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TMI Blog2024 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... rling and incontrovertible evidence showing that the accused is not concerned with issuance of the said cheques, which can only be seen by the High Court exercising powers under Section 482 Cr.P.C. In the present case, as discernible from the complaint, there is a dearth of any specific averments and only a general mention of accused Nos. 3-8 as the Directors of accused company and being in charge and responsible for the conduct, affairs, and business of the company, is alleged. The petitioner is not even a signatory to the subject cheques. It is in fact the Managing Director i.e., accused No. 2, who is deemed in-charge of the day to day affairs of the company and is actively involved and responsible for the affairs of the company, who has also signed the subject cheques. Indisputably, the other accused persons, who were also Directors of the company, have been dropped from the list of accused. Additionally, the petitioner, being designated as Chairman as per the 27th Annual Report, cannot be deemed to be in-charge of the day to day as per the principles established in the judgment of YASHOVARDHAN BIRLA VERSUS CECIL WEBBER ENGINEERING LTD. ORS. [ 2023 (4) TMI 706 - DELHI HIGH COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit (ICD). The said loan was advanced on an assurance of the accused company and on mutually agreed terms. Subsequently, in discharge of its liability, the accused company/respondent No. 2 issued three different cheques each drawn on drawn on Indian Overseas Bank, New Marine Lines Branch, Mumbai. The said cheques, on presentation, were dishonoured vide return memos with the remark Exceeds Arrangement . Consequently, demand notices were issued and upon failure of the accused company and its Directors to pay the sum under demand, the subject complaints came to be filed. The details of the aforesaid complaints as well as the respective cheques are summarized in the table given below:- Criminal Complaint No. Number and Date of Cheque Amount of Cheque Date of Return Memo Date of posting of Legal Notice 31528/2016 294602 dated 14.08.2012 Rs. 3 crores 16.08.2012 23.08.2012 31517/2016 291867 dated 12.08.2012 Rs. 2 crores 16.08.2012 23.08.2012 31829/2016 291866 dated 01.08.2012 Rs. 3 crores 16.08.2012 23.08.2012 4. On basis of the above averments, the learned Trial Court issued summons dated 09.11.2012 against the present petitioner, who is arrayed as accused no. 3. 5. It is stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner failed to respond to the legal notice that was duly served upon him and though the petitioner has claimed to be a non-executive Director, there is no cogent material placed on record. Moreover, the petitioner being the Chairman of the accused company by his very designation, can be assumed to be in charge of the affairs of the company and liable to be proceeded against. Lastly, it is stated that the petitioner s resignation on 27.12.2012 is much after the date of dishonour of cheque i.e. 16.08.2012. 9. I have heard the counsels for the parties and perused the material on record. 10. The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra. In S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla, the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability. The relevant extract of the said judgment reads as under: xxx 8. The officers responsible for conducting the affairs of companies are generally referred to as directors, managers, secretaries, managing directors, etc. What is required to be considered is : Is it sufficient to simply sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status xxx 12. 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. xxx 11. The said dicta of the Supreme Court continue to form the bedrock for the principles surrounding the vicarious liability of Directors under Section 138 read with Section 141 NI Act and has been reiterated with approval in a number of judgments which have followed. What arises from the above is that though a Director of a company indeed holds a special/unique position in the company, having authority to take decisions, the mere nomenclature or mention of an individual as a Director of a company cannot itself be the basis for bringing him/her into the fold of Section 138 with aid of Section 141 NI Act. 12. Further, with respect to the respondent s contention that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anur Shivashankarappa v. India Sugars and Refineries Ltd. [Shamanur Shivashankarappa v. India Sugars and Refineries Ltd., 2014 SCC OnLine Kar 8179] regarding liability of a Chairperson of a company in context of the Essential Commodities Act, where it was noted: (SCC OnLine Kar paras 26 and 28) 26. The term Chairman is not defined under the Companies Act, 1965. The Chairman is a necessary person in company meetings and is usually appointed by the articles of the company. Generally, Chairman is the highest post in the company, who represents the name and fame of the company. Chairman's role is to attend the meetings and to act according to the bye-laws of the company and also exercise any defined or reserved rights or duties. Regulation 76 (1) of table A to Schedule I to the Companies Act, 1956, provides that the Board may elect a Chairman and determine the period for which he has to hold the office. Generally, the directors elect one of them to be the Chairman of the Board who continues to be as such until he seizes to be a director or some other director who is appointed as a Chairman. Normally, the Chairman is a Director who is authorised to preside over the Board and general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truments Act. .. 13. Insofar as the legal position regarding quashing of complaints filed under Section 138 NI Act against the Directors in exercise of the powers conferred under Section 482 Cr. P.C. is concerned, the same has been discussed in detail by the Supreme Court in Sunita Palita v. Panchami Stone Quarry (2022) 10 SCC 152 and S.P. Mani Mohan Dairy v. Snehalatha Elangovan (2023) 10 SCC 685. In S.P. Mani (Supra), it has been observed: xxx 58. Our final conclusions may be summarised as under: 58.1. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment. 58.2. The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special kn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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