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TMI Blog2024 (11) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and he has, thus, prayed for quashing of the proceedings against him. It is not denied by the petitioner that he was an executive director of the company herein and a member of the Board of Directors as stated by the opposite party during the period of the alleged offence in the present case. A prima facie case has also been made out before the whole time member of the SEBI against the petitioner and others. Thus, the petitioner was prima facie a member of the Board of Directors (subject to being proved otherwise during trial), during the period of alleged offence and a prima facie case against him was also found, as held by the whole time member of the Securities and Exchange Board of India. Considering the fact that there is a prima facie case against the petitioner, it will be a clear abuse of the process of law, if this Court interferes in the proceedings before the trial Court against the petitioner herein. On perusal of the order of the learned Special Judge, the learned Judge has rightly applied the appropriate provisions of law in deciding the prayer for discharge and the said order being in accordance with law requires no interference by this Court. The trial before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indirectly. b) Amrit Projects Ltd. (Noticee No. 1) and its managing director i.e. Noticee No. 2 shall not dispose of, alienate or encumber any of its/his assets or divert any funds raised from public either through the offer and allotment of Deep Discount Bonds. c) The Company namely Amrit Projects Limited (Noticee No. 1) and its Managing Director Shri Kailash Chand Dujari (Noticee No. 2) shall jointly and severally refund the money collected by the Company through the offer and allotment of Deep Discount Bonds (Infra Bonds as well as Power Bonds), including the application money collected from investors, pending allotment of securities, if any, with an interest of 15% per annum (the interest being calculated from the date when the repayments became due in terms of section 73(2) of the Companies Act, 1956 till the date of actual payment) within a period of 180 days from the date of this order. It is clarified that the restraint imposed on the sale of assets at para (b) above, shall not operate if the sale of assets is made for the sole purpose of making refund to the investors by depositing the proceeds of sale in an Escrow Account with a nationalized bank. It is further clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts Ltd., Mr. Kailash Chand Dujari and Mr. Sasanka Roy Sarkar under Section 26(1) read with Sections 24(1)/27 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the SEBI Act ) read with regulation 3 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to securities Market) Regulation, 2003 read with 55A/56/60/67/68/70/2 (36)/73 of the Companies Act, 1956 along with section 621 of the Companies Act, 1956 read with Section 436/439 of the Companies Act, 2013 read with Section 6 of the General Clauses Act 1897 read with Section 193 of the Code of Criminal Procedure, 1973 before the learned 5th Special Court, SEBI, Calcutta and the same was registered as Special Case No. SEBI/39/2018. 7. The learned Special Judge in her order dated 22.04.2022 (under revision) held:- ..From the order of the WTM it is reflected that the petitioner was appointed as director on 27.04.2004 and ceased to be Director on and from 08.10.2013 which is indeed a long span of about more than 9 years and the period of alleged offence is during the financial year 2007-2008-2009-2010-2011-which is well within the tenure of director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, shall be deemed to be guilty of the offence, etc. What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company 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 under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manager [as defined in Section 2 (24) of the Companies Act] or a person referred to in clauses (e) and (f) of Section 5 of the Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141 (1) of the Act. No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141 (2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv) Other officers of a company cannot be made liable under sub-section (1) of Section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence. 29. In Pooja Ravinder Devidasani v. State of Maharashtra and Anr., (2014) 16 SCC 1 this Court held as under:- 17. ... Non-executive Director is no doubt a custodian of the governance of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1971 SC 2162] , this Court observed that a person in charge of a 3 (2014) 16 SCC 1 9 business means that the person should be in overall control of the day-to-day business of the Company. 19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri) 453] ). 20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company. 30. As held in K.K. Ahuja v. V.K. Vora (supra) when the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting the strategic direction for the organization, overseeing day-to-day operations, and ensuring the organization s goals and objectives are met. Executive directors are appointed by the board and in this case as submitted by Mr. Ganguly, appearing for the SEBI, that the petitioner herein was also a member of the Board of Directors. 11. The learned counsel appearing for the petitioner submits that the petitioner was only an executive director and received only a salary of Rs. 25,000/- and he was not involved in any of the day-to-day affairs of the company and he has, thus, prayed for quashing of the proceedings against him. 12. It is not denied by the petitioner that he was an executive director of the company herein and a member of the Board of Directors as stated by the opposite party during the period of the alleged offence in the present case. A prima facie case has also been made out before the whole time member of the SEBI against the petitioner and others. 13. On hearing the learned counsel for the petitioner, the learned counsel appearing for SEBI, the well reasoned order under revision and on careful perusal of the materials on record, it is prima facie evident that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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