TaxTMI 
TaxTMI 
2022 (8) TMI 870
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....Synthetics Limited (accused No.1) is a company incorporated under the Companies Act, 1956. The applicants herein, Anil Kumar Singhal (accused No.4) and Meenu Maheshwari (accused No.5) are the Directors of Gupta Synthetics Limited (accused No.1), apart from Mohan Gupta (accused No.2) and Prakash Gupta (accused No.3). Avinash Shah (accused No.6) is the company secretary. b] ING Vysya Bank Limited, which merged with Kotak Mahindra Bank Limited, the complainant herein ("the Bank") had extended various financial facilities to Gupta Synthetics Limited (accused No.1). A proceeding, Original Application No. 114 of 2012, was filed by ING Vysya Bank Limited before Debt Recovery Tribunal, Mumbai (DRT) for recovery certificate. Post merger of the ING Vysya Bank with Kotak Mahindra Bank, the complainant Bank instituted a Company Petition No. 184 of 2016 in this Court for winding up of Gupta Synthetics Limited (accused No.1). c] In Original Application No. 114 of 2012 before the DRT consent terms were executed between the complainant and the defendants including accused Nos. 1 to 3. It was inter alia aknowledged that defendants were jointly and severely liable to pay to the com....
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....plicants by invoking the provisions contained in section 141 of the Act, 1881. Nor there is any other material to show that the applicants had played any part in the commission of the alleged offence or the underlying transactions. The applicants contend that the learned Magistrate has mechanically issued the process against the applicants without properly appreciating the facts that the applicants were independent Directors of the applicant No. 1 company and were not the signatories to either the consent terms or the cheques which were allegedly dishonored and, in fact, had resigned from the post of Directors of accused No. 1. Hence, the prosecution of the applicants is a sheer abuse of the process of the Court. 5. An affidavit in reply is filed on behalf of the respondent No. 2/ complainant to controvert the assertions in the application. 6. I have heard Mr. Aadil Parsurampuria, learned counsel for the applicants, Mr. Ansh Karnawat, learned counsel for respondent No. 2 and Mr. A.R. Patil, learned APP for the State. With the assistance of the learned counsels for the parties, I have perused the averments in the application, contentions in the affidavit in reply and the mater....
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....s vs. Special Judicial Magistrate and Others AIR 1998 SC 128. 13] Municipal Corporation of Delhi vs. Purshotam Dass Jhunjunwala and Others AIR 1983 SC 158. 14] State of U.P. and Others vs. Synthetics and Chemicals Ltd. and Others (1991) 4 SCC 139. 15] Jaydeo vs. State of Maharashtra and Others 2006(2) MhLj 497. 16] State of Assam vs. Ripa Sarma AIR 2013 SC 3588 17] Hyder Consulting (UK) Ltd. vs. Governor, State of Orissa AIR 2015 SC 856. 18] Ramrajsingh vs. State of M.P. and Others 2009 (2) ACR 1650 (SC). 19] Yogendra Pratap Singh vs. Savitri Pandey AIR 2015 SC 157. 8. Per contra, Mr. Ansh Karnawat, learned counsel for respondent No. 2 stoutly submitted that the instant application is itself an abuse of the process of the Court. It was urged that the applicants have resorted to the device of selective reading of the averments in the complaint and placing reliance on the documents which suit the case of the applicants and, in the process, deliberately suppressed vital facts and documents, which bear upon controversy. Mr. Karnawat would submit that there are more than adequate averments in the complaint which make out ....
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....vice of demand notice and non-payment of the amount covered by the cheques within the statutory period, are not much in contest. 12. What was sought to be put in contest on behalf of the applicants was the claim of the complainant that the applicants were in-charge of and responsible to the conduct of the business of accused No. 1 company at the time of commission of the alleged offences. Laying emphasis on the execution of the consent terms (to which the applicants were not parties), the learned counsel for the applicants urged with tenacity that the commission of the alleged offences in respect of the cheques which were issued pursuant to the said settlement cannot be attributed to the applicants even remotely. 13. The legal position as regards the nature of the liability of the persons who are sought to be prosecuted by invoking the provisions contained in section 141 of the Act, 1881 is fairly crystallized. Under section 141 of the Act, 1881 when an offence is committed by the company, apart from the company, every person who at the time of the commission of the offence was in-charge of and responsible to the conduct of the business of the company shall also be deemed to ....
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....sible 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 and will be covered under subsection (2) of Section 141. 16. While arriving at the aforesaid conclusion the Supreme Court had observed in paragraph 10 as under: 10. The c....
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....t may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director. (emphasis supplied) 18. In the light of the aforesaid exposition ....
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.... and liable for the day-to-day operations and management of the accused No. 1 and were at all relevant times the persons involved in routine, business, taking all strategic decisions and were overall in charge of and responsible for conducting the day-to-day affairs and managing the activities and functioning of accused No. 1, thereby the acts, things, matters, business done by any of accused Nos. 2 to 6 for and on behalf of accused No. 1 is binding on all accused including accused No.1 and they are responsible, liable for the any acts, things, matters, business done by any of them, all of them for and on behalf of accused No. 1, at the relevant time. 20. In paragraph 11, the complainant asserts as under:- 11] ... ..... The accused Nos. 2 to 6 were all actively involved in the entire transaction of settlement with the complainant company. 21. In the context of the consent terms, the complainant avers as under:- 14] ... ...... I say that accused Nos. 1 to 6 were all aware of the said terms and conditions and in fact the accused No. 1 also made payments of part of the installments of the consent terms to the complainant company. The accused No. 1 has also disc....
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.... company were responsible to the business of the company and they were involved in the business of the company and responsible for all the affairs of the company. In the backdrop of such averments, the Supreme court declined to interfere with the order of High Court dismissing the application under section 482 of the Code. The Supreme Court adverted to the previous pronouncement in the case of S.M.S. Pharmaceuticals (supra) and the later judgments and reiterated the law as under:- 23. In the light of the ratio in S.M.S. Pharmaceuticals Ltd. (supra) and later judgments of which a reference has been made what is to be looked into is whether in the complaint, in addition to asserting that the appellants are the Directors of the Company and they are incharge of and responsible to the Company for the conduct of the business of the Company and if statutory compliance of Section 141 of the NI Act has been made, it may not open for the High Court to interfere under Section 482 CrPC unless it comes across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have be....