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2016 (9) TMI 965 - DELHI HIGH COURT

2016 (9) TMI 965 - DELHI HIGH COURT - TMI - Complaint under Section 138 read with Section 141 of the Negotiable Instruments Act - petitioner ceased to be a director of the company - Held that:- The petitioner had ceased to be a director of the accused company on November 12, 2009, which fact is apparent from Form 32 submitted to the Registrar of Companies, the fact that he was a director of the company when the negotiations took place would be irrelevant. - CRL.M.C. 7/2013 & CRL.M.C. 564/2014 - .....

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/11) and CC No.1781/1 (old number CC 3864/11/2011) under Section 138 read with Section 141 of the Negotiable Instruments Act (hereinafter referred to as Act ), titled Countrywide Promoters Pvt. Ltd. Vs. Era Landmarks Ltd. & Ors and the summoning order (s) dated March 01, 2011 and May 14, 2013 and all proceedings arising there from. 3. The brief facts necessitating the disposal of the present petitions are that the accused company, in which the petitioner was alleged to be a direct .....

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shall be paid by the complainant company as External Development Charges to the Government Department on behalf of the accused company, which shall be repaid by the accused company along with 18% interest to the complainant company. It is alleged that in lieu of part payment of the aforesaid liability in sum of ₹ 2458.39 Lacs, post dated cheques bearing Cheque No.291473 dated December 31, 2010, Cheque No.291474 dated December 31, 2010, Cheque No.291477 dated December 31, 2010 and Cheque No .....

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lainant company sent a demand notice to the accused company vide letter dated January 17, 2011 demanding the payment of the aforesaid amount of ₹ 13,03,39,100. The accused company replied to the demand notice stating that the cheques were handed over to the complainant merely as security and not for the satisfaction of any debt or liability. It resulted in above noted complaints as also another complaint, with which I am not concerned, being filed by the complainant in the Court of the lea .....

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e further case of the petitioner that the complaint contains bald allegations against the petitioner that he had interacted and participated in various negotiations between the parties in regard to the land development project. Relying upon the decision reported as 2007 (9) SCALE 371 K. Srikanth Singh Vs. North East Securities, it is the case of the petitioner that mere participation in the transaction does not infer that the director was responsible for the day-to-day affairs of the company. Vi .....

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Chakrborty Vs. Reliance Structures, to substantiate his arguments. 6. Per Contra the case of the complainant company is that the allegations in the complaint stating that the petitioner had participated in the negotiations to the agreements between the parties were not vague so as to discharge the petitioner from the ambit of Section 141 of the Act. Relying upon the decision reported as AIR 2005 SC 3512 S.M.S Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr., it is the case of the com .....

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and hence can be held vicariously liable under Section 141 of the Act. 7. It is the case of the complainant company that whether the petitioner ceased to be a director of the accused company is a matter of evidence. 8. Needless to state the facts of each case have to be considered. In SMS Pharmaceutical s case (supra) the Supreme Court had held:- 15. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complain .....

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respondent fails within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141 he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of th .....

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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-para (b) has to be in negative. 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 .....

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uld 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 Section141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as signatory of a cheque which is dishonoured is concerned, he is clea .....

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t 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 ele .....

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