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TMI Blog2019 (1) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... e criminal complaints (CC Nos. 4401, 4402, 4408, 4404, 4407, 4406, 4405, 4403 of 2017) instituted by the respondents in these petitions, each alleging offence under Section 138, Negotiable Instruments Act, 1881 (NI Act) having been committed concerning different set of cheques, the Metropolitan Magistrate by his almost identical orders passed on 26.04.2017, summoned amongst others, the petitioners as accused, invoking the vicarious criminal liability under Section 141 NI Act, 1881 against them, they having been shown in the array as fourth and fifth accused, their description being that of a director of Amrapali Silicon City Pvt. Ltd. which is the company against whose account and on whose behalf the said cheques had been issued, the same h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on articles of agreement dated 09.10.2015 whereunder the company accused had entered into an arrangement with the respondents for purposes of investment in its group housing project by the respondent (the complainant), which was to be repaid by the said company through the cheques in question under "buy back agreement". Reliance is also placed on the articles of association of the company accused wherein it is clarified - by clause 36 - that the non-executive directors appointed by the investors - shall have no responsibility for the day-to-day management of the company. 4. The petitions are resisted by the respondents primarily on the submissions that in terms of the articles of association of the company accused, the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the non-payment of the amount of the cheque within the statutory period after service of the notice of demand which constitutes the offence that is punishable under the aforementioned provision of law". 6. With reference to vicarious liability under Section 141 NI Act, taking note of the rulings in SMS Pharmaceuticals Pvt. Ltd (supra), Gunmala Sales (P) Ltd.(supra) and Standard Chartered Bank (supra) and the guiding principles were culled out in Jwala Devi Enterprises P. Ltd. (supra) thus:- "14. The guiding principles with reference to Section 141 of the Negotiable Instruments Act, 1881, which are now well settled by judicial pronouncements, some of which have been noted above, may be summarised thus :- (i) It is only those persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to proof at the trial; (vi). The person who has been summoned as an accused for offence under Section 138 of the Negotiable Instruments Act, 1881 on the basis of averment that he was director of the company accused, he being in charge of or responsible for the conduct of its business cannot get the complaint quashed by the High Court by filing a petition under Section 482 of the Code of Criminal Procedure, 1973 merely on the ground that no particulars as to his role have been set out in the complaint; and (vii). The person who has been summoned as an accused for offence under Section 138 of the Negotiable Instruments Act, 1881 by invoking the provision contained in Section 141 may persuade the High Court to quash the process in exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, one who actively looks after the day-to-day activities of the company and is particularly responsible for the conduct of its business. Simply because a person is a Director of a company, does not make him liable under the NI Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, 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 for an offence under Section 141 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies, they had specifically informed the complainant that they had no role to play in the day-to day affairs of the accused company or conduct of its business. It was the responsibility against this backdrop, to set out as to why they wanted to proceed against the petitioners as well. The complaints are conspicuously silent on this score. Rather the complaints would not even acknowledge receipt of the said replies. Same is the position with the affidavits which were filed during the pre-summoning inquiry. The complaints, insofar as they are directed against the petitioners, would, thus, fail even on the averment test. 10. Having regard to the above facts and circumstances, the petitioners concededly being non-executive directors, in absen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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