TaxTMI 
TaxTMI 
2024 (7) TMI 535
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....ta HUF vs M/s KSBL Securities Limited & Ors.' pending before the learned Metropolitan Magistrate, Patiala House Court, New Delhi. 2. The subject proceedings arise out of the complaint filed by the respondent/complainant wherein it has been alleged that M/s KSBL Securities Ltd./accused company had approached the respondent to enter into business transaction seeking investment in the nature of term loan. Accordingly, the parties entered into a Memorandum of Understanding ('MOU') dated 10.04.2018, wherein it was specifically stated that the investment would partake the character of a term loan alongwith capital protection. It was further agreed that the loan of Rs.30 lacs would carry fixed interest @ 15% per annum, which would be disbursed ....
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....and in this regard, a communication addressed to the Board of Directors has been placed on record. 4. The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra. In S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. (2005) 8 SCC 89, the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability. The relevant extract of the said judgement reads as under:- "xxx 8. The officers responsible for conducting the affairs of companies are generally referred to as directors, managers, secretaries, managing directors, etc. What is required to be considered is: Is it sufficient to simply....
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....isfies those requirements... xxx 10. ...What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action... The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the b....
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....Ltd. & Ors. 2021 SCC OnLine SC 915, and most recently in Susela Padmawathy Amma v. Bharti Airtel Ltd. 2024 SCC OnLine SC 311. What arises from the conspectus of decisions provided above is that while a Director of a company indeed holds a special/unique position in the company, having authority to take decisions, however, the mere nomenclature or mention of an individual as a Director of a company cannot itself be the basis for bringing him/her into the fold of Section 138 by assistance of Section 141 NI Act. 6. Section 141 of the NI Act dealing with offences by companies, contains the provision related to vicarious liability of Director and reads as under:- "141. Offences by companies- (1) If the person committing an offence....
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....to be vicariously liable, the complainant has to show that the said Director was indeed associated with the day-to-day affairs and management of the business. A Director cannot be arrayed as an accused on the basis of a cursory statement or vague averment. What would be appropriate pleadings/averments would be determined on a case-to-case basis. 8. Insofar as the legal position regarding quashing of complaints filed under Section 138 NI Act against the Directors in exercise of the powers conferred under Section 482 Cr.P.C. is concerned, the same has been discussed in detail by the Supreme Court in Sunita Palita v. Panchami Stone Quarry (2022) 10 SCC 152 and S.P. Mani & Mohan Dairy v. Snehalatha Elangovan (2023) 10 SCC 685. In S.P. Mani (....
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.... complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court. xxx" 9. From the above-mentioned cases, it can be seen that if any Director seeks quashing of a complaint under Section 138 NI Act or any process issued therein, then he would have to show that the complaint is bereft of the appropriate pleadings/averments which would bring him into the fold of the rigours of Section 141 NI Act and in this regard, he would have....