TaxTMI 
TaxTMI 
TaxTMI 
2013 (12) TMI 1651
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....re appointed as Additional Directors on 25.03.2011. However, there were not attributed any role or duties and thus they were not a part of day-to-day affairs or conduct of NKG Steel (India) Pvt. Ltd. Respondent no.1 gave Naresh Gupta a loan of ₹ 10 lakhs by RTGs transaction for a period of four months. The petitioners were not a part of the monetary deal nor had any knowledge about the same. After four months, a cheque signed and issued by NKG Steel (India) Pvt. Ltd in favour of respondent no.1 for an amount of ₹ 10 lakhs was given but the same was dishonoured on two occasions upon presentation with the remarks "Insufficient funds" and "Stop Payment" respectively. Again two fresh cheques were signed by Naresh Gupta for an amount of ₹ 5 lakhs each and were issued in favour of the proprietorship firm of respondent no.1 in lieu of previously dishonoured cheque. Both the cheques were returned unpaid with the remark "Stop Payment". The petitioner received a legal notice sent by respondent no.1 wherein it was falsely alleged that the petitioners along with the other Directors of NKG Steel (India) Pvt. Ltd were responsible for making false promises and giving assurances ....
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....Managing Directors of the company nor were concerned with the day to day affairs of the company nor were signatories to the cheques, as such in the absence of any specific averments against them, the summoning order, complaint and proceedings emanating therefrom are liable to be quashed. 7. Per contra, it was submitted by learned counsel for respondent no.1/complainant that there are specific allegations against the petitioners in the complaint itself, inasmuch as, the petitioners along with accused no.2 NKG Steel (India) Pvt. Ltd had approached the complainant for business loan of ₹ 10 lakhs, as such the complainant paid the amount of ₹ 10 lakhs. Thereafter a cheque was given by accused no.2 in discharge of the liability which was dishonoured on presentation. The complainant approached the respondents. Thereafter a meeting was organised which was attended by the petitioners and the cheque was returned and in lieu of dishonoured cheque, fresh cheques were given on the assurance given by the accused persons that the same would be encashed on presentation. However, the same were again dishonoured with the remarks "Stop Payment", as such it was submitted that in view of t....
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.... 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 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 oth....
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....d to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a. cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under Sub-section (2) of Section 141." 12. It was also observed:- "10..............The liability arises from being in charge of....
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....ct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under Sub-section (2) of Section 141. (iii) In the case of a Director, secretary or 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 a....
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....ough RTGS transaction in favour of accused company as business loan on the promise made by the accused to return the same within 4 months to the Complainant. 3. That in discharge of their aforesaid legally enforceable debt and liability, the accused issued a cheque bearing No.014640, drawn from Axis Bank, Geeta Ratan Jindal School, Sector-7, Rohini, New Delhi branch, duly signed by the accused no.2 in the favour of aforesaid proprietorship firm of the Complainant for the amount of ₹ 10,00,000/-(Rupees Ten Lakhs). However, the said cheque was returned unpaid by the accused's bank on two occasions on its presentation by the complainant before his bank i.e. Bank of Baroda, Vishakha Enclave, New Delhi with the remarks of "Insufficient Funds_ and "Stop Payment" respectively. Thereafter the complainant approached the accused No.2 & 3 at their aforesaid address at Rohini and stated about the fate of aforesaid cheque. Both the accused No.2 & 3 assured the complainant to repay the aforesaid amount of ₹ 10 lakh to the complainant and thereafter a meeting with the accused no.2, 4,5 and 6 and the complainant was organized at 900, Best Sky tower, Netaji Subhash Place, Wazirpur, New....