TaxTMI 
TaxTMI 
2020 (7) TMI 840
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....be exposited as follows : the respondent no. 2 as the complainant (hereinafter also referred as "the complainant", at places, for easy reference) has instituted the complaint before a Court of Chief Judicial Magistrate, Kamrup (Metro), Guwahati on 03.12.2018. In the said complaint, the complainant has arraigned the respondent no. 3 as the accused no. 1. The respondent no. 3 (hereinafter also referred as "the accused no. 1 company", at places, for easy reference) is a company incorporated under the Companies Act. That apart, the complainant has arraigned 4 (four) Directors of accused no. 1 company as accused no. 2, accused no. 3, accused no. 4 and accused no. 5 respectively. The petitioner no. 1 and the petitioner no. 2 are arraigned as accused no. 3 and accused no. 4 respectively in the complaint. In this criminal petition, while the accused no. 1 company has been impleaded as the proforma respondent no. 3, the other two accused - accused no. 2 & accused no. 5 - are impleaded as proforma respondent no. 4 and proforma respondent no. 5 respectively. In transpires that in the complaint, the complainant, an individual, is represented by one of her employees. 3. In order to appreciate ....
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....The learned trial court took cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 ("the NI Act", for short) on the complaint and after perusal of the complaint, initial deposition in the form of affidavit and documents exhibited therewith, by its order dated 07.02.2019, issued process against all the 5 (five) accused persons, mentioned herein above, to stand trial for the offence under Section 138, NI Act. 6. I have heard Mr. S. Sancheti, learned counsel for the petitioners; Ms. S. Jahan, learned Additional Public Prosecutor for respondent no. 1, State of Assam; and Mr. J.C. Gaur, learned counsel for respondent no. 2-complainant. I have also heard Mr. N. Sharma, learned counsel for the proforma respondent no. 5. None has appeared for respondent no. 3 and respondent no. 4 despite service of notice. 6.1. The learned counsel for the petitioners has submitted that the petitioners have been wrongly arraigned as accused no. 3 and accused no. 4 in the complaint as they had resigned as Directors of the accused no. 1 company at a date anterior to the cause of action for filing of the complaint for the offence under Section 138 of the NI Act. It is submitted ....
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....5 that the proforma respondent no. 5 had been inducted as a Director of the accused no. 1 company on 22.09.2017 and she has been participating in the trial. As the issue involves questions of fact the same can be determined and adjudicated during the stage of trial. 6.4. The learned Additional Public Prosecutor has submitted that the State is a formal party as evidently, the complaint has raised a private dispute which has arisen out of business transactions between them. 7. I have given due consideration to the submissions made by the learned counsel for the parties. I have also perused the materials available on record and the decisions cited by the parties. This criminal petition is taken up for consideration along with Criminal Petition no. 719/2019, as the issue involved in both the petitions is same and the accused persons arraigned are the same. 8. As the provision of Section 138 of the NI Act is of utmost relevance, the same is quoted hereunder : - 138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of ....
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.... amount of cheque or with both. Thus, under Section 138 of the NI Act, where a cheque issued by the drawer of the cheque in discharge of any debt or any other liability is returned by the bank unpaid, because of the amount standing to the credit of that account is insufficient or it exceeds the arrangement made with the bank to honour the cheque, the said accused person is deemed to have committed the offence. 10. As regards compliance of other conditions, the complainant is required to present the cheque to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. In the event of dishonour of the cheque on its presentation for either of the reasons afore-mentioned, the payee or the holder in due course of the cheque has to make a demand for payment of the cheque amount by giving a notice in writing to the drawer of the cheque within 30 (thirty) days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. If the drawer of the cheque fails to make the payment of the amount within 15 (fifteen) days of the receipt of the said notice, the cause of action arises for fili....
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....iable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence : Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and 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, 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. Explanation-For the purposes of this section, (a) "company" means anybody corporate and includes a firm or other association of individuals; and (b) "director", in re....
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....sion of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint. (vii) The person sought to be made liable should be in-charge of and responsible for the conduct of the business ....
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....ectors, Managing Director, manager and secretary containing the particulars with respect to each of them as set out in Clauses (a) to (e) of sub- section (1) of Section 303 of the Companies Act, 1956. Sub-section (2) of Section 303 mandates every company to send to the Registrar a return in duplicate containing the particulars specified in the register. Any change among its Directors, Managing Directors, managers or secretaries specifying the date of change is also required to be furnished to the Registrar of Companies in the prescribed form within 30 days of such change. There is, thus, statutory requirement of informing the Registrar of Companies about change among Directors of the company. 17. In this view of the matter, in our opinion, it must be held that a Director, whose resignation has been accepted by the company and that has been duly notified to the Registrar of Companies, cannot be made accountable and fastened with liability for anything done by the company after the acceptance of his resignation. The words "every person who, at the time the offence was committed", occurring in Section 141(1) of the NI Act are not without significance and these words indicate that cr....
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.... No. 32), the Company informed to the Registrar of Companies on 4-3-2004 about the appellant's resignation. It is not even the case of the complainants that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date the offence was committed by the Company, the appellant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of the court. 16. The decision rendered in Anita Malhotra vs. Apparel Export Promotion Council and another, reported in (2012) 1 SCC 520, is also in similar lines, following Harshendra Kumar D (supra). In Anita Malhotra (supra), the appellant was a non-executive Director on the Board of M/s Lapareil Exports (P) Ltd. ("the company", for short), resigned from the Directorship w.e.f. 31.08.1998. On 20.11.1998, recording the resignation of the appellant, the company filed statutory Form 32 with the Registrar of Companies. A notice dated 10.12.2004 was issued to the appellant regarding dishonour of allege....
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....nunciated in all the afore-mentioned decisions and few other decisions, together with the requirement of necessary averments for the purpose of making a Director of a company vicariously liable in terms of Section 141 for the offence under Section 138 of the NI Act and the situation that arises in view of resignation of a Director of such company who, thereafter, seeks quashing of the criminal proceedings, the Supreme Court in Gunmala Sales Private Limited vs. Anu Mehta and others, reported in (2015) 1 SCC 103, has observed as under :- 28. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors who are not signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the above-mentioned cases that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. This is a basic requirement. There is no deemed liability of such Directors. This averment assumes....
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....d 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 the process of the 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, uncontrovertible 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 evidence or circumstances, complaint cannot be quashed; 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code.....
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....e cheque was issued by the accused no. 2 as a Director of the accused no. 1 company. To fortify their submissions on that ground they have annexed the following documents to this petition on which they have placed reliance heavily - 20.1. In relation to the petitioner no. 1 (accused no. 3) : - (i) An extract of the Minutes of the Meeting of the Board of Directors of the accused no. 1 company held on 22.09.2017 at the registered office of the company wherein it was resolved to appoint the accused no. 5 having DIN 07456718 as Additional Director of the company as per the terms of the company's Articles of Association and to accept the resignation of the accused no. 3 having DIN 00908471, from the Directorship of the accused no. 1 company with immediate effect. It was further resolved to authorize the accused no. 4 to digitally sign and submit Form No. 12 with the Registrar of Companies, Shillong through the portal of the Ministry of Corporate Affairs (MCA); (ii) a letter of the accused no. 3 dated 20.09.2017 addressed to the Board of Directors of the accused no. 1 company whereby she tendered her resignation from the Directorship of the company on the ground of pre-occupation with t....
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....etitioners were shown as Directors of the accused no. 1 company along with the other two Directors. A look at the Print Out annexed by the complainant does not demonstrate that the same has anything to do with the Registrar of Companies, Shillong or the Ministry of Corporate Affairs, Government of India. In such situation, no credence can be given to such a document. The contention made in the additional affidavit is, thus, found not in consonance with the document relied on by the complainant. 22. At this point, a reference can be made to the provision of Section 168 of the Companies Act, 2013, which has replaced the Companies Act, 1956. It reads as under :- 168. Resignation of director :- (1) A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company : Provided that a director may also forward a copy of his resignation along with....
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....t, as quoted above, it is not explained what role the accused no. 3 and/or the accused no. 4 had played as Directors in the affairs of the accused no. 1 company nor it is explained in what manner they were responsible for commission of the offence. 25. The contention of the complainant, which was not pleaded in the complaint but pleaded before this Court, in that the cheque was issued on 01.10.2014 and handed over to the complainant and at the time of issuance of the cheque in the year 2014, both the petitioners were in the helm of affairs of the accused no. 1 company, deserves no consideration. A cheque if issued with date, 01.10.2014 could have remained valid for a period of 6 (six) months (as it then was) w.e.f. 01.10.2014 or till its given period of validity, whichever was earlier. Such a cheque could not have been presented for collection in the year 2018. Alternatively, if it is assumed that the cheque was an undated one in the year 2014 the complainant has failed to disclose the reason what made her to fill up the same in the year 2018 and as to why she did not present the cheque for collection for a period of about four years. Even if it is assumed that in the year 2014, t....