TMI Blog2024 (3) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... y, and, therefore, liable to be prosecuted by invoking the constructive criminality under Section 141 of the Act. In the case of POOJA RAVINDER DEVIDASANI VERSUS STATE OF MAHARASHTRA ANOTHER [ 2014 (12) TMI 1070 - SUPREME COURT] , the Supreme Court enunciated that the law laid down by the Supreme Court is that for making a director of a company liable for the offence 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, such director was responsible for the conduct of the business of the company. The facts in the case of SUNITA PALITA OTHERS VERSUS M/S PANCHAMI STONE QUARRY [ 2022 (8) TMI 55 - SUPREME COURT] , appear to be on all four with the case at hand, as the Appellants therein were also shown to be independent and non-executive directors of the company. Non-executive directors are not involved in the day to day affairs of the company or in running of its business. The endeavour of Mr. Kumar to bank upon the information disclosed in the annual statement of account does not advance the cause of the Respondent No. 1 complainant. The very fact that the Petitioners were made members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Indian Bank, Nariman Point Branch in favour of Kaybee Foundry Services Pvt. Ltd., for varying amounts. All the 13 cheques were returned unencashed on presentment. Despite service of the statutory demand notice, Isinox Ltd. and its directors, including the Petitioners, committed default in payment of the amounts covered by the dishonoured cheques. Kaybee Foundry Services Pvt. Ltd., thus, lodged a complaint for an offence punishable under Section 138 read with Section 141 of the Act, against Isinox Ltd., its directors and authorized signatories accused Nos. 2 to 7. By an order dated 24 December 2020, learned Metropolitan Magistrate was persuaded to take cognizance and issued process against accused Nos. 1 to 6 only. 6. In Complaint No. 5696/SS/2019, Isinox Ltd. had drawn three cheques aggregating to Rs. 44,39,645/- respectively. In Complaint No. 5695/SS/2019, Isinox Ltd. had drawn a cheque in the sum of Rs. 11,97,996/-. All the cheques were dishonoured on presentment during the period 27 August 2019 to 29 August 2019. Despite service of the statutory demand notice dated 19 September 2019, Isinox Ltd. and accused Nos. 2 to 6 allegedly committed defaults in payment of the amounts co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors of Isinox Ltd., is a matter which warrants determination at the trial. At this stage, according to Mr. Kumar, the Court cannot proceed on the basis of the information furnished in Form DIR 12 alone. 14. Inviting attention of the Court to the information disclosed in the audit report of Isinox Ltd. (R-7 colly), annexed to the affidavit in reply, Mr Kumar strenuously submitted that the Petitioner Nos. 1 and 2 were principal officers and also looking after the day to day business affairs of Isinox Ltd. Special emphasis was laid on the annual financial statement for the period 1 April 2019 to 31 March 2020, to the effect that the Petitioner Nos. 1 and 2 were members of the audit and corporate social responsibility committee of Isinox. The contention that the Petitioners were mere independent directors without any role in the management of the affairs of Isinox Ltd. is, thus, a subterfuge, urged Mr. Kumar. 15. I have given anxious consideration to the rival submissions. The liability under Section 141 of the Act, 1881 for commission of the offence punishable under Section 138 of the Act, is in the nature of a vicarious liability. It is trite that vicarious liability for an offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. . 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a Company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That respondent falls within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141 he would issue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Neeta Bhalla (2005) 8 SCC 89 and Pooja Ravinder Devidasani (supra), and enunciated the legal position as under : 42. Liability depends on the role one plays in the affairs of a company and not on designation or status alone as held by this Court in S.M.S. Pharmaceuticals (supra). The materials on record clearly show that these appellants were independent, non-executive Directors of the company. As held by this Court in Pooja Ravinder Devidasani (supra), a non-executive Director is not involved in the day to day affairs of the company or in the running of its business. Such Director is in no way responsible for the day to day running of the accused company. Moreover, when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the company or the company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs. 45. As held by this Court in N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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