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TMI Blog2020 (3) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... management of affairs of the company, is not enough. In Pepsi Foods v. Special Judicial Magistrate and Ors. [1997 (11) TMI 518 - SUPREME COURT] , it was held that summoning an accused person cannot be resorted to as a matter of course and the order must show due application of mind. Petition allowed. - CRL.M.C. 1410/2018 - - - Dated:- 3-3-2020 - MR. MANOJ KUMAR OHRI J. Petitioners Through: Mr. Saraswata Mohapatra, Advocate Respondent Through: Mr. Rajiv Sharma, Advocate 1. The present proceedings are instituted under Section 482 Cr.P.C challenging the order dated 14.02.2017 passed by the Metropolitan Magistrate in CC No.874/2017 whereby the present petitioners were summoned for the offence punishable under Section 138 N.I. Act. 2. The respondent, a private limited company, had filed a complaint through its authorized representative stating that it was engaged in the business of plywood in the name and style of M/s Kit Marketing Private Limited. The accused are regular purchasers of goods from the complainant on credit basis and have made regular payment towards sale consideration from time to time in the past. On 01.12.2016, there was an outstanding balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signatories of the cheques in question. 6. The present petitioners were impleaded as accused nos. 5, 6 3. Learned counsel for the petitioners urged that it is an admitted case of the respondent that the petitioners were neither the Managing Directors nor the signatories to the cheques in question. Learned counsel for the petitioners also relied on the Form 32 with respect to Sunita Palta (petitioner No.1) and Bhagwan Singh Duggal (petitioner no.2) submitted on 29.06.2013 and 13.07.2013 respectively, showing them as independent Non-executive Additional Directors. Similarly, Form No. DIR-12 with respect to Ashwini Kumar Singh (petitioner No.3) shows his status as independent Non-executive Director w.e.f. 01.04.2014. 7. Learned counsel for the petitioners has also referred to the Annual Report for the year 2016-17 of the accused company and the certificate issued by the Company Secretary of the accused company which also shows the status of petitioners as independent Directors. 8. On the other hand, learned counsel for the respondent has supported the impugned order. It was submitted that the petitioners have the remedy to appear and place their defence before the trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the Section would have said so. Instead of every person the section would have said every director, manager or secretary in a company is liable , etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. xxx xxx xxx 18. 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 connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conduct of the business of the company is necessary to bring the case under Section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv) Other officers of a company cannot be made liable under Sub-section (1) of Section 141. Other officers of a company can be made liable only under Sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 12. The issue relating to vicarious liability of a Non-executive Director came up before the Supreme Court in Pooja Ravinder Devidasani v. State of Maharashtra and Anr. reported as 2014(14) SCALE , and it was held as under:- 17...Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-today affairs of the running of its business and only monitors the executive activity. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the Company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (See: State of Karnataka Vs. Pratap Chand Ors ). 20. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the N.I. Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company. 13. In Nandakumar Ors. v. M/s ECE Industries Ltd. in SLP (Crl.) No.2770/2013 decided on 04.08.2014 , while setting aside the order of dismissal of the petition of the accused filed under Section 482 Cr.P.C. by the High Court, the Supreme Court held as under:- Therefore, it is clear that merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act, till it is shown that the said Director was in-charge of and responsible for the conduct of his business. The Court below and the High Court erred in not appreciating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. 17. Admittedly, the petitioners are neither the Managing Directors nor the Authorized Signatories of the accused company. The accused company and the Managing Director are arrayed as accused No.1 and 2 along with others in the complaint pending before the concerned Metropolitan Magistrate. A perusal of the complaint filed under Section 138 r/w Sections 141/142 of NI Act filed by the complainant shows that except for the general allegation stating that the petitioners were responsible for control and management and day to day affairs of the accused company, no specific role has been attributed to the petitioners. To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalised averment without any specific details as to how and in what manner, the petitioners were responsible for the control and management of affairs of the company, is not enough. 18. In Pepsi Foods v. Special Judicial Magistrate and Ors. reported as (1998) 5 SCC 749 , it was held that summoning an accused person cannot be resorted to as a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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