2024 (9) TMI 1488

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....he issue involved is also the same, with the consent of the parties, all the petitions are being disposed by a common Judgment. 3. The facts, in brief, leading to the filing of the present petitions are as under: a) The Petitioners in the present Petition are the wives of directors in the Company M/s RBT Pvt Ltd. The Respondent/complainant i.e., New India Color Company Limited, is a company incorporated under provisions of the Company Act, 1956 and is a leading distributor for Dyes and Chemicals for the Textile Industry. The Respondent Company has supplied certain materials to M/s RBT Private Limited, the Company in which the Petitioners' husbands are directors. The Company, M/s RBT Private Limited, had approached the Respondent Company to supply various materials for day-to-day running of the Petitioners' Company. Pursuant to various purchase orders, the Complainant's Company had supplied various material/products as required by the M/s RBT Private Limited. The M/s RBT Private Limited had subsequently raised invoices which were accepted without raising any dispute regarding the quantity and quality or the invoicing of the said products. b) The Complain....

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....tly contends that the Respondent has failed to establish any links between the Company, M/s RBT Private Limited, and the Petitioners. He further contends that the Petitioners were not the Directors of the Company and have no relation whatsoever with the running of the Company and for reasons only known to the Respondents, the Petitioners have been arrayed as accused in the present complaints. He further contends that no criminal liability can be fostered on the Petitioners as the cheque in question do not bear the signature of the Petitioners and the Petitioners are nowhere associated with the running of the debt bearing Company. 6. Per contra, learned Counsel for the Respondent states that the cheque in question was issued by the accused persons in discharge of their liability in lieu of goods supplied by the Respondent Company. She further states that the Petitioners continue to be the managers of M/s RBT Private Limited and even at the time of issuance of cheque, the Petitioner was a Director and the Petitioner was himself a manager of the M/s RBT Private Limited and stresses on the point that when the offence occurred, the Petitioner was managing the day-to-day affairs of th....

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....h postulates that if the persons 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. Section 141 (2) of the NI Act stipulates that if it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company then such 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. 11. Other than showing the Petitioners herein as Managers in the complaint, there is no specific averment regarding their specific role in the functioning of the Accused No. 1 Company. It has also not been mentioned in the complaint that the Petitioners have ever interacted with the Petitioners herein in the transaction or not. The nature of averments that are required for a Director would also ap....

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....D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 : AIR 1971 SC 2162], this Court observed that a person "in charge of a business" means that the person should be in overall control of the day-to-day business of the Company. 19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri) 453]). 20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company. 21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha Ramamurthy v. R.B.S. Channabasavaradhy....

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....i) 580 : (2015) 1 SCC (Civ) 433] on which the learned counsel for the respondents has heavily relied, this Court at para 34.3 held: (SCC p. 127) "34.3. In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of 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 tactic, the High Court may quash the proceedings. It bears repetition to s....

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....text of sub-section (1) of Section 141 of the NI Act. The allegation that they are in charge of the Company is neither here nor there and by no stretch of the imagination, on the basis of such averment, one cannot conclude that the allegation of the second respondent is that the appellants were also responsible to the Company for the conduct of the business. Only by saying that a person was in charge of the Company at the time when the offence was committed is not sufficient to attract sub-section (1) of Section 141 of the NI Act. 24. Sub-section 1 of Section 141 reads thus: "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 had exercised all due dil....