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TMI Blog2024 (2) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... om Complaint Case No. 9996/2014; 9995/2014; 9994/2014; 9997/2014 and 9993/2014, pending before learned MM (NI Act), North West, Rohini Courts, Delhi. 2. In brief, complaints under Sections 138/141 NI Act were filed on behalf of the respondent against M/s Genesis Industrial Solution Pvt. Ltd. (accused No. 1 Company) alongwith accused Nos. 2 to 4 being the Directors, before the learned Trial Court. The averments made in para 2 of the complaint may be reproduced for the purpose of present proceedings: "2. That the accused No. 1 is a private limited company and is engaged in the business of trading of Aluminum at the abovesaid address. The accused No. 2 to 4 are the directors of the accused No. 1 and accused No. 2 is authorised signatory of accused No. 1 and has been participating in day to day functioning and activities of the accused No. 1 and also responsible for day to day affairs and business of accused No. 1. The accused No. 3 and 4 are the Directors of the accused No. 1 and also responsible for day to day affairs and business of accused No. 1. As such, they have been dealing in day to day activities of the accused No. 1." 3. As per the case of the petitioner (accused No. 3 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the learned Trial Court. It is further submitted that petitioner has already participated in trial and the proceedings are at the stage of defence evidence wherein the role and status of petitioner in the Company can be duly clarified. It is urged that the petitioner was an 'Executive Director' in the accused Company at the relevant time and a false certificate of clarification was issued by the Chartered Accountant on 07.08.2018 i.e. on the date the earlier CRL. M.Cs. preferred on behalf of the petitioner were withdrawn. It is emphasized that the stand of the petitioner is an afterthought. It is also contended that the relevant transactions relate back to December, 2013 and 13 PDCs were issued, which were dishonoured during the period January, 2014 to March, 2014. The petitioner is stated to be 'Executive Director' and 'Promoter' at the relevant time. It is pointed out that part payment of Rs.51,000/- was also made through NEFT in December, 2013 prior to alleged resignation of the petitioner on 15.03.2014. 7. It may be noticed that CRL. M.C. 2382/2017-2386/2017 were earlier preferred on behalf of the petitioner for quashing of summoning orders in the aforesaid complaint cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding a designation or office in a Company, would not be liable unless he was in-charge of and responsible for the conduct of the business of the Company. Thus, the liability depends upon role in the conduct of the affairs of the Company and not merely by the designation or status except in the case of Managing Director and Joint Managing Director. 11. The principles of vicarious liability as reflected in para 27 in K. K. Ahuja v. V. K. Vora & Anr., (2009) 10 SCC 48, may also be beneficially noticed : "27. The position under Section 141 of the Act can be summarised thus: (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix "Managing" to the word "Director" makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company. (ii) In the case of a Director or an officer of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record. Since the object of enactment of Section 138 and 141 of NI Act is to prevent bouncing of cheques and sustain credibility of commercial transactions, the proceedings can be quashed only if the ingredients of the offence are altogether lacking despite the foundational facts laid by the complainant. 13. Observations made by Hon'ble Apex Court in paras 56 to 59 in SP Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 in this regard may also be beneficially reproduced: "56. Once the necessary averments are made in the statutory notice issued by the complainant in regard to the vicarious liability of the partners and upon receipt of such notice, if the partner keeps quiet and does not say anything in reply to the same, then the complainant has all the reasons to believe that what he has stated in the notice has been accepted by the noticee. In such circumstances what more is expected of the complainant to say in the complaint. 57. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But, if any Director or Partner wants the process to be quashed by filing a petition under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advertence to Sections 138 and Section 141, respectively, of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm. 58.3. Needless to say, the final judgment and order would depend on the evidence adduced. Criminal liability is attracted 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 firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the petitioner in terms of certificate issued by the Chartered Accountant only on 07.08.2018, after the earlier petitions preferred on behalf of the petitioner for quashing of summoning order, were withdrawn on 07.08.2018. Apparently, the same is belated after initiation of complaint proceedings in 2014. 15. It is also pertinent to observe that in the complaint cases under Section 138 NI Act, the statement of the accused/petitioner under Section 313 Cr.P.C. already stands recorded and the cases are at the stage of defence evidence. In the complaint initiated under Section 138 of NI Act, respondent No. 1 (complainant) duly pleaded that accused Nos. 2 to 4 (including petitioner) are the Directors of accused No. 1 (Company) and accused Nos. 3 (petitioner) and 4 are also responsible for day-to-day affairs and conduct of business of accused No. 1 Company. The accused, in discharge of legal liabilities are also stated to have partly paid a sum of Rs. 51,000/- through NEFT. During the relevant period, the petitioner was shown as an Executive Director and Promoter in the Company and the cheques were issued towards the outstanding amount of Rs. 95 lacs prior to resignation of pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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