TaxTMI 
TaxTMI 
2022 (12) TMI 90
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.... No.1 M/s Elder Pharmaceuticals Ltd., which is a public limited company, duly incorporated under the provisions of Indian Companies Act, 1956 and nos.2,3 and 6 (petitioners) are the Directors/authorized signatories of accused no.1, and the remaining 6 accused persons are responsible for the day to day affairs of the accused no.1 and it is on the alleged representations and requests of the accused no.2 (Alok Saxena), 3 (M.V.Thomas) and 6(petitioner) for and on behalf of the accused no.1, that the complainant had given Rs.25,00,000/ (Rupees Twenty Five Lacs) only as inter corporate deposit (loan) vide cheque No.083092 dated 05.03. 2012 drawn on IDBI Bank for a period of 120 days and accordingly accused no.3 (M.V.Thomas) had executed a demand promissory note. The complainant has further alleged that on the due date, M/s Elder Pharmaceuticals (accused no.1) had issued a cheque no.0302 33 for Rs.25,00,000/ towards the repayment of the inter corporate deposit and cheque no.030232 towards the remittances of interest on the deposit amounting to Rs.2,08,695 both dated 30.09.2014 drawn on ICICI Bank, Nariman Point Branch, jointly signed by accused no.2 (Alok Saxena), 3 (M.V. Thomas) respecti....
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....ance against the company as well as the other accused persons including this petitioner. He draws the attention of the Court to the complaint and submits that in the complaint itself there is averment that accused nos.2,3 and 6 are the Directors of the company and accused nos.4,5,7,8,9 and 10 are responsible for the day to day affairs of the company accused no Relying on this averment, he submits that by way of evidence on affidavit which has been brought on record by supplementary affidavit, it has been alleged that the petitioner was looking after the day to day affairs of the company and the learned court has taken cognizance against the petitioner. He took the Court to section 141 of the Negotiable Instruments Act, 1881 and submits that vicarious liability cannot be fastened against the petitioner under section 141 of the Negotiable Instruments Act. To buttress his argument, he relied in the case of Ashutosh Ashok Parasrampuriya and Another v. Gharrkul Industries Pvt. Ltd. and Others , reported in 2021 SCC OnLine SC 915 and relied on paragraph no.21 of the said judgment which is quoted hereinbelow: "21. After so stating, the Court analysed Section 141 of the NI Act and....
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.... more particulars about the role of the Director in the complaint. It may do so having come 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 been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm twisting tactics, the High Court 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 evi....
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....ld have undertaken further enquiry and would have tried to find out what was the legal status of the firm on the date of the commission of the offence and what was the status of the respondent in the firm. The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned." He further submits that even if the Director is not the signatory of the cheques, in the attending facts and circumstances he has to reply the notice under section 138 re ad with section 141 of the Negotiable Instruments Act, 1881. To buttress his argument, he relied in the case of "Ashutosh Ashok Parasrampuriya and Another v. Gharrkul Industries Pvt. Ltd. and Others"(supra). Paragraph nos. 25 and 27 of the judgment in case of "Ashutosh Ashok Parasrampuriya and Another v. Gharrkul Industries Pvt. Ltd. and Others"(supra) are quoted hereinbelow: "25. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors who are not the signatories to the cheques or who are not Managing Directors or Joint Man....
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....f would usher in the element of their acting for and on behalf of the company and of their being in charge of the company. In Gower and Davies' Principles of Modern Company Law (17^th Edn.), the theory behind the idea of identification is traced as follows: "It is possible to find in the cases varying formulations of the underlying principle, and the most recent definitions suggest that the courts are prepared today to give the rule of attribution based on identification a somewhat broader scope. In the original formulation in Lennard's Carrying Company case Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co . Ltd., [1915] AC 705 (HL)] Lord Haldane based identification on a person 'who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation'. Recently, however, such an approach has been castigated by the Privy Council through Lord Hoffmann in Meridian Global case Meridian Global Funds Management Asia Ltd. v. Securities Commission, (1995) 2 AC 500 (PC)] as a misleading 'general metaphysic of companies'. The true question in each case was who as a m atter of construction of the statute in question, ....
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....t to show that at the relevant point of time the appellant and the other are not alleged to be persons in charge of the affairs of the Company. Obviously, the complaint refers to the point of time when the two cheques were issued, their presentment, dishonour and failure to pay in spite of notice of dishonour. We have no hesitation in overruling the argument in that behalf by the learned Senior Counsel for the appellant." On these grounds, he submits that the petition is misconceived one and this Court, at this stage, may not interfere under section 482 Cr.P.C. Mr. Ojha, the learned counsel appearing on behalf of the respondent Stat e submits that the learned court has rightly taken cognizance. In view of the above submission of the learned counsels appearing on behalf of the parties, the Court has gone through the materials on record and finds that admittedly, the petitioner was the Executive Director at the time of issuing of the cheque. In paragraph no.3 of the complaint, it has been clearly averred that the accused nos. 2, 3 and 6 are the Directors of the company and accused nos.4,5,7,8,9 and 10 are responsible for the day to d ay affairs of the company. Thus, in the c....
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.... 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 any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." On perusal of this section, it is crystal clear that vicarious liability under sub section 1 or 2 of section 141 of the Negotiable Instruments Act can be fastened if the person is having the control over the day to day affairs of the company. Looking to the explanation of the said section, it is crystal clear that the firm or the company are required to be made an accused in the complaint and the company has already been made accused in the case in hand , however, such vicarious liability arises only when the company or the firm commits offence as primary offence. In the case in hand, in the complaint it has been stated that this petitioner was only Director and accused nos.4,5,7,8,9 and 10 are made to look after day to day affairs of the company and other accused persons aga....