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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 ..... t No.07, Aurangabad. Criminal Application No. 2052 of 2018 challenges the order of issuance of process passed on 16.11.2017 and proceedings in Summary Criminal Case No. 7882 of 2017. Criminal Application No. 2055 of 2018 challenges the order of issuance of process passed on 02.11.2017 and proceedings in Summary Criminal Case No. 7504 of 2017. Both the proceedings are filed under Section 138 of the Negotiable Instruments Act, 1881 [For short, hereinafter referred to as "N.I. Act"]. 03. Respondent no.02 original complainant had come with a case, that it is a company registered under the Companies Act, 1956, and it is a leading company in alloy steel plant in western India, 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2017, whereby by way of interim order, Mr. Dinkar Tiruvannadapuram Venkatsubramanian was appointed as Interim Resolution Professional [For short, "I.R.P."]. He was appointed for a period of 30 days and further directions were given, that I.R.P. shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate Insolvency Resolution Process in terms of Section 13(1)(b) of the 'Code' read with Section 15 calling for the submission of claims against 'Corporate Debtor'. 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 secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that "Drawer of the cheque alone can be prosecuted. The accused, who is not the drawer of the cheque, as he or she has not signed the same, the criminal proceedings are required to be quashed." He also relied on the decision of Delhi High Court in the case of M.L. Gupta & another Vs. Ceat Financial Services Ltd. [(2008) 145 CompCas 837]. The single bench of Delhi High Court has held, that "The complaint under Section 138 of the N.I. Act cannot be filed as on the date of presentation of the cheque, the company was in liquidation and cannot be stated to have committed any offence. Even second and third accused were not the in-charge 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 liquidati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsibility and liability of the other other accused persons, the process has been issued. 09. It will not be out of place to mention here, that upon query by the Bench, that who has signed the disputed cheques, learned Advocate appearing for respondent no.02 has filed the true photocopy of the cheques in both the matters which are marked as "X". It was also submitted by respondent no.02, that the said cheque had been signed by Financial Manager. Thereupon, again a query was made, as to whether he is an accused in the case. It is submitted that he is not made accused at this stage, but relying 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 Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 12. Now, turning towards the second point, it is to be noted that as regards accused nos.02 to 12, only at two places, same statement has been made by the complainant, that they are the directors of accused no.01, who are in-charge and responsible 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 che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra (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 cheque which is dishonoured is concerned, he is clearly r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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