the time of offence was in charge of and was responsible to the company for the conduct of the business of the Company would be prosecuted? - Held that:- The complainant has stated in so many words that the Company in question .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch was dishonoured later. Whereupon, Mr.Sushil Jindal, Mr. Anil Jindal and the petitioners (accused No. 2 to 6) acting for and on behalf of Company (accused No.l) stated that there was financial crunch in the Company, however, assured that the cheque would be honoured at any cost and the balance principal amount alongwith interest shall also be paid very soon by them. Thus, specific allegations against the present petitioners, accused No. 4 to 6, have been made in the complaint. Therefore, in my .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A.No.10878/2011 - Dated:- 29-10-2015 - MR. SURESH KAIT, J. For The Petitioner : Mr.Nishit Kush, Advocate. For The Respondent : Mr.Sudershan Joon, Mr.Bharat Gupta, Mr.Varun Tyagi, and Ms.Surbhi Mehta, Advocates SURESH KAIT, J. CRL.M.C. 3074/2011 1. By way of the present petition filed under Section 482 of the Code of Criminal Procedure, 1973 ( Cr.P.C. ), the petitioners seek quashing of the order dated 26.07.2011 passed by the learned Metropolitan Magistrate in Criminal Complaint No.2693/2011 und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y, Ms. Shashi Jindal (petitioner No.1 herein) is the Managing Director and In-charge of and responsible for the day-to-day affairs of the Company, Mr.Vaibhav Jindal and Mr. Saurabh Jindal, petitioners No.2 and 3 respectively, are the Directors and In-charge of and responsible for the day to day affairs of the Company. Accordingly, all the petitioners were handling the transactions and thus, dealt with the Complainant on behalf of the said Company. 3. It is further averred that the said Company w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

greed to be as per the rules of the Delhi Grain Merchant Association (Regd.). Accordingly, Complainant issued various Invoices, details of which are as under:- S. No. Invoice No. Date of Invoice Amount (Rs.) 1. 66384 11.10.2010 22,04,982.53 2. 66385 11.10.2010 19,07,427.07 3. 66801 22.11.2010 12,42,040.07 Total 53,54,449.67 4. Accordingly, for purchase of Urad, aforesaid invoices amounting to ₹ 53,54,449.67 were issued by the complainant. As a part-payment of the said invoices, the Company .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nted the aforesaid cheque with its banker the State Bank of Mysore, Naya Bazar Branch for encashment, however, the same was returned dishonoured by the banker of the accused with the endorsement "Exceeds arrangement". Accordingly, the information regarding the same was received by the Complainant by way of cheque return memo dated 25.11.2010. On dishonour of the said cheque, the Complainant, while protesting asked the accused that even after having received and consumed the goods, they .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

also be paid very soon by them. Though the Complainant believed the said assurances and representations of the accused but wanted the same to be in writing, therefore, the Company under the signature of accused No.3, Mr. Anil Jindal, gave the written undertaking/acknowledgment dated 29.11.2010, which is self evident of the fact that the said Mr. Anil Jindal for and on behalf of the Company admitted the liability towards the Complainant and had undertaken to honour the cheque as also the balance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aining principal amount of ₹ 4,449.67 as also the interest to which he is legally entitled to in accordance with the rules of the Delhi Grain Merchant Association (Regd.) as well as in terms of the acknowledgement/undertaking dated 29.11.2010 given by Mr. Anil Jindal for and on behalf of the Company. Upon which the accused became agitated without any rhyme or reason and warned him not to again come or approach them and stated that they will not make any payment to him. The Complainant was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed and that they had dishonest intention right from the very beginning to cheat the Complainant. On receiving the information of dishonour of the cheque in question, the respondent No.2 got served a legal notice dated 11.06.2011 upon the accused through Speed Post as well as Registered A.D. Cover, however, the said notice was received back. Registered A.D. Covers and Speed Posts sent to the accused at C-47, Lawrence Road Industrial Area, Delhi-110035 were received back on 15.06.2011 with the end .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2011 with endorsement dated 14.06.2011, 15.06.2011 and 16.06.2011 stating HC , which supposedly means House Closed . 7. As alleged all the accused have got false endorsement made on the said envelopes as they are aware about the contents of the same as they had opened one of the envelopes as some part of the opening of the same was torn, staple pins were removed and the face of the envelope was open, which means the accused had read the notice. Further stated that the accused got false endorseme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l liability, thus, an adverse inference to be drawn against them. Despite service of notice, the accused had not made the payment of the dishonoured cheque amounting to ₹ 53,50,000/- within the statutory period of 15 days from the receipt of notice. This act of the accused reflects that the accused malafidely, knowingly, deliberately and intentionally issued the said cheque with the intention not to honour the same. 9. It is further averred that the petitioners and other accused had used a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion, dishonour of the said cheque, issuance and service of legal notice and continues to be so even as on date. 10. Thus, the accused including the petitioners have committed an offence punishable under Section 138 read with Section 141 NI Act by dishonouring the aforesaid cheque and not making the payment of the same within the statutory period of 15 days after receipt of the legal notice dated 11.06.2011. 11. Mr. Nishit Kush, learned counsel appearing on behalf of the petitioners submitted tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Cheques have been missing from the office of the Company and only on receiving of the summons of the present case it has come to the knowledge of the active directors of the Company that the said Cheques have been misused by the respondent herein in the case in question. Immediately, after noticing the same, a complaint dated 01.09.2011 with Police Station Maurya Enclave was lodged by mentioning the true facts. 13. Mr. Kush submitted that perusal of the subject Complaint discloses that no o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the mandatory notice under Section 138 NI Act before being proceeded against before a court of law. 15. Learned counsel submitted that criminal liability arises from being in charge of and responsible for conduct of business of the Company at the relevant time when the offence was committed and not on the basis of merely holding the post of a director. No specific and particular role is assigned to any of the petitioners by the Complainant. The petitioner No. 1 is a house wife aged about 51 year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s submissions, learned counsel for the petitioners has relied upon the case of N.K. Wahi Vs. Shekhar Singh & Ors., (2007) 9 SCC 481, wherein the Supreme Court held as under:- 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 incharge and responsible for the conduct of the business of the company. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on, cannot allege that she was not incharge and responsible for the day-to-day affairs of the said Company. So far as the contention that the petitioners were not incharge of the day-to-day affairs of the Company at the relevant time is concerned, petitioners No. 1 to 3 are the only directors as on date in the Company in question. Petitioners No. 1 and 3 are wife and son of Mr.Sushil Jindal, accused No.2, who in turn is son of Mr.Anil Jindal, accused No.3. The dishonoured cheque is of substantia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l has relied upon the case of Gunmala Sales Private Ltd. Vs. Anu Mehta, AIR 2015 SC 1072, wherein the Supreme Court held as under:- 33. We may summarize our conclusions as follows: a) Once in a complaint filed Under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; b) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ause of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ome totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; d) No restriction can be placed on the High Court's powers Under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Crl.M.C. 3937/2012 and Crl. MC 3935/2012, titled as Krishna Muraril Lal Vs, IFCI Factors Ltd., decided on 27.11.2012, wherein a Coordinate Bench of this Court held as under:- 5. This Court upon a perusal of the complaint filed by the respondent/complainant finds that there are specific allegations against the present petitioners. The relevant portion of the complaint filed under Section 138 read with Section 141 of the Negotiable Instruments Act is reproduced hereinbelow:- 2. The accused no.1 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e accused Company, formed the intention to issue the above mentioned cheques in favour of the complainant, knowing fully well that they were not possessed of adequate balance, and that the complainant would not therefore be able to recover the amounts payable against the cheques. They are thus also liable to be punished along with the accused No.1 for the offence contemplated under Section 138 read with Section 141 of the Negotiable Instruments Act. 6. Further, the Supreme Court in K.K. Ahuja (s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. It shall, however, be open to the petitioners to lead evidence before the trial court to show that they are neither whole-time Directors of the Company in question nor involved in its day-to-day management. 21. Further relied upon the case of Ranjit Tiwari Vs. Narender Nayyar, 191 (2012) DLT 318, wherein this Court held as under:- 14. The law has been settled in the case of Anil Hada (supra), way back in 1999 by the Supreme Court holding that though the company itself is not prosecuted, the pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Section 141of the Act that penal liability under Section 138 is cast on other persons connected with the company. xxxx xxxx xxxx 16. According to Section 141(1), vicarious liability is attributed to the persons mentioned therein for the offence committed by the company, on the very same analogy notice served on the company amounts to serving of notice on all the persons as found in Section 141of N.I. Act. A person who was in charge of the company and was responsible to the company for the co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) Ltd. 124 (2005) DLT 206. 23. I have heard the learned counsel for the parties. 24. The moot question which now arises for consideration is whether a person simply being a Director of a Company is liable to be prosecuted by virtue of the provisions of Section 141 NI Act or the person who at the time of offence was in charge of and was responsible to the company for the conduct of the business of the Company would be prosecuted? 25. Before dealing with the same, it would be appropriate to first .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntained 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. (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 direct .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfils 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 an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the following terms:- 16. ... ... .... (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) The answer to question posed in sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d liability of a director in such cases. (c) The answer to question (c ) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and respo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2009) SLT 429 and N.K.Wahi Vs. Shekhar Singh and Ors., (2007) 9 SCC 481. 29. In N. Rangachari Vs. Bharat Sanchar Nigam Ltd., (2007)5 SCC 108, the Division Bench of the Supreme Court held that:- 13........... "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 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sher in the element of their acting for and on behalf of the company and of their being in charge of the Company........ 14. A person normally having business or commercial dealings with a Company, would satisfy himself about its creditworthiness and reliability by looking at its promoters and Board of Directors and the nature and extent of its business and its memorandum or articles of association. Other than that, he may not be aware of the arrangements within the Company in regard to its mana .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of its affairs. The Directors are prima facie in that position. .... ..... ..... 19........In fact, an advertence to Sections 138 and 141 of the Negotiable Instruments Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or Officers in charge of affairs of the Company to show that they are not liable to be c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r/manager/secretary/employee of the company towards the company and towards the third party. However, while dealing with the company, he comes in contact with persons who have the authority to take decisions on behalf of the company and deal with the third person on a particular subject matter, although it may be in different spheres of the same transaction. Such persons with authority to take decisions over the transaction and having knowledge of the transaction are deemed to be incharge of and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mmission of the offence is excluded from the scope of Section 141 NI Act. Section 141 NI Act creates a legal fiction against the defaulting company, so as to cover within its ambit all persons who have consented, connived or anyway attributed to the commission of the offence. The offence is the result, whereas the transaction is the cause. The liability arises on account of conduct, act or omission on the part of the person and not merely on account of holding an office or position in a company. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t has not elaborated the exact role of the petitioners No.2 and 3 while stating that they are responsible for the day-to-day operations and decision making of the company, is not sufficient ground to throw out the complaint qua the petitioners, at this premature stage. 32. It is pertinent to mention here that in a case bearing Crl.M.C. No.1996/2010, entitled Rajesh Agarrwal Vs. State & Anr., decided on 28.07.2010, a Coordinate Bench of this Court has observed that quashing of summoning order .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tan Magistrate and take such pleas. The proceedings under Section 138 NI Act being summary proceedings, the petitioner can make his submissions before the court that he has a valid and specific defence available with him to show that he need not face trial and he is prepared and ready to lead evidence to the said effect for which necessary permission can be sought from the trial court, for filing an affidavit in his defence or further, by filing an application seeking recall of any of the witnes .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ners and Mr. Anil Jindal, a cheque bearing No.361540 dated 23.11.2010 for a sum of ₹ 53,50,000/- drawn on State Bank of Bikaner and Jaipur, Khari Baoli Branch, Delhi, was issued which was dishonoured later. Whereupon, Mr.Sushil Jindal, Mr. Anil Jindal and the petitioners (accused No. 2 to 6) acting for and on behalf of Company (accused No.l) stated that there was financial crunch in the Company, however, assured that the cheque would be honoured at any cost and the balance principal amount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version