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2023 (10) TMI 798
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.... engaged in the business of ready-made garments, were having business relations with each other. As stated, the complainant had been supplying the material to the accused since 01.04.2016 on orders being placed by the accused and the accused had always been satisfied from the quality and quantity of the material supplied by the complainant. It was also stated that the complainant had been maintaining the books of accounts in the regular course of business and had been duly crediting the payments made by the accused company in its books of accounts. It was alleged that initially, the accused company had been regular in making the payments against the goods, but eventually, it had started making defaults in payments and as per the books, there was an outstanding amount of Rs. 12,78,510/- as on 02.06.2017. The complainant had made several requests to the accused company to make outstanding payments and ultimately had sent a demand notice on 13.04.2018 vide which the accused persons were directed to clear the outstanding amount. Thereafter, in the first week of May 2018, accused no. 2 i.e. Ashish Mishra had telephonically contacted the complainant company and had asked the AR of the co....
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....ol over the affairs of the company and the powers of the board of directors had got vested with the interim resolution professional. It is stated that though the cheque had got dishonoured prior to the company going into CIRP, it is stated that the offence under Section 138 of NI Act gets completed only after completion of 15 days from service of legal notice and failure to male payment, which had got completed a week after the accused company going into CIRP. It is argued that as per the judgment of Hon'ble Apex Court in P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd. (2021) 6 SCC 258, the word 'proceeding' under Section 14(1)(a) of IBC, 2016 would cover a prosecution under Section 138 of NI Act and thus, present proceedings ought not to be continued. It is also stated that since an FIR had been registered on the complaint of petitioners qua fraud that had happened with the accused company on the date of dishonour of cheque, the learned Trial Court ought to have followed the provision of Section 210 of Cr.P.C. which mandates that when there is a complaint case and police investigation in respect of the same offence pending, the proceedings in complaint case should be stay....
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...., makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.-For the purposes of this section, "debt of other liability" means a legally enforceable debt or other liability." "141. Offences by companies. - (1) If the person committing an offence under 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 ha....
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....r holding of the office and having been guilty of consent, connivance or neglect in the matter of commission of the offence by the company, the person covered by sub-section (1) may, by virtue of the first proviso, escape only punishment if he proves that the offence was committed without his knowledge or despite his due diligence. *** 33. Thus, the legal principles discernible from the aforesaid decision of this Court may be summarised as under:- (a) Vicarious liability can be fastened on those who are in-charge of and responsible to the company or firm for the conduct of its business. For the purpose of Section 141, the firm comes within the ambit of a company; (b) It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole; (c) If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed in regards the law. (d) In construing a complaint a hyper-technical approach should not be adopted so as to quash the same. (e) The laudable object of preventing bouncing of cheques and su....
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.... on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm. c.) Needless to say, the final judgment and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners 'qua' the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal.....
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....as been held the proceedings under Section 138/141 of NI Act can be initiated or continued against the directors of accused company, and moratorium under Section 14 of IBC, 2016 and consequent stay on proceedings shall be applicable only to the corporate debtor/accused company. The relevant observations in this regard are as under: "...Whether natural persons are covered by Section 14 IBC 101. As far as the Directors/persons in management or control of the corporate debtor are concerned, a Section 138/141 proceeding against them cannot be initiated or continued without the corporate debtor - see Aneeta Hada (supra). This is because Section 141 of the Negotiable Instruments Act speaks of persons in charge of, and responsible to the company for the conduct of the business of the company, as well as the company. The Court, therefore, in Aneeta Hada (supra) held as under: "51. We have already opined that the decision in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] runs counter to the ratio laid down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, t....
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....prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove." 102. Since the corporate debtor would be covered by the moratorium provision contained in Section 14 of the IBC, by which continuation of Section 138/141 proceedings against the corporate debtor and initiation of Section 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted, what is sta....
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....ant case..." 11. Similarly, in Narinder Garg v. Kotak Mahindra Bank 2022 SCC OnLine SC 517, a Three-judge bench of Hon'ble Apex Court, while reiterating the principles laid down in P. Mohanraj (supra) and refusing to quash proceedings against director of accused company, held as under: "3. In P. Mohanraj v. Shah Brothers Ispat Private Limited, (2021) 6 SCC 258, a Bench of three-Judges of this Court considered the matter whether a corporate entity in respect of which moratorium had become effective could be proceeded against in terms of Sections 138 and 141 of the Negotiable Instruments Act, 1881 ("the Act" for short). 4. A subsidiary issue was also about the liability of natural persons like a Director of the Company. In paragraph 77 of its judgment, this Court observed that the moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 would apply only to the corporate debtor and that the natural persons mentioned in Section 141 of the Act would continue to be statutorily liable under the provisions of the Act. 5. It is submitted by Mr. Gopal Sankaranarayanan, learned Senior Advocate that the resolution plan having been ....
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....used in the complaint case, the Magistrate shall inquire into or try together the complaint case and the case arising out of the police report as if both the cases were instituted on a police report. (3) If the police report does not relate to any accused in the complaint case or if the Magistrate does not take cognizance of any offence on the police report, he shall proceed with the inquiry or trial, which was stayed by him, in accordance with the provisions of this Code..." 15. The relevant portion of order dated 11.02.2020, vide which the application filed before the learned Trial Court seeking stay of proceedings as per Section 210 of Cr.P.C. was dismissed, reads as under: "...Accused no. 2/applicant entered his appearance through counsel on 13.11.2018 but the accused no. 2 failed to appear in person on three consecutive hearings i.e. on 13.11.2018, 12.03.2019 and 01.06.2019 and it is only on 22.08.2019 accused no. 2 appeared and sought to explore the possibility of mediation and accordingly matter was referred to mediation but the matter was received as unsettled from mediation centre and it is only thereafter on 24.10.2019 the present application was move....