TaxTMI 
TaxTMI 
2024 (11) TMI 280
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.... filed under Section 138 read with Sections 141/142 of the Negotiable Instruments Act, 1881 (hereinafter, referred to as 'the N.I. Act') however, involve the same parties and the same factual matrix. Accordingly, the petitions were taken up for hearing together and are being disposed of by a common judgment. 3. The subject proceedings arise out of the complaint filed by the respondent No. 1/complainant wherein M/s Birla Power Solutions Ltd., a Company incorporated under the Companies Act, 1956 has been arrayed as accused No. 1, while its Managing Director is arrayed as accused No. 2, accused No. 3 to 7 are directors of the accused company and accused no. 8 is the Company Secretary. Accused No. 3 to 8 are stated to be in-charge and responsible for the day-to-day affairs of the accused company. It is alleged in the complaint that the accused company/respondent No. 2 (hereinafter the 'accused company') had approached the complainant/respondent No. 1 by way of request letters dated 16.04.2012, 04.04.2012 and 03.04.2012 respectively in each complaint to advance a loan in the shape of Inter Corporate Deposit (ICD). The said loan was advanced on an assurance of the accused company and ....
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.... 7. Also, it is submitted that no specific role has been ascribed to the petitioner in the criminal complaint. The complaint merely contains bald averments and in absence of specific allegations, the complaint lacks the material averments making out the ingredients of Section 141 NI Act. In this regard, learned counsel has alluded to the decisions in Ashok Shewakramani & Ors. vs. State of Andhra Pradesh & Ors. reported as (2023) 8 SCC 473, Siby Thomas v. Somany Ceramics Ltd. reported as (2023) SCC OnLine SC 1299, Sunita Palta & Ors v Kit Marketing Pvt. Ltd. reported as (2020) SCC Online Del 2592 and Pooja Ravinder Devidasani vs. State of Maharashtra reported as (2014) 16 SCC 1. 8. Per contra, learned counsel of the respondent seeks dismissal of the petition contending that the same has been filed after a significant delay and without any explanation. The summoning order was also not assailed before the Revisional Court in terms of the decision of Supreme Court in State of Andhra Pradesh v. Golconda Linga Swamy and Anr. reported as Crl.A No. 1180/2003 and of this court in A.K. Dixit vs. Manoj Kumar and Ors. reported as 1999(1) JCC (Delhi) 181. It is further submitted that the pe....
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.... requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies 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 basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a compan....
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....of companies under them which may be ultimately held by a particular business family or a group of investors, but officers and professionals are appointed to run the day-to-day affairs of such companies. The whole purpose of having a Managing Director and Executive Directors appointed for a company is to ensure that all executive decisions are resident with that Managing Director and his/her team of Executive Directors. A number of non-Executive Directors or Directors who are not Executive Directors are present on the Board of the Companies for their expert independent advice or oversight of the functioning of the company. Even the role of "Chairman"/"Chairperson" is not typically of an executive nature since the Chairperson presides over the general meetings or of the functioning of the company and guides its business policies and need not interfere in the day-to-day affairs of the company. Chairperson of large business conglomerates are in fact even further removed from the minutiae of everyday operations of the company and distant from the micromanagement which is required to be done by the Executive Directors and officers of the company. Needless to say, this has to be assessed....
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...., Section 178 of the Act refers to Chairman's declaration of result of voting by show of hands to be conclusive, with respect to any resolution conducted in the Board meeting. Section 193 of the Act refers to minutes of proceedings of general meetings and of Board and other meetings, where the Chairman has to conduct the meeting of its Board of Directors. Section 292-A of the Companies Act refers to the Audit Committee wherein under Section 292-A (10) of the Act says that the Chairman of the Audit Committee shall attend the general meetings to provide any clarification on matters relating to audit. ∗ ∗ ∗ 28. Looking to the abovesaid powers and duties of the Chairman, it goes without saying that the Chairman is as good as a Director, but as he is higher in position, he presides over the meetings of the company. Therefore, unless a specific role is given to a Chairman by virtue of articles of the company to represent the management and participate in the day-to-day business, conduct and affairs of the company, he is not liable for all the offences committed by the company." 26. Creeping up an escalating liability to Chairpersons of ....
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....er contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court. xxx" 14. It is a well-settled principle in law that if any Director seeks quashing of a complaint under Section 138 NI Act or any process issued therein, then one must 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, one must bring on record, certain sterling and incontrovertible evidence showing that the accused is not concerned with issuance of the said cheques, which can only be seen by the High Court exercising powers under Section 482 Cr.P.C. 15. In the present case, as discernible from the complaint, there is a dearth of any specific averments and only a general mention of accused Nos. 3-8 as the Directors of accused company and being in charge and responsible for the conduct, affairs, and business of the company, is alleged. The petitioner is not even a signatory to the subject cheques. It is in fact the Managing Director i.e., accused No. 2, who is deemed in-charge of the day to day affairs of the company and is actively involve....