TaxTMI 
TaxTMI 
2022 (1) TMI 102
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....ached the respondent/complainant for venturing in the post production of one Tamil movie "Kochadaiiyaan" and they were informed that lease rights of the film will fetch a minimum guaranteed return of 12% i.e., Rs. 1,20,00,000 on investment of Rs. 10,00,00,000/- and 20% on the sale of the movie's lease rights. 4. Based on that, the complainant entered into a Memorandum of Understanding with the accused company and borrowed a sum of Rs. 10,00,00,000/- and the amount was also released through RTGS. However, the accused committed breach of terms of the agreement and defaulted in payment of the amount to the tune of Rs. 8,20,00,000/- out of the total liability of Rs. 16,90,00,000/-. 5. Earlier, they have given a cheque for a sum of Rs. 5,00,00,000/- and that was dishonoured due to stop payment notice issued by the accused. Thereafter, another cheque has been issued towards discharge of their liability drawn on Indian Overseas Bank, Chennai on 07.05.2015, for a sum of Rs. 3,00,00,000/-. That cheque was presented by the complainant for encashment and the same was returned on 08.05.2015, on the ground of insufficient funds. Thereafter, they issued demand notice to all the accused....
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....Admittedly, the petitioners are the Directors of the first accused company. Now, the contention of the petitioner is that they are not in charge of and responsible for the conduct of the business of the company, merely because they are Directors in the company, it cannot be held that they are deemed to be in charge of and responsible to the conduct of the business of the company. Further, there is no specific averment in the complaint to that effect, a mere bald statement that they are involved directly in the affairs of the company is not sufficient. 10. Before considering the submissions, it is useful to refer to the relevant avernment in the complaint, which reads as follows: "7. The complainant submits that towards the part discharge of the liability to make payment the accused herein issued a cheque bearing number "587788" drawn on Indian Overseas Bank, Near Pondy Bazar Police Station, Chennai - 600017, dated on 07.05.2015 for a sum of Rs. 3,00,00,000/-(Rupees three crores only). The above cheque was presented in The Lakshmi Vilas Bank, 646, Anna Salai, Chennai for clearance. However, the cheque was again returned on 08.05.2015, with a return memo reasoned as "Insu....
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....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 other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-- For the purposes of this section,-- (a) "company" means anybody corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." 14. By virtue of the legal fiction created under Section 141 of the Act, every person who are all in charge of and responsible for the day to day affairs of the company are deemed to have committed the offence. For that, there must be a specific averment in the complaint that those persons who are shown as accused are in charge of and responsible for the conduct of the business of the company at the relevant time. Thus, a basic averment has to be m....
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....nd Others reported in (2015) 1 SCC 103, the Hon'ble Supreme Court has held as follows: "28. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors who are not signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the above-mentioned cases that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. This is a basic requirement. There is no deemed liability of such Directors. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against the Director. That is why this Court in SMS Pharma-(1) observed that the question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Section 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 of the Code which recogni....