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TMI Blog2021 (12) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... that A1 being a Limited Company, and A2 being the Vice Chairman of A1 Company and A3 to A9 being the Directors of the A1 Company availed Rs. 50.00 crores towards short term loan on 10.01.2012 for general corporate purpose which was repayable with interest at 1.5% over and above the base rate of bank as applicable from time to time, with floating rate linked to its rate compounding on monthly basis. The said amount was repayable in bullet payment at the end of 364 days, but the interest was to be paid every month. The collateral security was also given to the said loan as (1) Lien on fixed deposit to a tune of Rs. 10.00 crores, (2) Negative Lien on Uniliner Machinery and (3) a post dated cheque for Rs. 50.00 crores. Apart from the above sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.2013 given by the accused on 10.01.2012 was presented by the complainant for collection and the same was returned by the bankers of the accused i.e. Canara Bank, Narayanaguda, Hyderabad with an endorsement "FUNDS INSUFFICIENT." The complainant issued a legal notice to all the accused on 19.01.2013 and as the accused neither paid the amount nor did give any reply, lodged the complaint under Sections 138 and 142 of Negotiable Instruments Act (for short 'NI Act'). 3. Heard the learned counsel for the petitioners. There is no representation for the 2nd respondent. 4. Learned counsel for the petitioners submitted that the petitioners were independent Directors and had no role or say in the day to day activities and business of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (NCT of Delhi) and Another (2007) 3 SCC 693. He further submitted that this Court in a batch of Criminal Petitions i.e. Crl. P. Nos. 3703 of 2013 & Batch, quashed the proceedings against the petitioners herein in CC No. 4 of 2013 on the file of IX Special Metropolitan Magistrate, Hyderabad and CC Nos. 116, 117 and 119 on the file of XIII Special Metropolitan Magistrate, Hyderabad and CC No. 447 of 2013 on the file of the XX Additional Chief Metropolitan Magistrate, Hyderabad, wherein the petitioners herein were shown as A6 & A9, and filed a copy of the said order. 6. On a perusal of the private complaint filed by the complainant, the role played by the petitioners was nowhere mentioned, except stating that as per Section 293 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved involvement. In S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another, the Apex Court held that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. In order to bring a case within Section 141 of the Act, the complaint should disclose the necessary facts which makes a person liable." 8. The Hon'ble Apex Court in recent judgment in Ashoke Mal Bafna case (2018) 14 SCC 202 (supra) while summarizing the principles as to when a Director of a company can be made liable for the offence committed by the company under Section 141 of the NI Act held that: "Section 141 is a penal provision creating vicarious liability, and which, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific 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. 10. Learned counsel for the petitioners filed copies of the resignation letters submitted by the petitioners to the Board of Directors on 20.05.2012 and 14.08.2012, respectively, and the resolutions passed by the Board of Directors in its meeting held on 08.12.2012 accepting the said resignations. These would disclose that the petitioners resigned from independent Directorship prior to the date of cheque on 10.01.2013. Form 32 filed by the learned counsel for the petitioners also would disclose that the petitioners were not working with the company with effect from 08.12.2012. 11. The Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve any exceptional position under section 149. The contention that the question whether the petitioners are independent directors and whether they are not in charge of day to day affairs, can be left to be decided after trial, is not in the spirit of the law, which directs quash of proceedings, when the contents of the complaint, coupled with the unimpeachable material produced by the petitioners, would not make out a case against the petitioners." 13. Hence, considering the judgments of the Hon'ble Apex Court and this Court in a batch of criminal petitions and in Arrakuntal V. Ganeshan case 2013 (2) ALT (Crl.) ( 275 (A.P.) (supra) and as the petitioners were neither Managing Directors nor the authorized signatories to sign on the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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