TaxTMI 
TaxTMI 
2022 (3) TMI 583
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....n business of manufacturing and trading in signaling equipments, industrial batteries and other equipments. The accused no. 1 is also a public limited company incorporated under the Companies Act, 1956 having its registered address at "Techpro Towers" Plot No. 11-A 17, 5th Cross Road, SIPCOT IT Park, Siruseri, Chennai-603103, Tamil Nadu and the other accused are the Directors/Executive Directors of the company/accused no. 1 and are responsible for the acts and deeds of the company/accused no. 1. The accused no. 1 has placed a purchase order bearing no. GET/11-009/12-13/362 dated 4th July, 2012 on the complainant at Administrative Office of the complainant at A-34, Sector-59, Gautam Budh Nagar, Noida-201301 Uttar Pradesh for the supply of two sets of Battery Bank, Charger along with accessories and the total amount of the abovementioned purchase order including taxes and duties was Rs. 4,58,42,880.00 (Rupees Four Crores Fifty Eight Lakhs Forty Two Thousand Eight Hundred Eighty only). The complainant supplied one set of battery bank along with its relevant accessories to the accused at their site on 25.4.2013 as per Purchase Order. The accused issued cheques bearing nos. 404847 and 4....
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....be held reliable for dishonour of any cheque issued by other Managing Directors. The applicant has not signed the dishonoured cheques on behalf of company nor he is authorized signatoree of the company. The O.P. No. 1 has merely implicated the applicant without assigning any specific role to the applicant in the execution of dishonour of the cheques with intention of harassing the applicant. The O.P. No. 1 has not made any specific averment against the applicant as to the part played by him in the whole transaction. It is further contended that merely being a Director in a company it is not sufficient to make the applicant liable under section 141 of the N.I. Act. For imputing liability on the applicant the O.P. No. 1 ought to have brought incontrovertible material on record to show that the applicant is incharge of and responsible for the conduct of affairs of the company. In the absence of such material and in the light of general averments the applicant can not be prosecuted. Learned counsel placed reliance on the following rulings on the aforesaid points: 1. K. Srikanth Singh V. North East Securities Limited (2007) 12 SCC 788 2. DMC Financial Services Limited V. J.N. Sareen....
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....e fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. (b) whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors of Joint Managing Director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against." The Hon'ble Supreme Court in para 4 and 8 made the following observations: "(4) In the present case, we are concerned with criminal liability on account of dishonour of cheque. It primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another....
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....s, which is Chapter II. Sections 291 to 293 refer to powers of Board of Directors. A perusal of these provisions shows that what a Board of Directors is empowered to do in relation to a particular company depends upon the role and functions assigned to Directors as per the Memorandum and Articles of Association of the company. There is nothing which suggests that simply by being a director in a Company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the Company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the Company who may be made responsible for day-to- day functions of the Company. These are matters which form part of resolutions of Board of Directors of a Company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculia....
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.... in negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for 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 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 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 signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act ....