TaxTMI 
TaxTMI 
2025 (1) TMI 414
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.... (iii) Pass an order thereby directing to call the Trial court record;" 2. The brief facts of the case, as per the complaint bearing no. 4971/2020, which led to the filing of the instant petition are as follows: a. The partnership firm namely, M/s PJH Enterprises, petitioner no. 1, petitioner no. 2 and one Mr. Harkaran Singh are the accused in the aforesaid complaint. b. The respondent/complainant is the owner of the property bearing no. 6, Sant Nagar, East of Kailash, New Delhi, which consists of a basement, first, second and third floors. In November, 2018, the complainant was approached by the accused persons seeking the lease of the Ground Floor of property bearing no. 6, Sant Nagar, East of Kailash, New Delhi admeasuring 2050 square feet (hereinafter as the "subject property") for a period of 5 years for commercial purposes. c. Accordingly, the Lease Deed with respect to the subject property was executed on 18th December, 2018, wherein it was agreed that the accused will have to pay a sum of Rs. 2,16,000/- (inclusive of GST) as monthly rent. d. Thereafter, M/s PJH Enterprises was registered as a partnership firm with the petitioner....
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....ch is a pre-requisite for commission of the offence under Section 141 of the NI Act. 5. It is submitted that the petitioners herein had no knowledge regarding the issuance of the said cheques as they were issued by Mr. Harkaran Singh, who is the Authorised Signatory of the accused-firm and therefore, they were not actively involved in managing the daily affairs of the accused-firm. 6. It is submitted that it is a settled position of law that the Directors/partners who are in charge and responsible for the conduct of company's/firm's affairs at the relevant time of commission of offence shall be held liable under Sections 138/141 of the NI Act. However, the petitioners were not involved in issuing the said cheques to the complainant and in maintaining the affairs of the company. Therefore, no offence under Section 138 and 141 of the NI Act is made out against the petitioners. 7. It is submitted that the complainant did not satisfy the criteria laid down under Section 138 of the NI Act as a single demand notice was sent for the dishonour of 9 cheques, which were presented on different dates, thereby, arising different cause of actions. 8. In view of the foregoing submissi....
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.... bestowed with the inherent jurisdiction to exercise its powers to either "prevent any abuse of process of law" or "secure the ends of justice". However, the said terminologies are devoid of any specific definition due to its wide ambit and therefore, the determination as to whether the case falls within the scope of the aforesaid term lies with the Court and must be testified based on the established principles of law. Moreover, under this provision, the Court must exercise its powers sparingly, cautiously and in exigent cases. 19. However, the Court can exercise its inherent powers under Section 482 of the Code to quash complaints and criminal proceedings emanating therefrom, if it does not constitute a prima facie offence against the accused and the same was elaborately dealt with by the Hon'ble Supreme Court in the case of Indian Oil Corporation v. NEPC India Limited and Others, (2006) 6 SCC 736. 20. Now adverting to the instant case. 21. It is the case of the petitioners that the offence under Sections 138 and 141 of the NI Act are not made out as they were unaware of the issuance of cheques in favour of the complainant and had no knowledge about the said transaction.....
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....he 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 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 b....
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....20 for an amount of Rs. 1,76,400/- which was dishonoured vide memo dated 21st May, 2020. (g) Cheque bearing no. 055228 dated 15th June, 2020 for an amount of Rs. 1,87,336/- which was dishonoured vide memo dated 17th June, 2020. (h) Cheque bearing no. 055235 dated 15th July, 2020 for an amount of Rs. 1,33,813/- which was dishonoured vide memo dated 16th July, 2020. (i) Cheque bearing no. 055236 dated 15th August, 2020 for an amount of Rs. 1,33,813/- which was dishonoured vide memo dated 19th August, 2020. 25. It is imperative to mention that the aforementioned cheques (a), (b), (d), (e), (g), (h) and (i) were drawn on ICICI Bank, Punjabi Bagh, New Delhi, which were signed by Mr. Harkaran Singh in his name. However, cheques (c) and (f) were drawn on YES Bank, East of Kailash, which were signed by Mr. Harkaran Singh on behalf of the accused-firm as an Authorised Signatory. 26. At this juncture, it pertinent to mention the contention of the petitioners that the offence under Section 138 of the NI Act is not made out as a single demand notice was sent for the dishonour of all the cheques collectively, which were presented on different dates, thereby, giv....
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....the burden of proving the same lies on such person claiming such defence. It is further stated that if the offence is committed with the connivance of the director, manager or any officer of the company, such person shall be held liable under Section 141 of the Act. Under Section 141 of the NI Act, the company is also inclusive of partnership firm and director is inclusive of a partner. 32. Section 141 of the NI Act merely states the liability of certain people for the offences committed by the company, which needs to satisfy the test of who is "in charge of" or "responsible for the conduct of company's affairs". However, the extent of their liability is discussed elaborately in a catena of judgments. 33. It is the contention of the petitioners that the petitioners had no knowledge of issuance of the said cheques to the complainant as they were not in charge and responsible for the affairs of the firm. Moreover, it was contended that no specific averments were made in the complaint, which is a prerequisite for invoking Section 141 of the NI Act. 34. The principle of making the officers of the company vicariously liable for the offences committed by the company and their ex....
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....ctor or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence. 22. In the case of Pooja Ravinder Devidasani v. State of Maharashtra7 this Court observed thus: "17. ...... Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. In National Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2....
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.... position of directorship/partnership does not make that person vicariously liable for the offences committed by the company. In fact, it is to be examined whether such Director/Partner was involved in the day-to-day affairs of the company and was in charge of the conduct of the affairs of the company at the time of commission of the offence. If the answer is in affirmative, then the Director/Partner will be held liable for the offences committed by the company under Section 141 of the NI Act. 36. Furthermore, the conduct of the Director of a company and his involvement is required to be stated explicitly by the complainant in the contents of the complaint. In National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 it was observed as follows: "13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the ....