TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 816
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.... for the offence punishable under Section 138 of the Negotiable Instruments Act as against the same accused persons in which the petitioner is arrayed as A3. 4. The case of the complainant is that the first accused is the private limited company indulged in the business of textile. A2 and A3 are the present Directors and they are handling the day-to-day affairs of the company. They are personally responsible for the acts of commission and omission of the first accused company. One Mr.P.Padmanabhan was the founder and Managing Director of the first accused company. During the third week of June 2019, A1 and A2 availed a short term financial assistance to the tune of Rs.50 lakhs to meet some imminent needs of the company and other requirements. The second accused is the wife of the said P.Padmanabhan. Accordingly, the first accused represented by the second accused, borrowed loan from the defacto complainant. In order to repay the same, they issued cheques signed by the husband of the second accused, who is being the authorized signatory of the first accused company. The post dated cheques were issued on the date of borrowing. The authorized signatory of the cheque was the Managing ....
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....38 of the Negotiable Instruments Act is a company, every person who at the time of the commission of the offence, was in charge of and was responsible for the conduct of the business of the company shall be deemed to be guilty. Admittedly, the petitioner is one of the Directors of the first accused company at the time of presentation of all the cheques for collection. That apart, the petitioner had full knowledge about the first accused company transactions between the company and the respondents herein. Therefore, he is liable to be punished for the offence under Section 141 of the Negotiable Instruments Act. He further contended that all the grounds raised by the petitioner has to be gone into by way of trial before the Trial Court, since all are mixed questions of fact and it cannot be considered under Section 482 of Cr.P.C., in a quash petition. In the complaint there are specific allegations as against all the accused persons to attract the offence under Sections 138 and 141 of the Negotiable Instruments Act. In fact, the respondents categorically averred in the complaint that his father the said P.Padmanabhan issued cheque as a Managing Director and authorized signatory of th....
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....es, the petitioner was neither a Director of the first accused company nor authorized signatory of the cheques. Therefore, simply because a person is a Director of a company, does not make him liable under the Negotiable Instruments Act. Every person connected with the company will not fall into the ambit of the provision. 10. Time and again, the Hon'ble Supreme Court of India and this Court repeatedly held that only those persons who were in charge of and were responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the company at the relevant point of time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act. 11. That apart, a perusal of the impugned complaint revealed that there is no specific averment to the extent that the petitioner shall have been at the helm of affairs of the company, one who actively looks after the day-to-day activities of the company and particularly responsible for the conduct of its business. Therefore, the provision under Section 141 is a pe....
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....iable 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 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....