TMI Blog2022 (8) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... fence was committed by the company without his knowledge or that he has exercised due diligence to prevent commission of such offence. To fasten vicarious liability under section 141 of the Act on a person, the law is well settled by the Hon ble Supreme Court in catena of decisions that the complainant should specifically state as to how and in what manner the accused was responsible. A bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible for the conduct of the business of the company without anything more as to the role of the Director is not sufficient to make him liable. Whether the petitioner at the material time of offence was in charge of the affairs of the company and responsible for the conduct of the business of the company? - HELD THAT:- It is found from the documents appended to the petition that the petitioner sent an application (Annexure P1 at page 13 of the petition) to the Board of Directors of M/s Arcuttipore Tea Company Ltd. tendering resignation from the Directorship on 13th March, 2020. The extracts of the minutes of the Board of Directors dated 22nd November 2021 (at page 20 of the petition) sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such alleged debt issued nine post-dated cheques in favour of the complainant. Three cheques bearing nos. 000585 dated 27.04.2021, 000586 dated 25.03.2021 and 000590 dated 27.05.2021 amounting to Rs.3,50,000/-, Rs. 3,45,737/- and Rs.4,00,000/- respectively were drawn on Kotak Mahindra Bank, Dalhousie Branch, Kolkata, West Bengal. (iv) The aforesaid cheques were deposited by the complainant at ICICI Bank, S.F Road Branch, Siliguri for encashment. However, all the aforesaid cheques were returned dishonoured with remarks funds insufficient‟ vide returned memo dated 17.06.2021 and 19.06.2021. (v) The complainant thereafter sent a demand notice to the accused claiming payment of those cheque amounts within a period of 15 days on receipt of the notice. On the failure of the accused parties to comply with the aforesaid demand notice the complainant instituted the present complaint. (vi) The learned Magistrate vide order dated 11.11.2021 issued process against the petitioner (Accused no.5) and other accused persons. 3. Being aggrieved by and dissatisfied with the aforesaid proceeding the petitioner has preferred the present revisional application. 4. Mr. Sach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on identical ground. Further in terms of Section 168 of the Companies Act, the petitioner sent his resignation to the company in writing, which has been taken note of and his resignation has been accepted giving effect from 13th March, 2020 and thus the petitioner cannot be held liable and/or responsible for the cheques issued after such date. In view of his aforesaid submissions he prayed for quashing of the instant proceeding. 5. Mr. Milindo Paul alongwith Mr Nabankur Paul, learned advocates for the opposite party-complainant, in reply to the contention raised on behalf of the petitioner, submitted that the Form no. DIR-12 has been generated on 8th December, 2021, and as such the petitioner at that point of time was the Director of the company and accordingly he has been arrayed as a party in the petition of complaint. Although he was an erstwhile Director of the company yet he was vicariously liable for the act of the company as the cheques were issued prior to the date of generation of Form no. DIR-12 and during his tenure of Directorship. However, learned advocates for opposite party-complainant in usual fairness submitted that the cheques in question were not issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation .- For the purposes of this section,- (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 6.1. On bare reading of the aforesaid provision it is found that a prosecution under Section 138 of the Act could be launched not only against the company on behalf of which the cheque has been dishonoured but it could also be initiated against every person who at the time the offence was committed, was in charge of and was responsible for the conduct of the business of the company. In fact, Section 141 of the Act deems such persons to be guilty of such offence, liable to be proceeded against and punished for the offence, leaving it to the person concerned to prove that the offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess could be proceeded against. 10. The three-Judge Bench of this Court answered the aforesaid questions thus: (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act. A Director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. (c) The answer to Question (c) has to be in the affirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for an offence under Section 141 of the N.I. Act. In National Small Industries Corporation (supra) this Court observed: 13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. 14. 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. The decision in Pooja Ravinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n charge of affairs of the company and was not responsible for the conduct of the business of the Company at the relevant time, cannot be held liable for an offence under Section 138 of the Act. 7. In D.M Kulkarni @ Dilip M. Kulkarni (supra) a Co-ordinate Bench of this Court in similar circumstance allowed the application for quashing as the accused resigned from his Directorship prior to issuance of the cheque. Further a Co-ordinate Bench in CRR 80 of 2022 has quashed proceeding against the present petitioner in another case of similar nature under section 138/141 of the Act on the ground that the petitioner tendered his resignation on 13th March, 2020 prior to issuance of the cheque involved in the said proceeding. 8. In view of the above and the materials discussed the accusation against the petitioner cannot stand and it would be travesty of justice if the petitioner is relegated to trial and is asked to prove his defence before the trial court. Therefore for promotion of justice or to prevent the injustice or abuse of process it would be proficient to exercise jurisdiction under Section 482 of the Code of Criminal Procedure. 9. In the light of above discussion, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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