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2020 (3) TMI 247

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..... anagement of affairs of the company, is not enough. In Pepsi Foods v. Special Judicial Magistrate and Ors. [1997 (11) TMI 518 - SUPREME COURT], it was held that summoning an accused person cannot be resorted to as a matter of course and the order must show due application of mind. Petition allowed. - CRL.M.C. 1410/2018 - Dated:- 3-3-2020 - MR. MANOJ KUMAR OHRI J. Petitioners Through: Mr. Saraswata Mohapatra, Advocate Respondent Through: Mr. Rajiv Sharma, Advocate 1. The present proceedings are instituted under Section 482 Cr.P.C challenging the order dated 14.02.2017 passed by the Metropolitan Magistrate in CC No.874/2017 whereby the present petitioners were summoned for the offence punishable under Section 138 N.I. Act. 2. The respondent, a private limited company, had filed a complaint through its authorized representative stating that it was engaged in the business of plywood in the name and style of M/s Kit Marketing Private Limited. The accused are regular purchasers of goods from the complainant on credit basis and have made regular payment towards sale consideration from time to time in the past. On 01.12.2016, there was an outstanding balance of ₹ 36,46,758/- payable .....

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..... titioner No.1) and Bhagwan Singh Duggal (petitioner no.2) submitted on 29.06.2013 and 13.07.2013 respectively, showing them as independent Non-executive Additional Directors. Similarly, Form No. DIR-12 with respect to Ashwini Kumar Singh (petitioner No.3) shows his status as independent Non-executive Director w.e.f. 01.04.2014. 7. Learned counsel for the petitioners has also referred to the Annual Report for the year 2016-17 of the accused company and the certificate issued by the Company Secretary of the accused company which also shows the status of petitioners as independent Directors. 8. On the other hand, learned counsel for the respondent has supported the impugned order. It was submitted that the petitioners have the remedy to appear and place their defence before the trial court. He, however, has not disputed the position with respect to Form 32/Form No. DRI-12 filed by the petitioners. He submitted that the petitioners were named as Directors in the complaint on the basis of the information which was downloaded from the official website of ROC. 9. I have heard learned counsels for the parties and have also gone through the case records. 10. The vicarious liability of a per .....

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..... person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. xxx xxx xxx 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person 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 the respondent falls within the parameters of Section 141 has to be spelt 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 com .....

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..... officers of a company can be made liable only under Sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 12. The issue relating to vicarious liability of a Non-executive Director came up before the Supreme Court in Pooja Ravinder Devidasani v. State of Maharashtra and Anr. reported as 2014(14) SCALE, and it was held as under:- 17...Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-today affairs of the running of its business and only monitors the executive activity. To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the Company, one who actively looks after the day-to-day activities of the Company and particularly responsible for the conduct of its business. Simply because a person is a Director of a Company, does not make him liable under the N.I. Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been .....

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..... and in what manner the Director was responsible for the conduct of the business of the Company. 13. In Nandakumar & Ors. v. M/s ECE Industries Ltd. in SLP (Crl.) No.2770/2013 decided on 04.08.2014, while setting aside the order of dismissal of the petition of the accused filed under Section 482 Cr.P.C. by the High Court, the Supreme Court held as under:- Therefore, it is clear that merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act, till it is shown that the said Director was in-charge of and responsible for the conduct of his business. The Court below and the High Court erred in not appreciating the fact that the complainant in the mechanical way cited the names of the appellants which alleged to have been obtained from the website of the Ministry of Corporate Affairs and unnecessary dragged the appellants in litigation who were not directly charged or responsible for the company for the conduct of business. The requirement of Section 141 of the Negotiable Instrument Act is against the persons responsible for the conduct or business of the company at the relevant time. In absence of such allegation against the appellan .....

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