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TMI Blog2025 (2) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment and Order dated 06.08.2019 passed by the High Court of Judicature at Bombay dismissing the petitions under Section 482 of the Code of Criminal Procedure, 1973 (the "CrPC") seeking quashing of criminal proceedings initiated against the Appellant under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (the "NI Act"). 3. The Appellant, who was an independent non-executive director of M/s D.S. Kulkarni Developers Ltd., has been arrayed as an accused in the complaints filed under section 138 of the NI Act alleging dishonor of cheques issued by the company. The High Court, while dismissing the Appellant's plea, observed that the role of the director is a matter of trial and that the complainant has made sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame appeared, along with all directors, independent directors, non-executive directors, and additional directors. 8. The Appellant resigned from the position of independent non-executive director on 03.05.2017. His resignation was duly notified to the Registrar of Companies through Form DIR-11 and Form DIR-12, with effect from the same date. 9. The following complaints under Section 138 NI Act were filed against the company before the Learned Metropolitan Magistrate 28th Court, Esplanade, Mumbai: 1. Complaint No. 66/SS of 2017, filed on 31.07.2017, qua Cheque No. 455494. 2. Complaint No. 645/SS of 2017, filed on 23.02.2017, qua Cheque No. 455495. 3. Complaint No. 697/SS of 2017, filed on 07.04.2017, qua Cheque No. 455496. 4. Compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by virtue of his directorship, was part of the decision-making apparatus of the company, therefore, could not escape liability at the pre-trial stage. ANALYSIS AND FINDINGS 15. This Court has consistently held that a mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the NI Act. Liability is contingent upon specific allegations demonstrating the director's active involvement in the company's affairs at the relevant time. 15.1. This Court in National Small Industries Corporation Limited v. Harmeet Singh Paintal and Another, (2010) 3 SCC 330 observed: "13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 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 offence committed by the company along with averments in the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each case. But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable." 15.3. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, (2005) 8 SCC 89, this Court laid down that mere designation as a director is not sufficient; specific role and responsibility must be established in the complaint. 15.4. In Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 this Court while taking into consideration that a non-executive director plays a governance role, and are not involved in the daily operations or financial management of the company, held that to attract liability under section 141 of the NI Act, the accused must have been actively in-charge of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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