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TMI Blog2022 (6) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... It is no doubt settled principle of law that if the accused in a proceeding under Section 138 of the Act who are not signatories to the instrument are hauled into those proceedings and if they are Non-executive Independent Directors, who have no role to play in any affairs of the Company, they cannot be prosecuted. It is in those cases the Apex Court or the constitutional Courts have quashed such proceedings in favour of those Non-executive Independent Directors. The phrase non-executive independent director is not even shown to exist in any of the documents appended by the petitioners. The respondent has demonstrated varied nomenclature of the petitioners in several documents. Therefore, it becomes a matter of trial. In the light of what is held by the Apex Court in N. RANGACHARI VERSUS BHARAT SANCHAR NIGAM LTD [ 2007 (4) TMI 621 - SUPREME COURT ], the complaint clearly narrates that the petitioners were also in-charge of the affairs of the Company, they are the brain and soul of the Company and at the time when they borrowed the loan, the agreement clearly stipulated that with their permission, including others the said loan was borrowed and the cheque was issued and no whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard Smt. Kaveri Thimmaiah, learned counsel for the petitioners and Sri Manu Kulkarni, learned counsel for the respondent. 4. The learned counsel appearing for the petitioners would vehemently argue and contend that the petitioners are Non-executive Directors of the Company and being Non-executive Directors they are not involved in the day-to-day affairs of the Company; they are not the signatories to the cheques for Rs.2/- crores issued in favour of the complainant. The cheques are signed by accused Nos.4 and 5, who are the Managing Directors of the Company. If proceedings are permitted to be continued, it would become an abuse of the process of the law, is the submission of the learned counsel. She would seek quashment of entire proceedings insofar as it concerns the petitioners. 5. On the other hand, the learned counsel appearing for the respondent would vehemently refute the submissions and contend that the petitioners are not Non-executive Directors but regular Directors of the Company, who are on the Board of the Company and are involved in day-to-day affairs of the Company. Several documents produced along with the petition or the objections would clearly demonstrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and sanction from its Board of Directors to execute this agreement. The signatories to the agreement are not the petitioners as the agreement is entered into between accused Nos.4 and 5 and the respondent. It is in furtherance of this agreement that cheques are issued in favour of the respondent. The cheque, which is also appended to the petition does not bear the signature of the petitioners but bear the signatures of accused Nos.4 and 5. Form DIR-12, which depicts details of Managing Director and Directors of the Company, the 1st petitioner is a Non- executive Director and Chairman. Minutes of 65th meeting of the Board of Directors held on 16th September, 2019, reads as follows: MINUTES OF THE 65TH MEETING OF THE BOARD OF DIRECTORS OF SHIKHAR MICROFINANCE PRIVATE LIMITED HELD ON MONDAY, THE 16TH SEPTEMBER, 2019 AT CORPORATE OFFICE OF THE COMPANY B-15, SECTOR-2 NOIDA, AT 10.30 A.M. Directors Present: 1.Mr. N.R.Rayalu -Chairman. 2.Mr. Anil Vidyarthi -Independent Director. 3.Mr. Saurabh Baroi -Nominee Director, Dia Vikas Capital Private Limited. 4.Mr.Satyavir Chakrapani-Managing Director CEO 5.Mr. Vijay Pandey -Joint Managing Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsible for the day-to-day affairs of accused No.1` and are also in-charge of and responsible for the conduct of the business of accused No.1. The accused No.1 being a de jure entity is operated on the instructions of accused Nos.2 and 6. Accused Nos. 3 and 4 are the Joint Managing Directors of accused No.1. Accused Nos. 4 and 5 signed the cheque which was dishonoured. Accused No.2 to 6 are the brain and soul of the Company and are responsible for all the acts and omissions of the Company and are also responsible to the Company for the conduct of the business of the Company. Accused Nos. 2 to 6 were in-charge of and responsible for the conduct of Accused No.1 at the time when the offence for which the present complaint is filed was committed. The offence for which the instant complaint is filed has been committed with full knowledge, in consonance with and in furtherance of common intention by all the Accused persons named in the captioned case. It is submitted that none of the accused individuals, acting in their official capacity have exercised any due diligence to prevent the commission of the offence under the Act. (Emphasis added) What is narrated is, accused Nos.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irman, in the next as Executive Director and in the other Chairman of the particular meeting of the Board. There is no whisper in any of the documents depicting the petitioners to be Non-executive Independent Directors. Therefore, if the haze has to be warded off, it is necessary for the petitioners to participate in the trial and demonstrate that they have no role to play in the day-to-day affairs of the Company and that they are not even aware of the borrowing. 10. It is no doubt settled principle of law that if the accused in a proceeding under Section 138 of the Act who are not signatories to the instrument are hauled into those proceedings and if they are Non-executive Independent Directors, who have no role to play in any affairs of the Company, they cannot be prosecuted. It is in those cases the Apex Court or the constitutional Courts have quashed such proceedings in favour of those Non-executive Independent Directors. The phrase non-executive independent director is not even shown to exist in any of the documents appended by the petitioners. The respondent has demonstrated varied nomenclature of the petitioners in several documents. Therefore, it becomes a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in S.M.S. Pharmaceuticals Ltd. (supra) observed that the question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Sections 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 CrPC which recognise the Magistrate's discretion to take action in accordance with law. Thus, it is imperative that if this basic averment is missing, the Magistrate is legally justified in not issuing process. 27. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the cheques were issued by the Company and dishonoured by the Bank, the appellants were the Directors of the Company and were responsible for its business and all the appellants were involved in the business of the Company and were responsible for all the affairs of the Company. It may not be proper to split while reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to fulfil the requirement of Section 141 of the NI Act. The complaint specifically refers to the point of time when the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the complaint are in charge of its affairs. The Directors are prima facie in that position. 22. In fact, in an earlier decision in Monaben Ketanbhai Shah v. State of Gujarat [(2004) 7 SCC 15 : 2004 SCC (Cri) 1857] two learned Judges of this Court noticed that: (SCC p. 17, para 4) The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind. 23. In the light of the ratio in S.M.S. Pharmaceuticals Ltd. [(2005) 8 SCC 89 : 2005 SCC (Cri) 1975] what is to be looked into is whether in the complaint, in addition to asserting that the appellant and another are the Directors of the company, it is further alleged that they are in charge of and responsible to the company for the conduct of the business of the company. We find that such an allegation is clearly made in the complaint which we have quoted above. Learned Senior Counsel for the appellant argued that in Saroj Kumar Poddar case [(2007) 3 SCC 693 : (2007) 2 SCC (Cri) 135 : (2007) 2 Scale 36] this Court had found the complaint unsustainable only for the reason that there was no specific averment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (Emphasis supplied) In the light of what is held by the Apex Court in the aforesaid judgments, the complaint (supra) clearly narrates that the petitioners were also in-charge of the affairs of the Company, they are the brain and soul of the Company and at the time when they borrowed the loan, the agreement clearly stipulated that with their permission, including others the said loan was borrowed and the cheque was issued and no where the petitioners are described as Non-executive Independent Directors. This being the factual scenario, exercise of jurisdiction under Section 482 of the Cr.P.C. in favour of the petitioners is declined. 11. The contention of the learned counsel for the petitioners that the complaint nor the sworn statement anywhere attributes any role of the petitioners is unacceptable as the complaint or the sworn statement cannot be read splitting hairs as it has to be read as a whole and if it is so read, it does attribute the role played by the petitioners. 12. For the aforesaid reasons, I pass the following: ORDER (i) The Criminal Petition lacks merit and is dismissed. (ii) It is made clear that the observations made supra are limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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