TaxTMI 
TaxTMI 
2017 (10) TMI 1659
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....ing Nos. 007906 dated 01.07.2015 of Rs. 10,00,000/-, cheque No. 007907 dated 01.04.2015 of Rs. 76,290/- and cheque No. 007908 dated 01.07.2015 of Rs. 38,146/- respectively in discharge of their liabilities towards the intercorporate deposit and the cheques upon presentation were returned unpaid with the endorsement 'exceeds arrangement'. Notice of dishonour was issued on behalf of the opposite party No. 2 but the value of the dishonoured cheques remained unpaid within the stipulated time frame. Hence, the impugned prosecution was instituted not only against accused No. 1-company and the Managing Director and signatory of the cheques but also against the petitioners who were variously described as part-time, whole-time and additional directors of the said company, 3. Petitioners argues that the requisite averments to implicate the petitioners vicariously is not disclosed in the petition of complaint. Reliance has been placed in Tamil Nadu News Print & Papers Ltd. v. D. Karunakar & Ors, 2015 (4) JCC [NI] 286 : (2016) 6 SCC 78, SMS Pharmaceuticals Ltd. v. Neeta Bhalla 2005 (3) JCC [NI] 203 : (2005) 8 SCC 89 and K.K. Ahuja v. V.K. Vora & Anr. 2009 (3) JCC [NI] 194 : (2009) 1....
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....erely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the induct 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 the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminatin....
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....onsent, connivance or negligence." This view has again been reiterated in Tamil Nadu News Print (supra). 9. Applying the aforesaid ratios to the averments in the petition of complaint, I find that although the petitioners have been variously described as director/additional director of the accused No. 1-company and it has been alleged that they were responsible and liable for the day-to-day business and the acts of the accused company' there is no whisper in the complaint that they were 'inch arge of the affairs of the company' at the materials point of time. It has been strenuously argued that a whole time director by virtue of his position is to be deemed to be in-charge of the affairs of the company and reference has been made to Sections 2(51) and 2(60) of the Companies Act which read as follows : "2(51): "key managerial personnel", in relation to a company, means- (i) the Chief Executive Officer or the managing director or the manager, (ii) the company secretary; (iii) the whole-time director; (iv) the Chief Financial Officer; and (v) such other officer as may be prescribed. 2(60) : officer who is....
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.... the company for the running of its day-to-day business at the time of commission of offence. Merely because a person was a whole time, director of the company, no statutory presumption cannot be made under Section 141 of the Negotiable Instruments Act that he is incharge of the affairs of the company. It may be profitable in this regard to note the observations of the Apex Court in K.K. Ahuja (supra) wherein the aforesaid expression 'in-charge of the affairs of the company' has been explained and it has, inter alia, been held as follows : "22. Section 141 uses the words "was in charge of, and was responsible to the company for the conduct of the business of the company". It is evident that a person who can be made vicariously liable under sub-section (1) of Section 141 is a person who is responsible to the company for the conduct of the business of the company and in addition is also in charge of the business of the company. There may be many Directors and secretaries who are not in charge of the business of the company at all. The meaning of the words "person in charge of the business of the company" was considered by this Court in Girdhari Lal Gupta v. D.H. Meht....