9911796707
TMI Blog2025 (2) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... ng order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.' In line with the dictum of the Hon'ble Apex Court in Rathish Babu Unnikrishnan v. State (NCT of Delhi), thus, while exercising the power under Section 482 of the CrPC to quash a complaint at the pre-trial stage, it is pertinent for this Court to examine whether the factual defence is of such impeachable nature that the entire allegations made in the complaint is disproved. In accordance with Section 141 of the NI Act, in instances where the principal offender under Section 138 of the NI Act is a company, every person who at such time when the cheque was dishonoured, and no subsequent payment was made, was in charge of the business of the company, and was responsible for the conduct of business, is deemed to be guilty of the offence under Section 138 of the NI Act. It is trite law that a person c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough its directors vide letter dated 30.10.2013, approached the complainant for restructuring of the existing debt of Rs. 88 crores. It is alleged that on the request of the accused company, the complainant agreed to restructure the existing debt of Rs. 88 crores on the terms and conditions as stipulated in the letter dated 31.12.2013. 4. It is alleged that the Interest During Construction ('IDC') dues were pending to the complainant. It is alleged that upon the request of the accused company, the complainant purchased the Cheque No. 013805 dated 30.09.2014 issued by the accused company through its authorised signatories in amounting to Rs. 1.5 crores for the payment of the IDC dues to the complainant. The complainant duly credited Rs. 1.5 crores to the account of the accused company as consideration for the said cheque. The said cheque, upon presentation, got dishonoured and returned unpaid vide return memo dated 16.10.2014 with remarks "Funds Insufficient." The subject cheque was once again presented for encashment on the assurance of the accused company. However, on this occasion as well, the same returned unpaid vide return memo dated 05.12.2014 for the reason "funds insuffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of knowledge of working and management of the accused company during the relevant period of issuance of cheque. He submitted that as per the provisions of Section 167(1)(b) of the Companies Act, the petitioners even ceased to be directors. He submitted that the Registrar of Companies were informed about the non-compliance of the provisions of the Companies Act by the accused company as none of the meetings for more than 12 months preceding July 2015 were either intimated or attended by the petitioners thereby indicating the inactiveness of the petitioners herein. He submitted that in response to the said communication, the Registrar of Companies vide communication dated 14.09.2015 called for explanation along with documentary evidence. Arguments advanced on behalf of the petitioner in CRL.M.C. 2520/2020 10. The learned counsel for the petitioner submitted that the petitioner has wrongly been roped in the present case. He submitted that the petitioner is neither the signatory of the subject cheque nor is responsible for managing the day to day affairs of the company. He submitted that the petitioner had no role to play in the granting of the loan by the complainant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submitted that the defences raised by the petitioners are subject matter of trial and cannot be looked into at this stage. Arguments advanced on behalf of the complainant qua the Petitioner in CRL.M.C. 2520/2020 15. The learned counsel for the complainant submitted that the grounds raised by the petitioner are subject matter of trial and no interference, at this stage, is warranted. He submitted that the petitioner was responsible for the day-to-day affairs of the company and had also signed the balance sheet of the accused company for the Financial Year 2014-2015 during which the transaction pertaining to the issuance of the subject cheque took place. Analysis 16. At the outset, it is relevant to note that this Court can quash complaints under the NI Act at the pretrial stage in the exercise of its inherent jurisdiction under Section 482 of the CrPC if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts. The Hon'ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) : 2022 SCC OnLine SC 513 had discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this Court to examine whether the factual defence is of such impeachable nature that the entire allegations made in the complaint is disproved. 18. The petitioners are sought to be implicated in the present case by virtue of Section 138 read with Section 141 of the NI Act on account of being the directors of the accused company at the relevant time when the cheque was issued. Section 141 of the NI Act reads as under: "141. Offences by companies.-(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent 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 employme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 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 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. If being a Director or manager or secretary was enough to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence." 23. It must be borne in mind that Section 141 of the NI Act is a penal provision that aims to create vicarious liability on the accused. For this reason, the provisions ought to be strictly construed. In the case of National Small Industries Corpn. Ltd.v.Harmeet Singh Paintal : (2010) 3 SCC 330, the Hon'ble Apex Court had emphasised the necessity to detail the role of the director accused on account of the penal nature of Section 141 of the NI Act and held as under: "13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of sub-section (1) of Section 141 of the NI Act must be a person who at the time the offence was committed, was in charge of and was responsible to the Company for the conduct of the business of the Company. Merely because somebody is managing the affairs of the Company, per se, he does not become in charge of the conduct of the business of the Company or the person responsible for the Company for the conduct of the business of the Company. For example, in a given case, a manager of a Company may be managing the business of the Company. Only on the ground that he is managing the business of the Company, he cannot be roped in based on sub-section (1) of Section 141 of the NI Act. 23. The second allegation in the complaint is that the appellants are busy with the day-to-day affairs of the Company. This is hardly relevant in the context of sub-section (1) of Section 141 of the NI Act. The allegation that they are in charge of the Company is neither here nor there and by no stretch of the imagination, on the basis of such averment, one cannot conclude that the allegation of the second respondent is that the appellants were also responsible to the Company for the conduct of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conduct of the business of the accused company. It must be shown that the director was not only in charge of but also responsible to the company for the conduct of the business of the company. 28. It is undisputed that the petitioners were not a signatory to the subject cheque. The Annual Return of the accused company in the nature of Form No. MGT-7 has also been appended which materialises that the petitioners had failed to attend any Board Meeting/Committee Meeting during the financial year in which the transaction took place. This Court has also perused several emails appended with the petition which materialise that the petitioners consistently sought information of the working of the accused company during the period of issuance and subsequent dishonour of the subject cheque. Further, letters dated 22.07.2015 have also been appended by the petitioners which state that the petitioners' office stood vacated in accordance with Section 167 (1) (b) of the Companies Act, 2013 on account of the petitioners not having attended any meeting for a period of 12 months due to non-receipt of any notice/communication. 29. From a perusal of the record, it is apparent that during the serie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company. Moreover, when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs. 44. ..The High Court observed that in the petition it had specifically been averred that all the accused persons were responsible and liable for the whole business management of the accused Company, and took the view that the averments in the complaint were sufficient to meet the requirements of Section 141 of the NI Act. 45. As held by this Court in National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] quoted with approval in the subsequent decision of this Court in Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder De ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
