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TMI Blog2022 (8) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cheques, the petitioner was neither a Director of the first accused company nor authorized signatory of the cheques. Therefore, simply because a person is a Director of a company, does not make him liable under the Negotiable Instruments Act. Every person connected with the company will not fall into the ambit of the provision. Time and again, the Hon'ble Supreme Court of India and this Court repeatedly held that only those persons who were in charge of and were 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 point of time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act. The provisions under Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the company. Further, the primary responsibility is on the complainant to make specific averme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... week of June 2019, A1 and A2 availed a short term financial assistance to the tune of Rs.50 lakhs to meet some imminent needs of the company and other requirements. The second accused is the wife of the said P.Padmanabhan. Accordingly, the first accused represented by the second accused, borrowed loan from the defacto complainant. In order to repay the same, they issued cheques signed by the husband of the second accused, who is being the authorized signatory of the first accused company. The post dated cheques were issued on the date of borrowing. The authorized signatory of the cheque was the Managing Director of the first accused company. However, the Managing Director, the said P.Padmanabhan died on 03.09.2019. Thereafter, the cheques issued by him were presented for collection on 25.11.2019. All the cheques were returned dishonored for Exceeds Arrangements . After causing statutory notice as required under Section 138 of the Negotiable Instruments Act, the respondents lodged complaints for the offence punishable under Section 138 of the Negotiable Instruments Act r/w 141 of the Negotiable Instruments Act. 5. The learned counsel for the petitioner would submit that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Negotiable Instruments Act. He further contended that all the grounds raised by the petitioner has to be gone into by way of trial before the Trial Court, since all are mixed questions of fact and it cannot be considered under Section 482 of Cr.P.C., in a quash petition. In the complaint there are specific allegations as against all the accused persons to attract the offence under Sections 138 and 141 of the Negotiable Instruments Act. In fact, the respondents categorically averred in the complaint that his father the said P.Padmanabhan issued cheque as a Managing Director and authorized signatory of the first accused company and died on 03.09.2019. Immediately on 17.09.2019, the petitioner who is being the son of the said P.Padmanabhan has been inducted as one of the Director of the first accused company. When there are specific allegations averred in the complaint with regards to the participation in the day-to-day affairs of the first accused company and at the time of presentation of the cheques, the petitioner is one of the Director of the first accused company. He further submitted that the petitioner is being the son of the deceased P.Padmanabhan and he had full knowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 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 point of time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act. 11. That apart, a perusal of the impugned complaint revealed that there is no specific averment to the extent that the petitioner shall have been at the helm of affairs of the company, one who actively looks after the day-to-day activities of the company and particularly responsible for the conduct of its business. Therefore, the provision under Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. 12. As stated supra, the petitioner was neither the Director nor the authorized signatory of the cheque, at the time of borrowal of loan as well as issuance of cheques. Therefore, the petitioner is not held to be liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly, Explanation.-For the purposes of this section,- (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 16. The provisions under Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the company. Further, the primary responsibility is on the complainant to make s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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