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TMI Blog2024 (8) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... Telecommunications India Ltd. ('BTIL') is a company incorporated under the Companies Act, 1956 and is structured into multiple business segments encompassing distribution of mobile handsets, accessories, communication devices etc. and is associated with leading telecom operators and biggest brands in the Original Equipment Manufacturer space including Apple products. (b) Rajesh Madan, accused No. 6 (hereinafter referred to as 'Petitioner No. 1') was inducted in BTIL on 31.03.2015 as an Independent Non-Executive Director; Harjeet Singh Kohli, accused No.8 (hereinafter referred to as 'Petitioner No. 2') was inducted in BTIL on 01.08.2016 as Non-Executive Director; and Geeta Mathur, accused No.5 (hereinafter referred to as 'Petitioner No. 3') was inducted in BTIL on 30.03.2015 as an Independent Non-Executive Director. (c) M/s Good Marketing and Sales Pvt. Ltd., complainant company/ Respondent herein is a part of group of companies including iWorld Business Solutions Pvt. Ltd. ('IBS') and iWorld Digital Solutions Pvt. Ltd. ('IDS') and is owned and operated by the same individuals and for the ease of reference is hereinafter referred to as the complainant. BTIL entered into two set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... play in the day to day affairs of BTIL. (g) Despite receipt of response to the legal notice and being aware of the status of the Petitioners, complainant maliciously filed a complaint under Section 138 read with Sections 141 and 142 of NI Act on 12.12.2017 before learned Metropolitan Magistrate, Patiala House Courts, against BTIL, Petitioners and other individuals. There is no averment in the complaint as to how Petitioners were in charge of or responsible for the conduct of the day to day business and affairs of BTIL, so as to make them vicariously liable for the alleged offence. In fact, complaint does not even disclose details under STC or the basis of alleging that there is an enforceable debt/liability of the Petitioners in connection with the concerned cheque. (h) On 14.12.2017, learned MM proceeded to record pre-summoning evidence of the Authorised Representative of the complainant and passed an order taking cognizance and summoning the Petitioners and others accused of the offence, without application of mind on whether the complaint disclosed commission of the offence alleged and in ignorance of Form No.DIR-12 reflecting the status of the Petitioners in BTIL. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Del 559. 4. It was contended that the complainant has made only bald averments in the complaint in respect of the Petitioners that they were in charge of and responsible for the conduct of the business of BTIL and has not spelt out how and in what manner Petitioners were in charge and responsible and therefore, the contents of the complaint are not sufficient to attract the offence under Section 138 of NI Act. There are catena of judgments wherein it is held that the complaint must necessarily contain averments as to how and in what manner the accused were in charge of and responsible for the conduct of business of the company, failing which at the threshold the complaint case and the summons ought to be quashed. In order to bring the offence under Section 141 (2), where the offence is alleged to be committed by a company, a Director, Manager, Secretary or other officer of a company, it is to be proved that the offence was committed with the consent or connivance of, or is attributable to, any neglect on the part of such individual. No material was placed before the learned MM at the pre-summoning stage which would even prima facie suggest that there was any consent, connivance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lainant on Form No.MGT-7 to contend that Petitioners being Executive Directors were regularly attending Board meetings/Audit Committee's meetings etc. and this was sufficient to hold them vicariously liable and fasten liability under Section 141 (2), is wholly misplaced for more than one reason. Firstly, no such averment was made in the complaint and it is for the first time during the course of oral hearing that this argument was made. Secondly, even as per the laid down procedure, once the complainant has already tendered pre-summoning evidence, there is no occasion to bring on record any additional document either before this Court or even before the learned MM. In the present petition, Court is testing the validity of the impugned summoning order, which cannot be done on the anvil of fresh documents or factual averments, brought before this Court. Without prejudice, even if Form No. MGT-7 is considered, it shows that Petitioners are Non-Executive Directors, who merely attended Board/Audit meetings but this fact alone does not and cannot lead to a conclusion that Petitioners played any role in the day to day affairs of BTIL and/or were responsible for the conduct of its business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the offence was committed, process can be issued by the learned Magistrate and rest would be a matter of trial, as held by the Supreme Court in K.K. Ahuja v. V.K. Vora and Another, (2009) 10 SCC 48 and Gunmala Sales Private Limited v. Anu Mehta and Others, (2015) 1 SCC 103. 9. It was argued that in Gunmala Sales (supra); Sunil Todi and Others v. State of Gujarat and Another, 2021 SCC OnLine SC 1174; and S.P. Mani (supra), the Supreme Court held that at the stage of considering a petition under Section 482 Cr.P.C. Court is required to look into only the averments made in the complaint by the complainant and no more. Complainant has, in the present case, clearly adverted to the acts committed by the Petitioners and the averments made disclose the commission of the offence under Section 138 of NI Act. Complainant has averred that accused Nos.2 to 10 which includes the Petitioners, who are accused Nos.6, 8 and 5 respectively, have personally interacted with various officers of the complainant and represented to the officials of the complainant that they were Directors and/or responsible officers of BTIL (accused No. 1) and are the persons-in-charge of BTIL and responsible for the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at having attended Board meetings and being a member of an Audit Committees, Petitioner would not fall within the definition of Independent Director or Non-Executive Director and cannot escape the liability of commission of an offence under Section 138 of NI Act. 12. It was urged that BTIL and complainant were having three different kinds of transactions but the same were not interlinked. In these transactions, several documents were executed, such as STC Agreement dated 20.04.2015; Credit Notes/Purchase Orders/Invoices; and Distributorship Agreement dated 27.05.2015 and admittedly a running account was maintained between the parties. The ledger account maintained by the complainant and the corresponding credit notes would bely the stand of the Petitioners that there existed no legally enforceable debt against BTIL. In the Arbitration Petition bearing No. 664/2017 filed by BTIL against the complainant, BTIL has filed a copy of its ledger account where there is a reference to the credit note of Rs. 1.34 crores given by BTIL to the complainant. Between 2016 to 2017, complainant made several requests to BTIL to issue credit notes including but not limited to processing the earlier on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these requirements, the commission of the offence which may be called the offence of "dishonour of cheque" is complete. If the drawer is a company, the offence is primarily committed by the company. 26. By virtue of the provisions of sub-section (1) of Section 141, the guilt for the offence and the liability to be prosecuted and punished shall be extended to every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of its business; irrespective of whether such person is a Director, manager, secretary or other officer of the company. It would be for such responsible person, in order to be exonerated in terms of the first proviso, to prove that the offence was committed without his knowledge or despite his due diligence. 27. Under the separate provision of sub-section (2), if it is proved that the offence was committed with the consent or connivance of or was attributable to the neglect on the part of any Director, manager, secretary or other officer of the company, such person would also be deemed to be guilty for that offence. Obviously, the burden of alleging and proving consent, connivance or neglect on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurring in Section 141 (1), i.e. 'at the time the offence was committed' and observed as under:- "34. The seminal issue raised and required to be settled in the present case is one relating to a person liable to be proceeded against under the provisions of sub-section (1) of Section 141 for being in-charge of and responsible to the company "at the time the offence was committed." It would, therefore, be important to find out the "time" when the offence under Section 138 can be said to have been committed by the company. It is commonplace that an offence means an aggregate of facts or omissions which are punishable by law and, therefore, can consist of several parts, each part being committed at different time and place involving different persons. The provisions of Section 138 would require a series of acts of commission and omission to happen before the offence of, what may be loosely called "dishonour of cheque" can be constituted for the purpose of prosecution and punishment. It is held by the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan [K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510 : 1999 SCC (Cri) 1284] , that : (SCC p. 518, para 14) "14. The offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted. The word "every" points to the possibility of plurality of responsible persons at the same point of time as also to the possibility of a series of persons being in charge when the sequence of events culminating into the commission of offence by the company were taking place. 38. As to what this "relevant time" is, was a question that this Court was called to answer, inter alia, in N. Rangachari v. BSNL [N. Rangachari v. BSNL, (2007) 5 SCC 108 : (2007) 2 SCC (Cri) 460]. In this case, Data Access, a company had issued two cheques to BSNL, which were duly presented, but were dishonoured for insufficiency of funds. A complaint under Section 138 of the NI Act was filed. While BSNL held the Directors liable, the appellant, a Chairman in the company contended that he being a nominated Chairman and holding an honorary post in the Company, was never assigned with any of the company's financial or other business activities. He was the Chairman for name's sake and was never entrusted with any job or business or constituted a signing authority." 18. In the context of the issue as to when a Director can be arraigned and proved to be guilty as a person 'in charge of and respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. To this extent there are no difficulties in our law to fix criminal liability on a company. The common law tradition of alter ego or identification approach is applicable under our existing laws." (emphasis in original) 45. Now, the logical question that would follow is who would be liable through the company for this offence? Can the company itself be prosecuted for this offence? Answering this question, Section 141 says, "every person who was in charge of" and "was responsible to the company for the conduct of the business" shall be deemed to be guilty of the offence. 46. This concept of vicarious liability has been explained by this Court in Sabitha Ramamurthy v. R.B.S. Channabasavaradhya: "7. ... Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers of a company cannot be made liable under sub-section (1) of Section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence." (emphasis supplied) 48. In a very recent pronouncement in Sunita Palita v. Panchami Stone Quarry, this Court, after referring to K.K. Ahuja referred to above, observed as under: "29. ... when the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company. This is because the prefix "Managing" to the word "Director" makes it clear that the Director was in charge of and responsible to the company, for the conduct of the business of the company. A Director or an officer of the company who signed the cheque renders himself liable in case of dishonour. Other officers of a company can be made liable only under sub-section (2) of Section 141 of the NI Act by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to notice the role of a director in a company. The word "director" is defined in Section 2 (13) of the Companies Act, 1956 as under: "2. (13) 'director' includes any person occupying the position of director, by whatever name called;" There is a whole chapter in the Companies Act on directors, which is Chapter II. Sections 291 to 293 refer to the powers of the Board of Directors. A perusal of these provisions shows that what a Board of Directors is empowered to do in relation to a particular company depends upon the roles and functions assigned to directors as per the memorandum and articles of association of the company. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence. 10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the section are "every person". These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words: "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, etc." 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 bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The question of what should be the averments in a criminal complaint has come up for consideration before various High Courts in the country as also before this Court. Secunderabad Health Care Ltd. v. Secunderabad Hospitals (P) Ltd. [(1999) 96 Comp Cas 106 (AP)] was a case under the Negotiable Instruments Act specifically dealing with Sections 138 and 141 thereof. The Andhra Pradesh High Court held that every director of a company is not automatically vicariously liable for the offence committed by the company. Only such director or directors who were in charge of or responsible to the company for the conduct of business of the company at the material time when the offence was committed alone shall be deemed to be guilty of the offence. Further it was observed that the requirement of law is that: (Comp Cas p. 112) "There must be clear, unambiguous and specific allegations against the persons who are impleaded as accused that they were in charge of and responsible to the company in the conduct of its business at the material time when the offence was committed." 14. The same High Court in V. Sudheer Reddy v. State of A.P. [(2000) 107 Comp Cas 107 (AP)] held that: (Comp Cas p. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner in a firm and it was held that a partner who was not in such overall control of the firm could not be held liable. In Municipal Corpn. of Delhi v. Ram Kishan Rohtagi [(1983) 1 SCC 1 : 1983 SCC (Cri) 115] the case was under the Prevention of Food Adulteration Act. It was first noticed that under Section 482 of the Criminal Procedure Code in a complaint, the order of a Magistrate issuing process against the accused can be quashed or set aside in a case where the allegation made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which are arrived at against the accused. This emphasises the need for proper averments in a complaint before a person can be tried for the offence alleged in the complaint. 16. In State of Haryana v. Brij Lal Mittal [(1998) 5 SCC 343 : 1998 SCC (Cri) 1315] it was held that vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed. All the same, it is also to be remembered that it is the duty of the court to discharge the accused if taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking. The present case falls in this category as would be evident from the facts noticed hereinafter." It was further observed: (SCC pp. 18-19, para 6) "6. ... The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be pleaded and proved and not inferred. (v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position, they are liable to be proceeded with. (vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint. (vii) 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." 23. In Anita Malhotra (supra), the Supreme Court restated the proposition that the complaint should specifically spell out how and in what manner the Director was in charge of or responsible to the accused company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. Relevant paragraph is as follows:- "22. This Court has repeatedly held that in case of a Director, the complaint should specifically spell out h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023) 8 SCC 473 : (2023) 4 SCC (Civ) 116 : (2023) 3 SCC (Cri) 568 : 2023 INSC 692] is also relevant. After referring to Section 141 (1) of the NI Act, in para 24 it was further held thus : (SCC p. 480) "24. ... On a plain reading, it is apparent that the words "was in charge of" and "was responsible to the company for the conduct of the business of the company" cannot be read disjunctively and the same ought to be read conjunctively in view of use of the word "and" in between." 20. The upshot of the aforesaid discussion is that the averments in the complaint filed by the respondent are not sufficient to satisfy the mandatory requirements under Section 141 (1) of the NI Act. Since the averments in the complaint are insufficient to attract the provisions under Section 141 (1) of the NI Act, to create vicarious liability upon the appellant, he is entitled to succeed in this appeal. We are satisfied that the appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482CrPC. In the result the impugned order [Siby Thomas v. Somany Constructions Ltd., 2019 SCC OnLine P&H 7919] is set aside and the subject crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the complainant states that the concerned accused was Director and also makes averment that he was in charge of and responsible for the conduct of its day-to-day business, but does not make any further elaboration as to how he was in charge of and responsible for the day-today conduct of the business. The question would be as to whether making this averment, namely, reproducing the language of Sub-section (1) of Section 141 would be sufficient or something more is required to be done, i.e. is it necessary to make averment in the complaint elaborating the role of such a Director in respect of his working in the company from which one could come to a prima facie conclusion that he was responsible for the conduct of the business of the company. xxx xxx xxx 24. Thus, what follows is that more bald allegation that a particular person (or a Director) was responsible for the conduct of the business of the company would not be sufficient. That would be reproduction of the language of Sub-section (1) of Section 141 and would be without any consequence and it is also necessary for the complainant to satisfy how the petitioner was so responsible and on what basis such an allegation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 company. The averments qua the petitioner herein contained in all these complaints are as under: "The accused Nos. 2 to 4 are the Directors and accused No. 5 is the General Manager Finance, who are responsible for the day-today affairs of accused No. 1 company and are jointly and severally liable for the acts and liabilities of the accused No. 1 company." 77. On the basis of these bald averments, I am afraid, proceedings could not have been maintained against the petitioner herein, as it is not specifically stated as to how the petitioner was in charge of and responsible for the affairs of the company. The summoning orders qua the petitioner are hereby quashed and the complaints qua him are dismissed. 24. Additionally, in the judgment of Kamal Goyal (supra) on which reliance has been placed, this Court has held as under: "12. In the case before the Hon'ble Supreme Court, the respondent No. 1 had resigned from the Directorship of the Company under intimation to the complainant and in these circumstances, the Hon'ble Supreme Court was of the view that a person who had resigned with the knowledge of the complainant in the year 1996, could not be a person in charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue. Impliedly, it is necessary for the courts to ensure strict compliance with the statutory requirements as well as settled principles of law before making a person vicariously liable. 13. The superior courts should maintain purity in the administration of justice and should not allow abuse of the process of court. Looking at the facts of the present case in the light of settled principles of law, we are of the view that this is a fit case for quashing the complaint. The High Court ought to have allowed the criminal miscellaneous application of the appellant because of the absence of clear particulars about the role of the appellant at the relevant time in the day-to-day affairs of the Company." 26. It would be useful to refer to the observations of the Andhra Pradesh High Court in this context in the case of Secunderabad Health Care v. Secunderabad Hospitals, 1998 SCC OnLine AP 338, which are as follows:- "14. ......there must be clear, unambiguous and specific allegations against the persons who are impleaded as accused that they were incharge of and responsible to the company in the conduct of its business at the material time when the offence was committed ...." 27. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process pursuant to a private complaint also provides an important avenue for filtering out frivolous complaints and this power must be fully exercised. On receipt of a private complaint, the Magistrate must first scrutinize it to examine if the allegations made in the private complaint, inter alia, smack of an instance of frivolous litigation and then examine and elicit the material that supports the case of the complainant. 30. Coming to the facts of the present case, perusal of Form No. DIR-12 of the accused company BTIL reflects that Petitioners No. 1 and 3 were Independent Non-Executive Directors while Petitioner No. 2 was Non-Executive Director at the time of commission of the alleged offence. In view of Section 141 of NI Act and Section 149 of Companies Act, 2013, Petitioners could be held vicariously liable only if it was shown that they were in charge of and responsible for the conduct of the business of the company at the time of commission of offence and not otherwise and complainant was required to specifically aver in the complaint as to how the Petitioners were in charge of day to day affairs of the company BTIL as well as conduct of its business, as per settled law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the complaint that a particular person was a Director, Managing Director, CEO, etc. As held by the Supreme Court in S.M.S. Pharmaceuticals (supra), it may be that in a given case, a person may be a Director but may know nothing about the day to day functioning of the company and there is no universal rule that a Director is in charge of its everyday affairs. In this context, I may also allude to the judgment in Pooja Ravinder Devidasani (supra), as follows:- "17. There is no dispute that the appellant, who was wife of the Managing Director, was appointed as a Director of the Company-M/s Elite International (P) Ltd. on 1-7-2004 and had also executed a letter of guarantee on 19-1-2005. The cheques in question were issued during April 2008 to September 2008. So far as the dishonour of cheques is concerned, admittedly the cheques were not signed by the appellant. There is also no dispute that the appellant was not the Managing Director but only a non-executive Director of the Company. Non-executive Director is no doubt a custodian of the governance of the company but is not involved in the day-to-day affairs of the running of its business and only monitors the executive activity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector was involved in the day to day affairs of a company at the time of commission of the alleged offence under Section 138 of NI Act. In the complaint, as noted above, complainant has only made a bald averment that Petitioners were Directors and were involved in the day to day affairs of the company, without anything more. The case of the complainant hinges on the averment that Petitioners were regularly attending Board meetings and taking active part in the meetings of Audit Committees, Corporate Social Committees and Nomination Committees and are thus vicariously liable. Form No.MGT-7 is relied on in this context. Be it noted that this plea was not taken in the complaint and for the first time argument was raised before this Court. Secondly, merely attending Board/Audit meetings cannot singularly lead to a conclusion that Petitioners played any role in the day to day affairs of BTIL or were responsible to the company. Even otherwise, Independent and/or Non-Executive Directors are ordinarily expected to participate in Board meetings and this is evident from a plain reading of Schedule 4 of the Companies Act, 2013. Even on a factual note, this plea is incorrect going by the writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements. Not every person connected with a company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction complained of. A person who is in charge of and responsible for conduct of business of a company would naturally know why the cheque in question was issued and why it got dishonoured." 33. Sections 138 and 141 of the NI Act were introduced in the Act to encourage the wider use of a cheque and to enhance the credibility of the instrument. The intent of the Legislature in carrying out the amendment was to encourage people to have faith in the efficacy of banking transactions and use of cheques as negotiable instruments. To balance, a penal provision was enacted to ensure that the drawer of a cheque does not misuse the provisions and honours his commitment. The issue herein concerns the criminal liability arising out of dishonour of a cheque. Normally, the criminal liability is not vicarious i.e. one cannot be held criminally liable f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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