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TMI Blog2013 (2) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... In the complaint, it was alleged that M/s. High Ground Enterprises Pvt. Ltd. (Accused No. 3 before the Court of MM) had issued certain cheques in favour of the Respondent No. 2 in discharge of its liability. The cheques when presented were dishonoured with the remarks payment stopped by the drawer . A statutory notice under Section 138 of the Negotiable Instruments Act, 1881 (the Act) was served upon the drawer company. Accused No. 4 was alleged to be the authorized signatory of accused No. 3 company and accused Nos. 1 and 4 to 6 were alleged to be directors of the company and responsible for day to day affairs of the accused company. 2. The only ground of challenge raised by the learned counsel for the Petitioner is that the Complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised, it would be appropriate to extract Para 2 of the Complaint whereby vicarious liability is sought to be fixed on the Petitioner. The same reads as under: 2. That the accused No. 1 is the director of the accused No. 3 company and is responsible and liable for day to day affairs of accused No. 3 company. Further, accused No. 2 is the authorized signatory of the accused No. 3 company and has been duly authorized for the same. Apart, the accused No. 4 to 6 are also the directors of the company and are responsible for day to day affairs of the accused No. 3 company. 6. In National Small Industries Corporation Ltd. v. Harmeet Singh Paintal Anr., (2010) 3 SCC 330, the Supreme Court analysed the provisions of Section 141 of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stick would not apply to a director. It was stated that for making a director vicariously liable for the act of the company, there has to be clear and unambiguous averments as to the part played by the director in the transaction in question and how they were in charge of and responsible to the company for the conduct of its business. Paras 17 to 19 of the report are extracted hereunder: 17. The law as laid down in S.M.S. Pharmaceuticals Ltd. case (2005) 8 SCC 89 has been consistently followed and as late as in 2007, this Court in N.K. Wahi case (2007) 9 SCC 481 while considering the question of vicarious liability of a Director of a company, reiterated the sentiments expressed in S.M.S. Pharmaceuticals Ltd. that merely being a Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that they had been in charge of the affairs of the Company and were responsible for its action. The High Court, therefore, rightly held that in the absence of any specific charge against the respondents, the complaint was liable to be quashed and the respondents were liable to be discharged. 8. There is a latest report of the Supreme Court in Anita Malhotra v. Apparel Export Promotion Council Anr. (2012) 1 SCC 520, wherein it was laid down that reproduction of the statutory requirement (as laid down in Section 141(2) of the Act) by itself would not be sufficient to make director of a company liable. The complainant should specifically spell out as to how and in what manner the director was in charge and responsible to the accused co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rately arguing the matter, by inviting our attention to Paresh P. Rajda v. State of Maharashtra (2008) 7 SCC 442 contended that a departure/digression has been made by the Court in N. Rangachari v. BSNL (2007) 5 SCC 108. However, in this case also the Court has observed in para 4 that the High Court had noted that: (Paresh P. Rajda case) 4...an overall reading of the complaint showed that specific allegations had been levelled against [the accused] as being a responsible officer of the accused Company and therefore equally liable.... In fact, the Court recorded the allegations in the complaint that the complainant knew all the accused and that Accused 1 was the Chairman of the accused Company and was responsible for day-to-day affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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