TMI Blog2022 (2) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... at the very inception regarding the maintainability of the proceedings against him - However, if in course of proceedings the petitioner is able to rebut the presumptions so far as the proviso clause of Sub-section 1 is concerned i.e. 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 he would be entitled to an order of acquittal. The stage at which petitioner has approached this Court is premature and as such this Court finds no reason to interfere with the proceedings. Revision application dismissed. - CRR 3525 of 2019 With CRAN 2 of 2020 (Old No. CRAN 488 of 2020) - - - Dated:- 18-2-2022 - HON BLE JUSTICE TIRTHANKAR GHOSH For the petitioner : Mr. Abhirup Chakraborty. For the Opposite Party no. 2 : Mr. Ayan Bhattacherjee, Mr. Karan Dudhwewala, Mr. Anil Choudhury. Tirthankar Ghosh, J:- The present revisional application has been preferred by the petitioner challenging the proceedings being Case No. CS-27458 of 2017 under Sections 138/141 of the Negotiable Instruments Act, 1881, pending before the learned Metropolitan Magistrate, 15th Court, Calcutta. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- (Rupees Two Lakh Eleven Thousand Five Hundred only) drawn on Syndicate Bank, Kolkata as part of the said settlement. d) The complainant presented the said cheque with its bankers namely, ICICI Bank, Chowringhee Road Branch, P.S.- Shakespeare Sarani, Kolkata-700016 on 30.11.2016 for encashment within its validity period but the same was dishonoured by the bankers of the accused persons with an endorsement Funds Insufficient . The said information of dishonour was received by the complainant on 02.12.2016 and pursuant to the request made by the accused persons the complainant again presented the cheque on 31.01.2017 for encashment and the cheque was again dishonoured with the same endorsement. The complainant company lastly on 20.02.2017 presented the cheque with its banker on the verbal assurance of the accused persons but the same was again dishonoured with the same endorsement of Funds Insufficient . The complainant company through its advocate issued a demand notice dated 20th March, 2017, thereby demanding the amount covered by the dishonoured cheque i.e. ₹ 2,11,500/- (Rupees Two Lakh Eleven Thousand and Five Hundred only) within 15 days from the date of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember, 2015 and on 30th September, 2016 the company accepted the resignation of the petitioner with effect from 29th September, 2015 (attention has been drawn to pages 32 and 33 of the revisional application) for comparing name of the petitioner being deleted from the list of Directors. The petitioner has also drawn the attention of this Court to the certified true copies of statutory form No.11 and 12 which was obtained from the Office of the Registrar of Companies which would reflect that the resignation of the petitioner was available in the public domain. Additionally, it has been submitted that the petitioner cannot be made vicariously liable by invoking the provisions of Section 141 of the Negotiable Instruments Act which makes a director liable and as the petitioner was never director of the company at the relevant period of time, he cannot be made liable as the cause of action of the instant case arose after 20th February, 2017. In order to substantiate his arguments following authorities have been relied upon by the Rajasekar Vs.- U.M.S. Radio Factory Limited, (2011) 1 MWN (Cri) DCC 36; Harshendra Kumar D. Vs.- Rebatilata Koley Ors., (2011) 3 SCC 351; K. Srikanth S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities to stress on the issue that if the person has resigned as director he/she cannot be construed to come within the meaning of Section 141 of the Negotiable Instruments Act. Learned advocate for the petitioner relied upon the following paragraphs of Rajasekar Vs.- U.M.S. Radio Factory Limited (supra): 11. Therefore, every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of the business of the Company, as well as the Company, shall be deemed to be guilty of the offence. The above provision makes it clear that the persons who are sought to be made vicariously liable for Criminal offence should be at the time the offence was committed was in charge of and was responsible to the Company for the conduct of the business of the Company. 13. It is well settled that the liability of a Director of a Company arises when he is in-charge of and responsible for the conduct of the 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. Section 141 of the Act provides for a constructive liability. Therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant sent a letter of resignation to the Managing Director of the Company, the relevant part of which reads as follows: Subject: Resignation from the post of Director. With reference to the above subject I hereby resign to the post of Director in your company (sic) immediate effect as I am preoccupied with my other business activities and unable to concentrate, participate in the affairs of the company. Therefore it is kind request with you to accept my resignation and intimate the ROC by filing necessary applications to comply with the legal formality. 19. The Board of Directors held the meeting on 2-3-2004 and accepted the appellant's resignation on that day itself. The extract of resolution to that effect reads as follows: Mr Harshendra Kumar D., s/o Rathnavarma Hegde residing at No. 55, Vittal Mallya Road, Bangalore, due to his personal inconivenceses (sic) he requested to accept his resignation for the Director, and the Board accepted the resignation and it will be effected immediately on the date of resignation. 20. On 4-3-2004, the Company informed the Registrar of Companies in the prescribed form (Form 32) about the resignat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for day-to-day affairs of the company. An offence envisaged under Section 138 of the Negotiable Instruments Act contains several ingredients as has been held by a three-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [(2005) 8 SCC 89 : 2005 SCC (Cri) 1975] in the following terms: (SCC pp. 98-99, para 10) 10. What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 : (2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378 : AIR 2015 SC 675] .) In Anil Khadkiwala Vs. State (NCT of Delhi), (supra) petitioner referred to the following paragraphs: 7. The complaint filed by Respondent 2 alleges issuance of the cheques by the appellant as Director on 15-2-2001 and 28-2-2001. The appellant in his reply dated 31-8-2001, to the statutory notice, had denied answerability in view of his resignation on 20-1-2001. This fact does not find mention in the complaint. There is no allegation in the complaint that the cheques were post-dated. Even otherwise, the appellant had taken a specific objection in his earlier application under Section 482 CrPC that he had resigned from the Company on 20-1-2001 and which had been accepted. From the tenor of the order of the High Court on the earlier occasion it does not appear that Form 32 issued by the Registrar of Companies was brought on record in support of the resignation. The High Court dismissed the quashing application without considering the contention of the appellant that he had resigned from the post of the Director of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of the court. In Saroj Kumar Poddar Vs. State (NCT of Delhi) (supra) petitioner stressed on the following paragraph: 14. Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in para 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act. Attention of the Court was also drawn to the following paragraphs of DCM Financial Services Ltd. Vs. - J.N. Sareen, (supra): 14. The complaint petition did not disclose as to who had signed the cheque on behalf of the Company. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r v. State (NCT of Delhi) [(2007) 3 SCC 693 : (2007) 2 SCC (Cri) 135] , Everest Advertising (P) Ltd. v. State, Govt. of NCT of Delhi [(2007) 5 SCC 54 : (2007) 2 SCC (Cri) 444] and Raghu Lakshminarayanan v. Fine Tubes [(2007) 5 SCC 103 : (2007) 2 SCC (Cri) 455] .] 22. Mr Patwalia, however, submitted that a situation may arise where change in the management is effected only to avoid such constructive liability. Firstly, we are not concerned with such a hypothetical case. Secondly, as noticed by this Court in Rangachari case [(2007) 5 SCC 108 : (2007) 2 SCC (Cri) 460] 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. On the other hand Mr. Bhattacherjee, learned advocate appearing for the complainant/opposite party relied upon paragraph 15 of Lalit Kumar Sharma Vs. State of U.P. (supra): 15. Evidently, therefore, the second cheque was issued in terms of the compromise. It did not create a new liability. As the compromise did not fructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained 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: 60[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (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 director, manager, secretary or other officer of the company, such director, man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions so advanced in the petition of complaint would go to show the involvement of the present petitioner. The contention advanced by the petitioner, prima facie, reflects a design in view of the documents enclosed along with the revisional application as the petitioner has tendered his resignation on September 29, 2015 and subsequently signed the terms of settlement using the office seal of the company in October, 2016. There was no reason for the petitioner to use the seal of the company on October, 2016 if at all he has tendered his resignation in September, 2015. Having regard to the factual background of the present case and the law laid down in the case of Lalit Kumar Sharma (supra) that the second complaint do not create any new debt or liability the provisions of Section 141 of the Negotiable Instruments Act which refers every person and consent and connivance attributable on the part of any director should be extended to the present petitioner as liability depends on the role played by a person and not on his designation. The case is at the initial stage any further interpretation regarding the conduct of the present petitioner as also the manner of appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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