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TMI Blog2024 (3) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... Articles of Association and Memorandum of Association of the accused company, in which the details of Directors, as they were at the time of formation of company in the year 2015, were mentioned, and the updated data of the company available in the records of Registrar of Companies or Ministry of Corporate Affairs website was not placed before the learned Trial Court. The petitioners had resigned much prior to the issuance of cheque and the complainant has not disputed the factum of their resignations. The Director who had signed the cheque in question i.e. Nikhil Mehta (accused no. 3) continues to be the Director of the accused company till date, whereas the records show that the present petitioners had resigned in the year 2017 itself. Thus, the petitioners cannot be made liable under Section 138/141 of NI Act, in such facts and circumstances. Petition allowed. - HON'BLE MS. JUSTICE SWARANA KANTA SHARMA For the Petitioner Through: Mr. Deepender Hooda Mr. A.S. Tiwari, Advocates. Mr. Arpit Verma, Mr. Chanakya Gupta Ms. Nandini Chadha, Advocates (through video-conferencing). For the Respondents Through: Mr. Atul Kumar, Ms. Sweety Singh, Ms. Archna Kumari Mr. Rahul Pandey, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummoned the accused persons. Appearance on behalf of accused no. 3 Sh. Nikhil Mehta was marked on 25.11.2019 before the learned Magistrate. However, the summons issued against the accused no. 4 i.e. Sh. Saurabh Sethi (petitioner herein) had been received back unserved. Moreover, due to non-appearance of accused no. 2 i.e. Sh. Dheeraj Pahwa (petitioner herein), bailable warrants were issued against him. 4. Learned counsel appearing on behalf of petitioner Sh. Dheeraj Pahwa, argues that the petitioner had resigned and had ceased to be a Director of the accused company w.e.f. 17.07.2017 and thereafter, he had no concern with the day-to-day affairs and decisions of the company qua its business transactions. In this regard, this Court s attention has been drawn towards the resignation letter dated 17.07.2017 as well as Form No. DIR-12 wherein the petitioner is shown to have ceased as Director of Company w.e.f. 17.07.2017. It is stated that the petitioner is not aware of the circumstances and the purpose for which the cheque in question had been issued. It is also stated that the cheque has neither been signed by the petitioner nor is the petitioner aware of the amount if any or at all w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the learned Trial Court on 18.08.2023, the said accused has specifically taken name of the petitioner Dheeraj Pahwa and that he used to exclusively used to look after finances in respect of the accused company. Therefore, it is prayed that present petitions be dismissed. 7. This Court has heard arguments addressed by the learned counsels appearing on behalf of the petitioners as well as the complainant, and has perused the material on record. 8. The case set out by the petitioners, in a nutshell, is that both of them had resigned in the year 2017 from the directorship of accused company, and the cheque in question had been issued and dishonoured much later i.e. in the year 2018, and therefore, the petitioners cannot be made liable for the dishonour of the cheque. 9. To appreciate the same, this Court has analysed the material including the resignation letters, Form No. DIR-12, copy of Board Resolution etc. placed before this Court by both the petitioners as well as the Trial Court Record, and an examination of the same brings forth the following important facts: a. Accused persons namely Nikhil Mehta, Dheeraj Pahwa and Saurabh Sethi were the first three directors of the accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down by the Hon ble Apex Court in catena of judgments and in this regard, a reference can be made to the recent judgment in case of Rajesh Viren Shah v. Redington (India) Limited 2024 SCC OnLine SC 143 wherein the Hon ble Apex Court has held that a director, who had resigned prior to the issuance of cheque in question, cannot be held liable under Sections 138 and 141 of NI Act. The relevant observations are extracted hereunder: 8. We find the High Court, in the impugned order to have elaborately discussed the principles of law in regard to the quashing of such proceedings but, however, not dealt with the factual matrix. Ex facie, we find that the complainant has not placed any materials on record indicating complicity of the present appellant(s) in the alleged crime. Particularly, when the appellant(s) had no role in the issuance of the instrument, which is evident from Form 32 (Exh. P. 59) issued much prior to the date on which the cheque was drawn and presented for realisation. 9. The veracity of Form-32 has neither been disputed by the Respondent nor has the act of resignation simpliciter been questioned. As such, the basis on which liability is sought to be fastened upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the company, it cannot be presumed that he was also responsible for its day-to-day affairs. The relevant observations are as under: 12. It could thus clearly be seen that this Court has held that merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable. 17. In case of Pooja Ravinder Devidasani v. State of Maharashtra Anr. (2014) 16 SCC 1 also, the Hon ble Apex Court had observed as under: 17. ....... Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and 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 time, will not be liable for an offence under Section 141 of the NI Act. In National Small Industries Corpn. [National Small Industries Corpn. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (2006) 10 SCC 581 : (2007) 1 SCC (Cri) 621] , it was held by this Court that: (SCC pp. 584-85, para 7) 7. it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused is vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. (emphasis supplied) By verbatim reproducing the words of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable, is a ground for quashing proceedings initiated against such person under Section 141 of the NI Act. (Emphasis supplied) 18. In case of Ashok Shewakramani v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.] On a plain reading, it is apparent that the words was in charge of and was responsible to the company for the conduct of the business of the company cannot be read disjunctively and the same ought be read conjunctively in view of use of the word and in between. (Emphasis supplied) 19. As noted above, in the present case, one handwritten line has been added in the complaint i.e. accused no. 2 to 4 are responsible of day to day affairs of accused no. 1 , and even the complete language of Section 141 of NI Act has not been reproduced, let alone any specific detail about any role played by either of the petitioner in issuance or dishonour of cheque in question or as to how were they-in-charge of or responsible for the day-to-day affairs of the accused company when the cheque in question had been issued or dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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