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TMI Blog2018 (9) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... or Advisor or Manager of accused no.01, is a question. Further, though the cheques were given on the aforesaid dates, the cheque in S.C.C. No. 7882 of 2017 was presented by the complainant for encashment on 11.09.2017. That means, with full knowledge that I.R.P. has taken over the affairs of accused no.01, the said cheque was presented. In Form "B", the complainant has not whispered that such cheques were given by the responsible officer of accused no.01 - definitely, some cloud has been created on the issuance of cheque. No doubt, all these facts would be required to be addressed by the trial court at the time of final hearing. As regards the legal position about maintainability of the complaint is concerned, it can still be kept open for the simple reason that the proceedings is also instituted against accused no.01. Accused no.01 is not a party in this proceedings. Directors of accused no.01, who are in-charge and responsible for the conduct of the affairs of the company - Held that:- Admittedly, accused nos.02 to 12 are not the signatories to the disputed cheques. In fact, in para no.05 of the complaint, the complainant has stated that accused nos.01 to 12 issued a cheque. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia, specialized in manufacturing of carbon, alloy and special steel products in round, square, flats and special profiles. Accused no.01 is also a company registered under the Companies Act, 1956 and is engaged in business of producing wide range forging, iron and aluminum casting, machining and subassemblies products. It has been contended that accused nos.02 to 12 i.e. present applicants are directors of accused no.01 company and they are incharge and responsible for the conduct of the business of accused no.01 company. Accused no.01, through the directors accused nos.02 to 12 had approached the complainant with a request for supply of rolled steel products on credit and as per the invoices, the product was supplied. The complainant has maintained account in its regular course of business. Huge amount is outstanding from accused no.01. In order to discharge the legally enforceable debt or liability, accused nos.01 to 12 issued cheques drawn on Andhra Bank, Sachapir Street, Pune. In S.C.C. No. 7882 of 2017, the cheque was bearing no. 000694, dated 06.08.2017, for an amount of ₹ 25,64,677/, and in S.C.C. No. 7504 of 2017, the cheque 2was bearing no. 000693, dated 04.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor'. On the same day, by a different order, the petition was admitted, declaring moratorium prohibiting (a) the institution of suits or continuation or pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002). Thereafter, the publication was made by I.R.P. A letter was also issued by accused no.01 on 17th August, 2017 to the National Company Law Tribunal, giving list of claims for accused no.01. Name of the complainant was at serial no.189. A letter was issued by I.R.P. to Andhra Bank, Camp Branch, Pune, on 29.07.2017, whereby he informed about his appointment by the National Company Law Tribunal and the intention to propose change in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the day today affairs and conduct of the business of the company on that date. He, therefore, prayed for quashing of the proceedings by submitting that the learned Magistrate failed to consider all these facts. 08. Per contra, learned Advocate appearing for respondent no.02 has submitted that there is no bar for prosecuting the company and the responsible persons for the offence punishable under Sections 138 and 141 of the N.I. Act, though the proceedings under the Insolvency and Bankruptcy Code, 2016 were initiated or the company was under liquidation. He relied on the decision of this Court at principal seat, given in Criminal Writ Petition No. 1280 of 2010, M/s. Indorama Synthetics (I) Ltd. vs. The State of Maharashtra others, on 14th March 2018. Reliance was placed in that matter, on the decision of Division Bench in the case of Firth (India) Steel Company Ltd. (In liquidation) vs. Respondent [1995(5) Bom.C.R. 907], wherein it was declared that, The embargo created on the right of a party who initiated criminal proceedings particularly for an offence punishable under Sections 138 and 141 of the N.I. Act will not operate, as said proceedings are not within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of the Hon'ble Supreme Court, in the case of Bholu Ram Vs. State of Punjab another [(2008) 9 SCC 140], he submitted that when it appears during trial / recording of evidence, that a person has committed an offence who is not an accused, can be tried together with the accused by invoking the powers under Section 319 of the Cr.P.C. 10. Taking into consideration the arguments advanced on behalf of the applicants, it can be seen that they want to challenge the proceedings on two counts, first in respect of the proceedings which were taken up against them by Corporation Bank before the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 and the other ground is that they were not responsible for the daytoday affairs of the company and the basic ingredients have not been followed in view of the decision in N.K. Wahi's case (supra). As regards first point is concerned, no doubt, all those things which had happened before the National Company Law Tribunal were not put before the learned Magistrate when the complaint was filed and the order of issuance of process was passed. Each and every complainant is expected to be fair in prosec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for the conduct of the affairs of the company. The complainant has not given what is the nomenclature and how each one of accused nos.02 to 12 is incharge. Admittedly, accused nos.02 to 12 are not the signatories to the disputed cheques. In fact, in para no.05 of the complaint, the complainant has stated that accused nos.01 to 12 issued a cheque ..... None of them i.e. accused nos.02 to 12 had issued that cheque but somebody else is the signatory to the cheque. This fact is also suppressed by the complainant. The learned Magistrate ought to have considered as to who is the signatory to the cheque and whether he is made an accused or not before proceeding to issue process against accused nos.02 to 12. In N.K. Wahi's case (supra), the Hon'ble Supreme Court has relied on the decision in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and another [2005(8) SCC 89], wherein it was held thus: To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141. 13. Therefore, taking into consideration the above said legal position, it was necessary for the complainant to specifically aver and demonstrate as to how each one of accused nos.02 to 12 were incharge and responsible for the conduct of the business of accused no.01. Therefore, the order of issuance of process passed by the learned Magistrate cannot be allowed to be sustained. 14. Another point that is also required to be considered is that the addre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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