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TMI Blog2014 (10) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... d in what manner the petitioner was incharge or was responsible to the accused company for the conduct of its business. In a catena of decisions, it was held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors showing as to how and in what manner, the Directors were responsible for the conduct of the business of the company. The facts of every case have to be analyzed on the touchstone of the various judgments of the Supreme Court on the law on vicarious liability under Section 141 of the NI Act. In the instant case, there is no specific allegation against the petitioners that they were responsible and incharge of day-today affairs of the business of the company and therefore, the petitioners are not covered under proviso to Section 141 of the NI Act. Conclusion - For making Directors liable for the offenses committed by the company under Section 141 of the Act, there must be specific averments against the Directors showing as to how and in what manner, the Directors were responsible for the conduct of the business of the company. The impugned order is set aside - petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are independent non-executive Directors of the accused company namely M/s. GEI Industrial Systems Ltd. and are not associated with the accused company in any manner. The same is mentioned in Form-32 which was filed with the Registrar of Companies. 7. Learned senior counsel for the petitioners have pointed out that the co-accused, who were accused Nos. 7, 8 and 10 in the complaint filed a petition under Section 482 Cr.P.C. for quashing of the complaint which was dismissed by this Court vide order dated 14.12.2012. The said accused persons filed Special leave to appeal (Crl.) No. 2770/2013 arising out of order dated 14.12.2012 in Crl.M.C. No. 4250/2012. Vide order dated 04.08.2014, the Hon'ble Supreme Court has quashed the complaint(s) bearing CC Nos. 422/1/12 and 423/1/12 qua accused Nos. 7, 8 and 10. 8. On the other hand, learned counsel for the respondent urges that the accused persons are responsible for day-to-day affairs of the accused company and the offence committed is within the knowledge of the petitioners. 9. I have given thoughtful consideration to the submissions made by learned counsel for the petitioners as well as counsel for the respondent. I have also peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the ambit of the provision and only those persons who were incharge of and responsible for the conduct of the business of the company at the time of commission of an offence, shall be liable for criminal action. It follows from the fact that if a Director of company who was not incharge of and was not responsible for the conduct of the business of the company at the relevant time will not be liable for a criminal offence under the provisions of Section 141 of the Act. 12. Section 141 of the Act 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 and that the Director (arrayed as an accused) was incharge of and responsible for the conduct of the business of the company without anything more as to the role of the Director. The complainant should spell out as to how and in what manner the petitioner was incharge or was responsible to the accused company for the conduct of its business. This is in consonance with the strict interpretation of penal statutes especially where special statutes create vicarious liability. 13. In a catena of decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cast criminal liability, the section would have said so. Instead of 'every person' the section would have said 'every director, manager or secretary in a company is liable'..., etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. 11. A reference to sub-section (2) of Section 141 fortifies the above reasoning because sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in the commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant Para 9 of the complaint reads as under:- "That the accused No. 2 being the Chairman-cum- Managing Director, the addressee No. 3, 4 and 5 being the Whole Time Directors, the accused No. 6 as Nominee Director, accused Nos. 7, 8, 9, 10, 11 being the Directors, the accused No. 12 being the Additional Director, and the accused No. 13 being the Company Secretary of accused No. 1 company, at the time placement of the Inter Corporate Deposit, issuance of the impugned cheques as well as on the date of dishonour of the cheques and thereafter also were/are in full effective control of all the business affairs and day to day conduct of business of accused No. 1 company, therefore, the accused Nos. 2 to 13 are also deemed to have committed the offence, punishable under Section 138 and 141 of the Negotiable Instruments Act, and are liable to be prosecuted and punished, along with accused No. 1, in accordance with law. The complainant submits that the offence has been committed with the full knowledge, consent, active connivance of accused No. 2 to 13, therefore, under Section 5 of the Companies Act, 1956 the said accused even otherwise also are liable to be prosecuted and punished for c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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