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TMI Blog2013 (6) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... st respondent against the petitioner and others, alleging that the 1st accused is a firm carrying on business in cotton, 2nd accused is the Managing Director of the said firm, for which accused Nos. 3 and 4 are Directors. It is alleged that all the accused have been actively participating in the day-to-day transaction of the company, and with the consent and knowledge of accused Nos. 3 and 4, 2nd accused issued four cheques on behalf of the 1st accused. The said cheques, when presented, were returned due to insufficient funds. After complying with legal requirements as contemplated under the provisions of the Act, a private complaint came to be filed against the accused. 2. Learned counsel appearing for the petitioner mainly contends tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. Section 141 of the Act does not say that a Director of the company shall automatically be vicariously liable for commission of an offence by or on behalf of the company. What is necessary is that sufficient averments should be made to show that the person who is sought to be proceeded against on the premise of he being vicariously liable for commission of an offence by the company must be in-charge of, and shall also be responsible to the company for the conduct of its business. Sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , held that merely being a Director will not make a person liable for an offence that may have been committed by the Company. For launching a prosecution against the Directors of a company under Section 138 read with Section 141 of the 1881 Act, there has to be a specific allegation in the complaint with regard to the part played by them in the transaction in question. It was also laid down that the allegations had to be clear and unambiguous showing that the Directors were in charge of and responsible for the business of the company. This was done to discourage frivolous litigation and to prevent abuse of the process of Court and from embarking on a fishing expedition to try and unearth material against the Director concerned . 7. In S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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