TaxTMI 
TaxTMI 
2020 (12) TMI 412
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.... no averments in the complaint to the effect that they are in charge of and responsible for the conduct of the business of the first accused company. The respondent stated in the complaint that the first accused company is a Private Limited Company. The accused 2 to 4 are the Directors of the first accused company and they are responsible for the management of the first accused company and the first accused company is represented by accused 2 to 4. Further alleged that all the accused issued cheque fraudulently to cheat the complainant and instructed the complainant to present the cheque for collection. Thereafter they instructed banker to stop payment on which the cheques were dishonoured as "payment stopped by drawer". Therefore all the accused persons are liable to be punished under Sections 138 and 142 of NI Act. He further submitted that in the absence of specific allegation in the complaint that the accused persons were in charge of and responsible to the company in the conduct of the business at the relevant time, Directors of the company cannot be prosecuted. Except the above said averments, there is no other specific averments as against each accused to punish them under S....
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....against the petitioners. In support of his contention, he relied upon the following judgments: (i) Pooja Ravinder Devidasani Vs. State of Maharashtra and another reported in (2014) 16 SCC 1. (ii) Indus Airways Private Limited & Ors. Vs. Magnum Aviation Private Limited & Anr. reported in (2014)12 SCC 539. 5. Per contra, the learned counsel for the respondent contended that the respondent is a Private Limited Company and they are manufacturers and exporters of hosiery garments. The first accused is the company and the accused 2 to 4 are Directors. The first accused company is represented by its Directors A2 to A4. The accused had placed several orders for supply of garments with the respondent and also entered into an agreement. In the year 2018, the accused placed orders to the tune of Rs. 2,21,56,088/- for purchasing of garments. As per the statement of account maintained by the respondent, the total outstanding balance amount payable by the accused to the respondent at Rs. 71,31,891/- The said balance amount was against nine purchase orders. As per the purchase order, the respondent dispatched garments worth about Rs. 53,09,530/- and the garments worth about R....
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....thers Vs. State of Gujarat and another in Crl.A.No.251 to 252 of 2020 dated 10.02.2020. Therefore, he sought for dismissal of the quash petitions. 7. Heard Mr.V.Karthick, Senior Counsel appearing for the petitioners, and Mr.J.P.Karunakaran, learned counsel appearing for the respondent. 8. The petitioners are arrayed as A1 to A4 in all the complaints lodged by the respondent for the offence punishable under Sections 138, 141 and 142 of NI Act. According to the respondent complainant, the first accused company is consisting of its Directors / accused 2 to 4 herein, who placed orders for supply of garments with the respondent. On the nine purchase orders, the respondent already supplied garments worth about Rs. 53,09,530/- and the garments worth about Rs. 18,22,361/- are cleared by the Quality Controller Staff of the accused even in the month of August 2018 and garments worth about Rs. 25,02,179/- are ready for inspection by the accused and that apart raw material worth about Rs. 9,15,769/- is kept in the warehouse of the respondent herein. In order to pay the outstanding balance amount, the accused issued 6 post dated cheques as follows: Cheque date Cheque Number Chequ....
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....stered office at above mentioned address and responsible for management of accused company and first accused is represented by the accused No.2 to 4. Out client again re-presented the above cheque on 01.10.2018 but same was again dishonoured and returned on 03.10.2018 with an endorsement of "payment stopped by drawer". In the absence of specific allegation in the complaint in respect of the role played by the Directors and their responsibility in the conduct of the first accused business at the relevant point of time and that the offence was committed by their consent or connivance. In this regard, it is relevant to rely upon the judgment in the case of Aneeta Hada Vs. Godfather Travels and Tours Private Limited reported in (2012) 5 SCC 661, wherein the Hon'ble Supreme Court of India has held as follows: 58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only....
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....he respondent and instructed the respondent to present the same for collection. When the petitioners categorically called upon the respondent to refrain from presenting the cheques and also return the same, the petitioners would not have instructed the respondent to present those cheques for collection. That apart, those cheques admittedly are post-dated one. When there is a dispute in respect of quality of the garments, the petitioners stopped the payment of those cheques. It is also seen that the first petitioner filed suit for claiming damage as against the respondent in CS.No.683 of 2019 before the High Court of Bombay and it is pending for trial. The first petitioner also lodged private complaint before the Judicial Magistrate, Mumbai for the offence punishable under Section 420 of IPC as against the respondent herein. Therefore, the alleged cheques are not issued for any legally enforceable debt by the petitioners to the respondent herein. The petitioners also noted defects in the materials of the respondent herein. 12. Further the payment terms were also revised by them and the alleged cheque was issued as security deposit. After made payment, the cheque which was given a....
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.... the counsel on either side at length. The questions that arise for determination are (i) whether the appellant is liable for prosecution under Section 138 read with Section 141 of the N.I. Act for the alleged offence of dishonor of cheques committed by the default Company?; (ii) whether the High Court was right in dismissing the writ petitions filed by the appellant seeking quashing of the criminal proceedings initiated against her by the Respondent No. 2? 17. There is no dispute that the appellant, who was wife of the Managing Director, was appointed as a Director of the Company-M/S Elite International Pvt. Ltd. on 1st July, 2004 and had also executed a Letter of Guarantee on 19th January, 2005. The cheques in question were issued during April, 2008 to September, 2008. So far as the dishonor of Cheques is concerned, admittedly the cheques were not signed by the appellant. There is also no dispute that the appellant was not the Managing Director but only a non-executive Director of the Company. Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-to-day affairs of the running of its business and only moni....
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....3 SCC 330 observed that 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 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 the accused was in charge of or was responsible to the Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes especially where such statutes create vicarious liability. 10. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and respon....