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2020 (3) TMI 247

..... th Sections 141/142 of NI Act was filed on 30.01.2017 - HELD THAT:- Admittedly, the petitioners are neither the Managing Directors nor the Authorized Signatories of the accused company. The accused company and the Managing Director are arrayed as accused No.1 and 2 along with others in the complaint pending before the concerned Metropolitan Magistrate. A perusal of the complaint filed under Section 138 r/w Sections 141/142 of NI Act filed by the complainant shows that except for the general allegation stating that the petitioners were responsible for control and management and day to day affairs of the accused company, no specific role has been attributed to the petitioners. To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalised averment without any specific details as to how and in what manner, the petitioners were responsible for the control and management 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 allo .....

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..... referred to para 17 of the complaint which contained allegations against the present petitioners and the same is reproduced hereunder: 17. That the accused no. 1 is liable because the cheques in question have issued on behalf of the accused no. 1 and the accused no.2 to 6 are liable being the managing directors and directors of the accused no.1 and also being responsible for the control and management and day to day affairs of the accused no.1 and the accused no. 7 and 8 are liable being the signatories of the cheques in question. 6. The present petitioners were impleaded as accused nos. 5, 6 & 3. Learned counsel for the petitioners urged that it is an admitted case of the respondent that the petitioners were neither the Managing Directors nor the signatories to the cheques in question. Learned counsel for the petitioners also relied on the Form 32 with respect to Sunita Palta (petitioner 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 D .....

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..... rises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the Section would have said so. Instead of every person the section would have said every director, manager or secretary in a company is liable …, etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the 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 .....

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..... shonoured cheque was signed by him on behalf of the company, would give rise to responsibility under Sub-section (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Section 2(24) of the Companies Act) or a person referred to in Clauses (e) and (f) of Section 5 of Companies Act, an averment in the complaint that he was in-charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv) Other officers of a company cannot be made liable under Sub-section (1) of Section 141. Other 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 .....

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..... ction 141. 18. In Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC 189, this Court observed that a person 'in charge of a business' means that the person should be in overall control of the day to day business of the Company. 19. A Director of a Company is liable to be convicted for an offence committed by the Company if he/she was in charge of and was responsible to the Company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (See: State of Karnataka Vs. Pratap Chand & Ors). 20. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the N.I. Act, there must be specific averments against the Director showing as to how 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. .....

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..... standing anything contained in this Act,- (i) an independent director; (ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. 17. Admittedly, the petitioners are neither the Managing Directors nor the Authorized Signatories of the accused company. The accused company and the Managing Director are arrayed as accused No.1 and 2 along with others in the complaint pending before the concerned Metropolitan Magistrate. A perusal of the complaint filed under Section 138 r/w Sections 141/142 of NI Act filed by the complainant shows that except for the general allegation stating that the petitioners were responsible for control and management and day to day affairs of the accused company, no specific role has been attributed to the petitioners. To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalised averment without any specific details as to how and in what manner, the petitioners were res .....

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