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TMI Blog2023 (12) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1 as per Memorandum of Association. If the petitioner was not responsible for affairs of the accused no. 1 despite being promoted as Additional Director of the accused no. 1, it can only be established and proved in accordance with law during the trial of the complaint under section 138 of NI Act. The petitioner has not placed or submitted any document which can reflect that the petitioner has never participated in conduct of business of the accused no. 1. The petitioner cannot be absolved from his liability qua the cheques in question by merely pleading that he was not responsible for day to day affairs and conduct of the business of the accused no. 1. The arguments advanced by the counsel for the petitioner are without any legal support. The present complaint cannot be dismissed qua the petitioner. The present petition alongwith pending application is accordingly dismissed. - HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN For the Petitioner Through: Mr.M.P.Parthiban, Advocate. For the Respondents Through: Mr. Yudhvir Singh Chauhan, APP for State/R-1. Mr. Nishant Datta, Mr. Pradeep Bhardwaj and Mr. Chirag Rathi, Advocates for R-2. JUDGMENT 1. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weeks to enable them to arrange funds. The respondent no. 2 represented these cheques with its banker at Bank of Baroda, Sansad Marg, New Delhi-110001 Branch in account no. 25620200000406 but these cheques were again returned as dishonoured vide cheque memo dated 18.10.2017 with remarks Funds Insufficient . The respondent no. 2 sent legal notice dated 24.10.2017. The respondent no. 2 received a reply dated 09.11.2017 on behalf of accused no. 4 i.e. the petitioner wherein the petitioner denied his liabilities towards the respondent no. 2. The accused despite notice dated 24.10.2017 did not pay cheque amount. Hence, the respondent no. 2 filed the present complaint. The court of Ms. Ambika Singh, Metropolitan Magistrate-02, Patiala House Courts, New Delhi vide order dated 04.10.2018 stated to have issued notice against the accused including the petitioner. 3. The petitioner being aggrieved filed the present petition. The petitioner pleaded that he joined the accused no. 1 on 28.09.2015 and was appointed as regional sales manager. The cheques in question were issued by the directors of the accused no. 1 and at that time, the petitioner was not the Additional Director of the accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the accused nos. 2 and 3. The Article of Association of the accused no. 1 stated that only 2 directors were appointed to take decisions regarding all financial and administrative matters. The counsel for the petitioner relied on Mannalal Chamaria V State of West Bengal, (2014) 13 SCC571; A.K. Singhania V Gujarat State Fertilizer Company, (2013)16 SCC 630; National Small Industries Corporation Ltd. V Harmeet Singh Paintal, (2010) 3 SCC 330; State of Haryana V Brij Lal Mittal, (1998) 5 SCC 343; Gunmala Sales Pvt. Ltd. V Anu Mehta others, (2015) 1 SCC 103; State of Haryana V Bhajan Lal, 1992 Supp (1) SCC 335; and A.R. Radha Krishna V Dasari Deepthi, (2019) 15 SCC 550. 5. The counsel for respondent no. 2 also advanced oral arguments and submitted written submissions. He argued that the petitioner has not mentioned that who are the Managing Director, Director, Additional Director and/or Whole Time Director of the accused no. 1. The petitioner is named as Director of the accused no. 1 as per FORM 32 available on the website of Ministry of Corporate Affairs. The Company Master data also did not mention who are the Managing Director, Director, Additional Director and or Whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is the Company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are result of acts of others. Therefore, officers of a Company who are responsible for acts done in the name of the Company are sought to be made personally liable for acts which result in criminal action being taken against the Company. It makes every person who, at the time the offence was committed, was incharge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company, liable for the offence. The proviso to the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are every person . Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable. 7.2 The Supreme Court in Siby Thomas V M/s Somany Ceramics Ltd., Criminal Appeal no. 003139 of 2023 (arising out of Special Leave Petition (Crl.) no. 12 of 2020) decided on 10th October, 2023 referred decision in S.P. Mani and Mohan Dairy V Dr. Snehalatha Elangovan, 2022 SCC OnLine SC 1238 and observed that it is the primary responsibility of the complainant to make specific averments in the complaint, so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Siby Thomas V M/s Somany Ceramics Ltd. also referred Anita Malhotra V Apparel Export Promotion Council another, (2012) 1 SCC 520 wherein it was observed as under:- 22. This Court has repeatedly held that in case of a Director, the complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. (Vide National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal ). In the case on hand, particularly, in Para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day-to-day affairs of the Company. We have verified the averments as regards to the same and we agree with the contention of Mr. Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day-to-day affairs of the Company. On this ground also, the appellant is entitled to succeed. 7.4 The Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also responsible to the company for the conduct of the business. Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section 1 of Section 141 of the NI Act. 7.5 The Supreme Court in Siby Thomas V M/s Somany Ceramics Ltd. after referring the above mentioned decisions observed as under:- 16. Thus, in the light of the dictum laid down in Ashok Shewakramani s case (supra), it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. A bare perusal of Section 141(1) of the NI Act, would reveal that only that person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company alone shall be deemed to be guilty of the offence and shall be liable to be proceede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1 is a private limited company and the accused nos. 2, 3, 4 (the petitioner) and 5 are the Directors/Additional Directors for accused no. 1 and hence are liable for day to day affairs of the accused no. 1. The respondent no. 2 also stated that the respondent no. 2 during the course of business had supplied goods to the accused persons which also includes the petitioner and the outstanding amount is also payable by the accused persons and the respondent no. 2. The cheques in question were issued by the accused. The respondent no. 2 also issued legal notice dated 24.10.2017. The averments mentioned in the complaint reflect that the respondent no. 2 has made sufficient allegations to establish that the petitioner was involved in day to day affairs of the accused no. 1. The arguments advanced by the counsel for the petitioner is without any basis and cannot be factually sustained. 9. The petitioner alleged that he joined the accused no. 1 company on 28.09.2015 as regional sales manager. The petitioner never remained the Additional Director of the accused no. 1 and the cheques in question were issued by the Directors of the accused no. 1 and were not signed by the petitioner. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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