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2019 (9) TMI 418

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..... affairs of the company. In a case as in the instant case, when the managing director and also a director of the company are sought to be prosecuted, it cannot be presumed that the director was also running the affairs of the company and was in charge and management of the company. The IDEB Projects P. Ltd., did not owe any debt or liability to the complainant. According to the complainant, the cheque in question was issued to satisfy the liabilities or the debt incurred by M/s. IDEB Parkway Holdings P. Ltd., and M/s. IDEB PSB Estates P. Ltd. Under the said circumstances, without there being any further material to show that as on the date of occurrence of the liability, the petitioner being one of the directors of the company was fully aware of the affairs of the company and with her knowledge and consent, the cheque in question was issued through IDEB Projects P. Ltd., merely by reproducing the ingredients of section 141(2) of the Act , the criminal liability cannot be fastened on her. The petitioner cannot be prosecuted in her capacity solely on the ground that she was director of the said company as on the date of the issuance of the said cheque. The prosecution of .....

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..... ired response. Accordingly, the complainant initiated action against the petitioners as well as accused No. 1 under section 138 of the Negotiable Instruments Act, 1881 (the Act for short). 4. Learned counsel for the petitioners submits that the petitioner in Crl. P. No. 5676 of 2012 herein is neither a party to the aforesaid agreement dated February 23, 2009 nor is she a signatory to the said cheque. Under the said circumstances, the prosecution of the said petitioner for the alleged offences under section 138 of the Act is wholly illegal. Secondly, he contends that even assuming that the petitioner in Crl. P. No. 5676 of 2012 is prosecuted in her capacity as a director of the subsidiary company, namely, IDEB Projects P. Ltd., as per the averments made in the complaint itself, no liability had arisen as on the date of the issuance of cheque dated November 1, 2009. Learned counsel has emphasized that as per the averments made in paragraph 5 of the complaint, the obligations of M/s. IDEB Park- way Holdings P. Ltd., and M/s. IDEB PSB Estates P. Ltd., had arisen only on November 3, 2009. Under the said circumstances, there was absolutely no occasion for the petitioners .....

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..... ng trial and hence, there is no case for quashment of the complaint. 8. I have considered the rival contentions urged by the parties and have perused the averments made in the complaint and law laid down in the decision relied on by learned counsel for the petitioners. Undisputedly, the petitioner in Crl. P. No. 5676 of 2012 is neither the drawer of the cheque nor is she a party to the agreement entered into between the complainant and M/s. IDEB Parkway Holdings P. Ltd., M/s. IDEB PSB Estates P. Ltd. According to the complainant, the cheque in question was issued by the subsidiary of the said company, in discharge of the debt or liability said to have been due by M/s. IDEB Parkway Holdings P. Ltd., and M/s. IDEB PSB Estates P. Ltd. It is also not in dispute that the cheque in question is signed by the authorized signatory of IDEB Projects P. Ltd., namely, accused No. 2 and someone else. There is also no dispute with regard to the fact that accused No. 2 is the managing director of IDEB Projects P. Ltd., the drawer of the cheque. The question therefore arises for consideration is whether the petitioner in Crl. P. No. 5676 of 2012 being the director of the company, which .....

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..... counsel for the petitioners, the hon'ble Supreme Court has analyzed the law on the point and has reiterated the ratio laid down in K. K. Ahuja v. V. K. Vora [2009] 152 Comp Cas 520 (SC), as under (page 535 of 152 Comp Cas) : The position under section 141 of the Act can be summarized thus : (i) If the accused is the managing director or a joint managing director, 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. It is sufficient if an averment is made that the accused was the managing director or joint managing director at the relevant time. This is because the prefix 'managing' to the word 'director' makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company. (ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegat .....

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..... 12. In a case as in the instant case, when the managing director and also a director of the company are sought to be prosecuted, it cannot be presumed that the director was also running the affairs of the company and was in charge and management of the company. As held in the case of S. M. S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 127 Comp Cas 563, 573 (SC) ; [2005] 8 SCC 89 : 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 business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for t .....

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..... any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. But, in the instant case, as already held above, the circumstances detailed in the complaint do not suggest that the issuance of cheque was within the knowledge of the petitioner in Crl. P. No. 5676 of 2012 or that it was issued with the consent or connivance of the petitioner as contended by learned counsel for the respondent. 14. On the other hand, the averments made in the complaint go to show that as on the date of issuance of the said cheque, namely, on November 1, 2009 no liability had arisen even with regard to the original agreement dated February 23, 2009. At the cost of repetition, it may be necessary to refer back to the averments made in this regard in paragraph 5 of the complaint, which reads as under : 5. The complainant further submits that in view of non-compliance of the obligations under the advertisement agreement, on or before November 3, 2009 the accused was obligated to mak .....

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