Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Indian Laws Indian Laws + HC Indian Laws - 2020 (5) TMI HC This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2020 (5) TMI 127 - HC - Indian Laws


Issues Involved:
1. Validity of the summoning order under Section 138 read with Sections 141/142 of the NI Act.
2. Petitioner's role and responsibility as a Director of the accused company.
3. Timeliness and intent behind filing the petition.
4. Legal precedents and their applicability to the case.

Detailed Analysis:

1. Validity of the Summoning Order:
The petitioner challenged the summoning order dated 21.01.2014, arguing that the complaint lacked specific allegations against him, making the order invalid. The petitioner contended that as a non-executive Director, he was not responsible for the company's business conduct. However, the court found that the petitioner was an Executive Director in the category of Promoter, as evidenced by Form 32. The court cited Section 2(k) of the Companies (Specification of Definitions Details) Rules, 2014, and Section 2(69) of the Companies Act, 2013, to define the roles and responsibilities of an Executive Director and Promoter. The court concluded that the complaint's averment that the petitioner was in charge of the company's day-to-day affairs was sufficient, rendering the summoning order valid.

2. Petitioner's Role and Responsibility:
The petitioner claimed to have resigned from the company on 30.11.2013, post the issuance of the cheques in question. The court noted that the petitioner was an Executive Director and Promoter, responsible for the company's business conduct. The court referred to several legal precedents, including K.K. Ahuja v. V.K. Vora & Anr. and Gunmala Sales (P) Ltd. v. Anu Mehta, to emphasize that Directors responsible for the company's business could be held liable under Section 138 of the NI Act. The court found that the petitioner failed to provide material evidence of his resignation being accepted by the Board of Directors, thus holding him accountable.

3. Timeliness and Intent Behind Filing the Petition:
The court observed that the petition was filed after a lapse of four years from the summoning order, suggesting it was a delaying tactic. The court cited the Supreme Court's decision in Gunmala Sales (P) Ltd., which emphasized the need for unimpeachable evidence to quash such complaints. The court found no such evidence from the petitioner and noted that the petition was highly belated, indicating an intent to delay the trial.

4. Legal Precedents and Their Applicability:
The petitioner relied on several legal precedents, including National Small Industries Corporation Limited v. Harmeet Singh Paintal, Mannalal Chamaria & Anr. v. State of West Bengal, and J.N. Bhatia & Others v. State. The court analyzed these cases and found them inapplicable to the petitioner's situation. The court emphasized that the petitioner was an Executive Director responsible for the company's business, as opposed to the non-executive roles discussed in the cited cases. The court also referred to the Supreme Court's decisions in Standard Chartered Bank v. State of Maharashtra and A.R. Radha Krishna v. Dasari Deepthi & Ors., which supported the view that specific averments against an Executive Director were not necessary for issuing summons.

Conclusion:
The court dismissed the petition, noting that the petitioner was indeed an Executive Director responsible for the company's business conduct. The petition was deemed a delaying tactic, filed without providing any substantial evidence to support the petitioner's claims. The court imposed a cost of ?25,000 to be paid to the "PM Cares" Relief Fund and directed that a copy of the judgment be communicated to the trial court.

 

 

 

 

Quick Updates:Latest Updates