9911796707
TMI Blog2024 (12) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... d well within the statutory period of 30 days. However, despite intimating the accused persons, including the petitioner, regarding the dishonor of the cheque and payment of the due amount, the accused persons including the petitioner failed to pay the said amount, thereby, making out an offence under Section 138 of the NI Act. Accordingly, the aforesaid complaint was filed - Section 141 of the NI Act merely states the liability of certain people for the offences committed by the company, which needs to satisfy the test of who is in charge of or responsible for the conduct of company s affairs . However, the extent of their liability is discussed elaborately in a catena of judgments. In the instant case, even though the petitioner is not an authorised signatory of the cheque, she is an officer of the company, holding a directorial position at the respondent no.4-company. Therefore, not being an authorised signatory does not absolve her from the liability of the commission of offence as long as the requisites under Section 138 and 141 of the NI Act are met - this Court has observed a prima facie case against the petitioner for her involvement in the day-to-day activities of the cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited as being owners of Flat No. 1, Ground Floor, I Wing, Griha Shakti, Ladvali, Karjat, Raigad, Maharashtra 410206 (hereinafter as the subject property ) and expressed interest in selling the said subject property to the complainant. c. Thereafter, the complainant agreed to pay a sum of Rs. 35,00,000/- as sale consideration and accordingly, made a payment of Rs. 25,00,000/- to the accused herein. d. Later, the petitioner and respondent no. 5 handed over a file to the complainant consisting of documents showing the closing of a house loan in favour of one Ms. Yasmin Hashmat Ullah, a resident of 6, Crescent House 27, Sahid Bhagat Singh Road, Colaba, Mumbai, Maharashtra. e. Upon finding the documents contradictory, the complainant visited the State of Maharashtra only to find that the neither the accused were the owners of the subject property, nor the subject property was in the name of Ms. Yasmin Hashmat Ullah. f. After confronting the accused regarding the same, the accused promised to refund the said amount of Rs. 25,00,000/- paid by the complainant in lieu of the sale of subject property. Accordingly, a cheque bearing no. 000519 dated 11th September, 2019 for an amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further submitted that the petitioner has never dealt with the complainant and has no knowledge about the issuance of the said cheque to the complainant. Moreover, it is submitted that she is not an authorised signatory of the cheque in question and hence, she was erroneously made a party to the instant complaint. 6. It is submitted that due to her non-involvement in the company s affairs and her absence of knowledge regarding the issuance of the said cheque to the complainant, no offence is made out against her under Sections 138 and 141 of the NI Act. 7. It is submitted that it is a settled position of law that the Directors who are in charge and responsible for the conduct of company s affairs at the relevant time of commission of offence shall be held liable under Sections 138/141 of the NI Act. However, the petitioner was not involved in issuing the said cheque to the complainant and in maintaining the affairs of the company. 8. In view of the foregoing submissions, it is prayed that the instant petition may be allowed. 9. Per Contra, learned APP for the State vehemently opposed the instant petition and submitted that the learned MM was right in issuing summons against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, under this provision, the Court must exercise its adverse powers sparingly, cautiously and in exigent cases. 18. However, the Court can exercise its inherent powers under Section 482 of the Code to quash complaints and criminal proceedings emanating therefrom, if it does not constitute a prima facie offence against the accused and the same was elaborately dealt with by the Hon ble Supreme Court in the case of Indian Oil Corporation v. NEPC India Limited and Others, (2006) 6 SCC 736. 19. Keeping the aforesaid law in mind, it is pertinent to understand the contention of the petitioner that the said complaint and the summoning order are liable to be quashed as the petitioner is not involved in the day-to-day affairs of the company and was unaware of the cheques issued to the complainant, hence, the offences under Section 138 and 141 of the NI Act are not made out. 20. Therefore, this Court will examine whether the instant case satisfies the ingredients of Section 138 and 141 of the NI Act, wherein, the former deals with the dishonour of cheque and the latter deals with the company s liability in dishonour of cheque. For the purpose of convenience, the said provisions are reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence: 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, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation . For the purposes of this section, (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 21. Upon perusal of Section 138 of the NI Act, it is observed that the said provision deals with the offence of dishonor of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repay the due amount from the date of receipt of the demand notice. However, if the drawer fails to pay the due amount within the said statutory period, then an offence under Section 138 of the NI Act is deemed to have been committed. 23. In the instant case, the complainant presented the said cheque for the second time on 19th October, 2019, which was dishonored vide memo dated 21st October, 2019 for insufficiency of funds. As required by Section 138 of the NI Act, the complainant issued a demand notice dated 2nd November, 2019, which was issued well within the statutory period of 30 days. However, despite intimating the accused persons, including the petitioner, regarding the dishonor of the cheque and payment of the due amount, the accused persons including the petitioner failed to pay the said amount, thereby, making out an offence under Section 138 of the NI Act. Accordingly, the aforesaid complaint was filed. 24. Now coming to Section 141 of the NI Act, it is observed that when a company commits an offence under Section 138 of the NI Act, any person who is in charge of or responsible for the conduct of the affairs of the company shall be held guilty of the offence. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company 21. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-to-day functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct 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. 27. The aforementioned extracts clearly states that mere holding of the position of directorship does not make that person vicariously liable for the offences committed by the company. In fact, it is to be examined whether such Director was involved in the day-to-day affairs of the company and was in charge of the conduct of the affairs of the company at the time of commission of the offence. If the answer is in affirmative, then the Director will be held liable for the offences committed by the company under Section 141 of the NI Act. 28. Furthermo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 37 of the AoA, it is specifically stated that the petitioner i.e., Ms. Jyoti Siwach was one of the First Directors of the Company. Further, it is observed that she is one of the Promoters as well as the Subscriber of the respondent no. 4-company. Upon perusal of Company Master Data, which is annexed as Document no. 33, it is observed that the petitioner s Unique Director Identification Number (DIN) is mentioned as 07513150. 33. It is further pertinent to mention that it was contended by the petitioner that she is not an authorised signatory of the said cheque and hence, cannot be made liable under Section 138 and 141 of the NI Act. 34. In the instant case, even though the petitioner is not an authorised signatory of the cheque, she is an officer of the company, holding a directorial position at the respondent no.4-company. Therefore, not being an authorised signatory does not absolve her from the liability of the commission of offence as long as the requisites under Section 138 and 141 of the NI Act are met. 35. Considering the foregoing discussion on facts and law, this Court has observed a prima facie case against the petitioner for her involvement in the day-to-day activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
