TMI Blog2024 (3) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. It could thus clearly be seen that this Court has held that merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable. It can thus be clearly seen that there is no averment to the effect that the present appellant is in-charge of and responsible for the day-to-day affairs of the Company. It is also not the case of the respondent that the appellant is either the Managing Director or the Joint Managing Director of the Company - It can thus clearly be seen that the averments made are not sufficient to invoke the provisions of Section 141 of the N.I. Act qua the appellant. The judgment and order passed by the High Court dated 26th April, 2022 is quashed and set aside - Appeal allowed. - B. R. GAVAI And SANDEEP MEHTA , JJ. For the Petitioner : Mr. Manoj V George, Adv. Ms. Shilpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ievance of the respondent is that in-spite of regular follow-ups and reminders, Fibtel Telecom Solutions failed and neglected to clear the respondent s dues. Only thereafter, upon repeated demands made by the respondent, Fibtel Telecom Solutions furnished five post-dated cheques to the complainant, on 17th June 2016, details of which are as given below : Sr. No. Cheque No. Cheque Dated Cheque Amount 1 414199 25.06.2016 Rs. 25,00,000/- 2 414196 31.08.2016 Rs. 50,00,000/- 3 414204 31.08.2016 Rs. 80,00,000/- 4 414195 31.07.2016 Rs. 45,00,000/- 5 414205 30.09.2016 Rs. 80,00,000/- 3.5 On deposit of the cheque mentioned at Sr. No. 1 in the table, bearing cheque no. 414199 and dated 25th June 2016, by the respondent, the said cheque was returned to it unpaid with reason payment stopped by drawer . Aggrieved thereby, the respondent issued a legal notice to Fibtel Telecom Solutions, on receipt of which following an oral agreement between them, a payment schedule was agreed to and a cheque for an amount of Rs. 25,00,000/- drawn by Fibtel Telecom Solutions was honoured by it. However, when the complainant deposited the remaining four cheques as mentioned at Sr. No. 2 to 5 in the table, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue in question. It was only the accused No.2 who was the signatory to the cheque. It is, therefore, submitted that the High Court has grossly erred in not allowing the petition for quashing of criminal complaints qua the appellant. Learned counsel relied on the judgments of this Court in the cases of N.K. Wahi vs. Shekhar Singh and others (2007) 9 SCC 481 , S.M.S. Pharmaceuticals Ltd. vs Neeta Bhalla and another (2005) 8 SCC 89 Ashoke Mal Bafna vs. Upper India Steel Manufacturing and Engineering Company Limited (2018) 14 SCC 202 , Krishi Utpadan Mandi Samiti and others vs Pilibhit Pantnagar Beej Ltd. and another (2004) 1 SCC 391 and Laxmi Dyechem vs. State of Gujarat and others (2012) 13 SCC 375 in support of his submissions. 6. Shri Lakshmeesh S. Kamath, learned counsel for the respondent, on the contrary, submitted that the learned judge of the High Court has rightly, after considering the material on record, dismissed the petition for quashing of criminal complaints qua the appellant. It is submitted that the grounds raised are the defense of the accused and it can only be raised at the stage of the trial. It is, therefore, submitted that no interference is warranted in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the question as to whether it was sufficient to make the person liable for being a director of a company under Section 141 of the Negotiable Instruments Act, 1881. This Court considered the definition of the word director as defined in Section 2(13) of the Companies Act, 1956. This Court observed thus: 8. . There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fulfilment of the requirements under Section 141. ( emphasis in original ) 18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 : AIR 1971 SC 2162] , 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 convict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of K.K. Ahuja vs. V.K. Vora and another (2009) 10 SCC 48 . 14. In the case of State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi vs. Rajiv Khurana (2010) 11 SCC 469 , this Court reiterated the position thus: 17. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of the company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non- Director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable. 15. In the case of Ashoke Mal Bafna (supra), this Court observed thus: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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