2023 (5) TMI 509 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - petitioner were involved in day-to-day affairs of the company so as to warrant their summoning by the learned Magistrate or not - Section 138 and 141 of the NI Act - HELD THAT - It is settled law that only those directors, who were incharge of and responsible for day to day affairs of the company can be made liable under Section 141(1), or those directors, managers, officers etc. of the company due to whose negligence, connivance or consent the offence under Section 138 has been committed can be made liable under Section 141(2) - In the present case, the complainant has alleged that the accused company had issued the cheque in question for an amount of Rs. 19,98,779/- in favour of the complainant as part-payment for discharge of its debt, however, the same had got dishonored upon its presentation for the purpose of encashment. The complainant has averred in the complaint that accused no. 2 to 5 are the directors of the accused company and accused no. 6 is the company secretary as well as signatory of the accused company, as per the details available on MCA website, and all of them were therefore, responsible for day to day functioning of the accused company. Upon perusal of record, including the minutes of meetings annexed with the present petition, it is revealed that petitioner no. 1 was present in every meeting, minutes of which have been annexed, which prima facie indicate that she was responsible for day to day functioning of the accused company. As far as petitioner no. 2 is concerned, the mere fact that he was, at the relevant time, not present in India does not absolve her of her responsibilities towards the company and at times it may be possible that though one may not be physically present in India, however, in this age of technology one can take part in day-to-day affairs of the company and perform all the acts that a director is required to perform while being in a foreign country. Even otherwise, the veracity of such claims cannot be examined at this stage by this Court. It is also not the case of these petitioners that they were not the whole time directors or were non-functional directors of the accused company - Similarly, the presence of petitioner no. 3 can be seen in majority of the minutes of meetings annexed with the petition. As observed, a company secretary can also be held liable as per Section 141(2) of NI Act if it can be proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of company secretary. As per details of MCA website and as also averred by complainant, petitioner no. 3 is also a signatory of the accused company. Considering the overall facts and circumstances of the case as well as the material placed on record, this Court is of the opinion that the contentions raised before this Court at this stage are triable issues which can be decided only during the course of trial by leading evidence before the learned Trial Court and therefore, this Court does not deem it a fit case to exercise its powers under Section 482 Cr.P.C. for setting aside the summoning order and complaint qua petitioners at this stage when trial has still not yet commenced and the accused persons have merely been summoned by the Trial Court. Petition dismissed.

Summary

Issues Involved:
1. Quashing of Summoning Order
2. Specific Allegations Against Petitioners
3. Legal Provisions and Compliance
4. Prima Facie Case and Triable Issues

Summary:

1. Quashing of Summoning Order:
The petitioners sought quashing of the summoning order dated 22.10.2018 passed by the learned Metropolitan Magistrate in Criminal Complaint No. 15254/18 under Section 482 of the Code of Criminal Procedure, 1973.

2. Specific Allegations Against Petitioners:
The petitioners argued that there were no specific allegations against them regarding their involvement in the day-to-day affairs of the company, and only general allegations were made. They contended that petitioner no. 2 was not in India at the relevant time and petitioner no. 3, being a Company Secretary, had no role in the day-to-day affairs.

3. Legal Provisions and Compliance:
The court referred to Sections 138 and 141 of the Negotiable Instruments Act, 1881, emphasizing that only those directors responsible for the day-to-day affairs or due to whose negligence, connivance, or consent the offence was committed could be held liable. The court also cited the Supreme Court's observations in S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan, highlighting the requirements for implicating a person under Section 141.

4. Prima Facie Case and Triable Issues:
The court found that the complainant had sufficiently complied with the provisions of Section 138/141 of the NI Act, alleging that the petitioners were involved in the day-to-day functioning of the accused company. The presence of petitioners in the minutes of meetings indicated their responsibility. The court concluded that the contentions raised were triable issues to be decided during the trial and not at this stage. Consequently, the petition for quashing the summoning order was dismissed.

Conclusion:
The court dismissed the petition, stating that the issues raised were triable and should be decided during the trial. The observations made were solely for deciding the present petition and should not influence the trial court.