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TaxTMI 
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2022 (11) TMI 1085
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....rned Metropolitan Magistrate (N.I. Act)-03, Rouse Avenue Court, New Delhi. 3. The facts of the case are summarized as under: a. The complainant/respondent Yes Bank Limited is a company engaged in offering wide range of banking services to its clients. Oscar Investments Limited (accused no. 1) is a public listed company, promoters/directors of which are accused no. 2 and 3. b. RHC Holding Pvt. Ltd. happens to be the holding company emanating from Oscar Investments Ltd./accused no. 1. The petitioner in CRL.M.C. 2359/2022 namely Mr. Vishal Arora i.e., accused no. 4, was employed as the Senior Manager Finance in RHC Holding Pvt. Ltd., and the petitioner in CRL.M.C. 2360/2022 namely Mr. Hemant Dhingra i.e., accused no. 5, was employed as Director (Finance) in RHC Holding Pvt. Ltd. Both the petitioners, however, were not part of the Board of Directors. For the ease of operations, the petitioners were appointed as the Authorized Signatories in the bank account of Oscar Investments Limited/accused no. 1. c. On 23.12.2016, accused no. 1 availed credit facility from the complainant bank for a total sum of Rs.5,65,00,00,000/- (Rupees Five Hundred and Sixty Five C....
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....was also replaced as a member of the Asset Liability Management Committee with effect from 17.08.2017. It was further submitted that accused no. 4 also ceased to be an employee of RHC Holdings Pvt. Ltd. with effect from 27.08.2018, and was rather an employee of Hair Rejuvenation and Revitalization Nigeria Ltd. when the Cheques were allegedly dishonoured on 09.01.2020. It is stated that both the accused persons stopped having any association with the accused company post their resignations. It was further stated that in view of the same, petitioners could clearly not have been the person in charge of or responsible for the conduct of day to day business of the accused company in the year 2020. 5. It is stated that accused no. 5 had addressed a letter dated 06.10.2017 to the Board of Directors of RHC Holdings Pvt. Ltd., informing that the cheques signed by him would no longer be valid and a request was made that the said cheques be replaced with ones executed by the Authorised Signatories of the company at the earliest. Accordingly, after the resignation of accused no. 4 also, Mr. Sanjeev Kumar Singhal, Mr. Chandra Shekhar Jha, and Mr. Rajendra Kumar were appointed as the new auth....
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....ard, reliance has been placed on the decisions in Rajeshbhai Muljibhai Patel & Ors. v. State of Gujarat & Anr. (2020) 3 SCC 794 and Bhupesh rathod v. Dayashankar Prasad Chaurasia & Anr. (2022) 2 SCC 355. It is argued that the contentions of the petitioners that they had rendered the cheque undated is also misconceived and legally untenable under the provisions of the Negotiable Instruments Act, 1881, for which reliance is also placed on the decision in Mojj Engineering Systems Ltd. & Ors. v. A.B. Sugars Ltd. 154 (2008) DLT 579. It is further stated that the petitioners were duly authorized to act on behalf of accused company at the time of issuance of cheques in favour of respondent bank towards discharge of the undisputed liabilities towards credit facility. 10. Mr. Vashishth submits that specific allegations and averments have been made against the petitioners in the complaint, and accused persons have been summoned by the learned Trial Court after due application of mind and considering all the material before it. It is argued that as held in catena of judgments, the contentions raised on behalf of the petitioners are triable issues and thus, no mini trial is contemplated at ....
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....section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable 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....
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.... 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 sub-section (2) of Section 141..." (emphasis supplied) 15. In K.K. Ahuja v. V.K. Vohra (2009) 10 SCC 48, the Hon'ble Supreme Court had summarised the position under Section 141 as under: "20. The position under section 141 of the Act can be summarized thus : (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is bec....
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....lity can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the compl....
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.... also the personal guarantor for the Facility. 15. That the Accused persons, were aware of the cheques being issued towards the legally recoverable liability towards the Complainant Bank..." 18. In the present case, the admitted and undisputed facts that emerge from the material on record are that the accused company had availed a credit facility of Rs.5,65,00,00,000/- from the respondent bank, and towards the discharge of liability under the facility, the accused company, through its authorised signatories i.e. the present petitioners, had submitted a declaration along with signed cheques of Rs.200,00,00,000/- and Rs.25,00,00,000/- to the respondent bank on 23.12.2016. Thereafter, the loan agreement was entered into between the accused company and complainant on 17.01.2017. The cheques in question were presented for encashment on 09.01.2020 and the same were dishonoured. 19. The petitioners, however, contend that a blank declaration and undated cheques, signed by them, were forwarded to the complainant bank on 23.12.2016. Thereafter, both the petitioners had subsequently resigned from their positions in the holding company of accused no. 1 in the years 2017 and 2018....
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....ohitbhai Jivanlal Patel v. State of Gujarat in the following words: "In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant­accused....." 22. The Hon'ble Apex Court in Rajeshbhai Muljibhai Patel v. State Of Gujarat (2020) 3 SCC 794 had observed as under: "22. The High Court, in our view, erred in quashing the criminal case in C.C.No.367/2016 filed by appellant No.3Hasmukhbhai under Sec....
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....e Borrower hereby deliver to the Bank, cheque(s) (as detailed in Annexure attached hereto) drawn in favour of the Bank, to discharge Borrower's pecuniary obligations. The Borrower do hereby authorise and empower the Bank/its officers to present the cheque(s) (more particularly described in Annexure I hereto) in terms of Section 20 of the Negotiable Instruments Act 1881 towards payment of our Outstanding Debt Obligations...." 24. To this effect, the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, has observed as under: "33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. 34. If a signed blank che....
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.... thus, cannot be made liable vicariously liable for commission of offence under Section 138. Several documents have been filed on record to establish the said fact. Reliance in this regard was placed upon the decision in DCM Financial Services Ltd. v. J.N. Sareen, (2008) 8 SCC 1. The Hon'ble Apex Court in this case, however, had expressed that the role of respondent/director as signatory to a post-dated cheque was not specifically averred in the complaint and the said plea was raised for the first time before the Supreme Court. The Court had observed as under: "20. The cheque in question was admittedly a post dated one. It was signed on 3rd April, 1995. It was presented only sometimes in June, 1998. In the meantime he had resigned from the directorship of the Company. The complaint petition was filed on or about 20th August, 1998.Intimation about his resignation was given to the complainant in writing by the 1st respondent on several occasions. Appellant was, therefore, aware thereof. Despite having the knowledge, the 1st respondent was impleaded one of the accused in the complaint as a Director Incharge of the affairs of the Company on the date of commission of the offenc....
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....ers have also placed on record their resignation letters, board resolution of the accused company and documents pertaining to their subsequent employments to show that they could not have been the authorised signatories of the accused company at the time the cheques in dispute were dishonoured. However, this Court is of the opinion that the issue as to whether the petitioners had resigned before the presentation of cheques or not is a disputed question of facts and has to be decided on the basis of relevant documents and evidence to be produced at the stage of trial. This is not a case involving a resignation of a director which can be simply verified by this Court by perusing Form 32 issued by Registrar of Companies. 30. The petitioners herein were admittedly the employees in the holding company of accused no. 1 and were its authorised signatories at the time when the credit facility was obtained from the respondent bank. It is also not the case of petitioners that they had informed the respondent about their resignations, rather, they had merely asked the accused company to do the same. Nothing is placed on record to show that the respondent bank was informed by the accused co....