TMI Blog2022 (4) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... ffer made by the petitioners for adjustment of amount appears reasonable and impregnable. Ergo, to break the chain of elongated litigation pursued unnecessarily for more than two decades and to bring the discord to its logical end, it is opined that the complaint cases should be quashed by adequately compensating the respondent. The proceedings of all the complaint cases, which have given rise to these petitions, are hereby quashed. It is directed that from the deposited amount of the SDBL which is lying in Escrow Account and in possession of the respondent, the total cheque amounts, in all the complaint cases, shall be adjusted and further an amount of ₹ 50 Lac towards compensation and ₹ 20 Lac towards cost of litigation shall also be adjusted - petition allowed. - M.Cr.C. No.55265/2021, M.Cr.C. No.55138/2021, M.Cr.C. No.55117/2021, M.Cr.C. No.55191/2021, M.Cr.C. No.55196/2021, M.Cr.C. No.55202/2021, M.Cr.C. No.55211/2021 - - - Dated:- 30-3-2022 - Hon'ble Shri Justice Sanjay Dwivedi For the Petitioners : Shri SanjayAgrawal, Advocate and Shri Rahul Diwaker, Advocate And Shri Rahul Gupta, Advocate. For the Respondent : Shri Sanjay K. Agrawal And Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 433(e) and 434 of the Companies Act, 1956 seeking for winding-up of SDBL. In that petition, following directions were issued on 03.05.2013. 31. The Directors of the SDBL are directed to strictly comply with the requirements of Section 454 of the Act and Rule 130 of the Rules and furnish to the OL a statement of affairs in the prescribed form verified by an affidavit within a period of 21 days from the date that this order become operative as indicated in para 32 below. They will also file affidavits, in this Court, with advance copies to the OL, within four weeks thereafter setting out the details of all the assets, both movable and immovable, of the SDBL company and enclose therewith the balance sheets, profit and loss accounts and copies of the statements of all the bank accounts for the last three years. 32. Given the history of this litigation, and the fact that SDBL claims that it is a profit making company that has the capacity to pay the admitted liability, the Court considers it appropriate to grant one more opportunity to SDBL to pay to MPSDIC the admitted liability as shown in its balance sheet as on 31st March 2010, minus the payments made by SDBL to MPSIDC t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts which were sanctioned and disbursed in favour of SDBL by the respondent. The total sum of 12 cheques came to ₹ 6.71 Crore and as per the information available through RTI, up-to 30.04.2017, the amount of ₹ 7,60,47.000/- earned interest of ₹ 2,16,39,378/- and the total accumulated amount must have fetched more interest till date. Thereafter, petitions under Section 482 of CrPC were filed before the High Court seeking for quashment of respective criminal proceedings pending in relation to complaint cases filed under Section 138 of N.I.Act on the ground that in pursuance to One Time Settlement Scheme, the SDBL was ready to pay the cheque amounts and as such the criminal proceedings were sought to be quashed. By a consolidated order dated 22.04.2014, those petitions were dismissed by the High Court giving following observations:- 14. In present criminal cases offence under NI Act has been committed years before prior to the introduction of OTS Scheme. For offence already committed years before cannot be automatically compounded as a matter of resolution of the Scheme as a matter of right. Compliance of Scheme is sincere and utmost duty of officer of Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores. As such, the amount plus interest already in possession of the respondent can be adjusted with the cheque amounts. He candidly submitted that in addition to the aforesaid adjustment, adequate compensation, if any awarded by this Court, can also be adjusted from the total amount (principal + interest) carried in Escrow Account and in possession of the respondent. 5. Shri Sanjay K. Agrawal, learned counsel appearing for the respondent has opposed the submissions made on behalf of the petitioners and submitted that the present petitions are liable to be dismissed mainly on the ground that on earlier occasion, the petitions under Section 482 of CrPC wherein the petitioners had claimed One Time Settlement , had already been dismissed by the High Court vide order dated 22.04.2014. He accentuated that second set of petitions for the same cause of action; claiming similar relief and between indifferent parties, is not maintainable. He sanguinely submitted that this Court runs short of occasion to reconsider the said aspect as has already been tested and disdained by the High Court previously in earlier round and therefore these petitions are liable to be dismissed being not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, not a single penny has been refunded, although that amount carries interest and after calculating the interest, the total amount came to ₹ 12,26,86,378/- as on 01.12.2021. He also submitted that except the proceeding under Section 138 of N.I. Act, no other proceeding for recovery of loan amount has been instituted by the respondent and as such the cheque amount can be adjusted with the amount lying with the respondent and proceeding of Section 138 can be concluded by quashing the complaints. In support of his contentions, he has placed reliance on the decisions in re (2018) 14 SCC 2002 Ashoke Mal Bafna v. Upper India Steel Manufacturing and Engineering Company Ltd.; (2014) 16 SCC 1 Pooja Ravinder Devidasani v. State of Maharashtra and another; the order passed in MCrC No.1758/2015 (M.A.Harin Iqbal and another v. Hiralal Daheria and another) and an order passed in MCrC No.3113/2018 (Aswad Constructions Company v. Rakesh Singh . 7. I have heard the rival submissions of the learned counsel for the parties at length and perused the documents available on record. 8. This Court is of the following opinion:- 9. The gleaned facts are indicative that the proceeding i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple of law that the proceedings under N.I. Act by way of filing complaint under Section 138 cannot be treated to be a recovery suit and that cannot be used as a weapon to recover the amount. But, in the case at hand, as per the arguments advanced on behalf of the respondent, they are not accepting the offer of the SDBL when the SDBl is ready to pay the cheque amount and also ready to pay adequate compensation as determined by this Court. I find no reason to accept the submission made by the counsel for the respondent that the amount lying with them, which was admittedly directed to be repaid by the Supreme Court and that amount was not refunded by them, now cannot be used by the SDBL to adjust the amount of cheque amount. These proceedings are pending since long and it further indicates that the respondent has not initiated any proceeding for recovery of loan amount, but now depending upon these proceeding of N.I.Act, it can be inferred that they are using it as a weapon to recover their outstanding which might be higher than the amount involved in the cheques. But that is not the basic object of the provisions of N.I.Act, therefore, the offer made by the petitioner to adjust the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CrPC to entertain the petition and to see whether offer made by the petitioner can be accepted or not. In the petitions earlier filed and got dismissed by the High Court from the observations made in the concluding part of the order, reproduced hereinabove, it is clear that the High court refused to quash the proceeding as they were sought to be quashed on the basis of OTS Scheme, but here the SDBL has come up with the case that cheque amount can be adjusted with the amount of the SDBL lying with the respondent and was directed by the Supreme Court to refund that amount to SDBL, but that has not been done by the respondent and the said amount is lying in Escrow account carrying multiple interest and as per the facts that amount has been accumulated to the tune of ₹ 10,97,70,319/-. 12. Adverting to the another reason, by which, the SDBl is seeking quashment of the complaints on the ground that requirement of Section 141 of N.I.Act has not been fulfilled. For the purpose of ready reference, I profitably quote the provisions of Section 141 of N.I.Act as under:- 141 Offences by companies . -(1) If the person committing an offence under section 138 is a company, every pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re such statutes create vicarious liability. 9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action [See : Pooja Ravinder Devidasani v. State of Maharashtra Ors. AIR 2015 SC 675]. 10. 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 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. 14. Further, in re Pooja Ravinder Devidasani (supra), the Supreme Court has observed as under:- 17. There is no dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 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. (1981) 2 SCC 335]. 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 averm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a matter of course. To settle the scores between the parties which are more in the nature of a civil dispute, the parties cannot be permitted to put the criminal law into motion and Courts cannot be a mere spectator to it. Before a Magistrate taking cognizance of an offence under Section 138/141 of the N.I. Act, making a person vicariously liable has to ensure strict compliance of the statutory requirements. The Superior Courts should maintain purity in the administration of Justice and should not allow abuse of the process of the Court. The High Court ought to have quashed the complaint against the appellant which is nothing but a pure abuse of process of law. 15. The High Court in the case of M.A. Harin Iqbal (supra) has dismissed the complaint relying upon the case of Supreme Court in re Standard Chartered Bank v. State of Maharastra (2016) 6 SCC 62 , dismissing the complaint holding that there was no sufficient allegation made in the complaint that the accused holding the post of Chairman, Managing Director and Executive Director were the persons responsible and in charge of day-to-day business of accused/Company. Again, in the case of Aswad Construction Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her rule of law, is to be regarded as the controller of the company for the purpose of the identification rule. 21. 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. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are incharge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of its affairs. The Directors are prima facie in that position. 26. In the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct of the business of the company. (ii)In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured 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 Sec. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; 34.4 No restriction can be placed on the High Court s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director. 19. Before I summarise my conclusion, it would be apt to go-through the averments made in the complaint. Paragraph 3 which specifies the allegation made against petitioners No.2 and 3, is reproduced he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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