TaxTMI 
TaxTMI 
2025 (5) TMI 1119
X X X X Extracts X X X X
X X X X Extracts X X X X
.....M.C. 667/2019 & CRL.M.A. 2747/2019, 31109/2024, 31136/2024, CRL.M.C. 668/2019 & CRL.M.A. Nos. 2749/2019, 31113/2024, 31138/2024, CRL.M.C. 674/2019 & CRL.M.A. Nos. 2763/2019, 31137/2024, 31140/2024, CRL.M.C. 680/2019 & CRL.M.A. Nos. 2774/2019, 31106/2024, 31114/2024, CRL.M.C. 683/2019 & CRL.M.A. Nos. 2779/2019, 31111/2024, 31139/2024, CRL.M.C. 685/2019 & CRL.M.A. Nos. 2784/2019, 31108/2024 JUDGMENT 1. The present petitions are filed essentially challenging the separate summoning orders dated 28.10.2017, passed by the learned Trial Court in Complaint Case Nos. 3581/2017, 3582/2017, 3583/2017 and 3235/2017 qua the petitioners. 2. The brief facts of the case are as follows: 2.1. In all the respective complaints, the petitioner M/s. SAM India Builtwell Pvt. Ltd. has been impleaded as Accused No. 6. The petitioners-Madan Lal, Arvind Goel and Surendra Kumar Gupta have been impleaded as accused persons in the complaints in capacity of them being Directors and promoters of Accused No. 6. The petitioner Nutan Goel (wife of the petitioner Arvind Goel) and the petitioner Kamlesh Garg (wife of the petitioner Madan Lal) have been implicated as they are the shareholders and promoters of Accu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the failure of the accused persons to make the payment within the stipulated period despite the receipt of the statutory notice, the complainant filed the present complaint under Section 138 of the Negotiable Instruments Act, 1881 ('NI Act'). 2.6. In Complaint Case No. 3583/2017, it is alleged that the complainant was in urgent need of an office and two residential plots. It is alleged that for the same reason an MoU was executed by accused Asha Jain on 01.08.2014 on behalf of Accused No. 1 whereby the complainant extended a sum of Rs. 30 lakhs to Accused No. 1 as earnest money for booking one corner shop admeasuring 330 square feet and two residential plots at AVJ Infocity. It is alleged that subsequently on the demand of accused Vinay Jain, a further sum of Rs. 25 lakhs was paid to accused Vinay Jain as part payment of consideration for the booked units. It is thus the case of the complainant that he paid a sum of Rs. 55 lakhs to Accused No. 1 as part payment of the booked units as against the total sale consideration for a sum of Rs. 1,09,05,000/-. 2.7. In accordance with the MoU dated 01.08.2014, post the expiry of a period of 12 months, should the complainant decide not to h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reholding in the Accused No. 1 company till 2014-2015. 5. He submitted that even if the case of the complainant is taken at its highest, even then in 2014-2015 itself, long before the date of issuance of the cheques, that is, 19.06.2017 or the date of its dishonour being 30.06.2017, M/s Sam India Builtwell Pvt. Ltd had already transferred its nominal shareholding of 2000 equity shares in Accused No. 1 company to Vinay Jain/authorised signatory of the subject cheques and Asha Jain. 6. He submitted that in terms of Section 141 of the NI Act only such persons who, at the time of the offence, were in charge of and responsible to the company for the conduct of its business, can be made liable. 7. He submitted that merely because the petitioner company - M/s Sam India Builtwell Pvt. Ltd., at some stage, held 2000 shares of Accused No. 1 company cannot translate to mean that the petitioner company or the petitioners who held the shares or were/are directors of the petitioner company were responsible for the affairs of Accused No. 1 company who issued the impugned cheques to the complainant. He submitted that the petitioners were only directors/shareholders in the petitioner company, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint. 17. The consequences of scuttling the criminal process at a pretrial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial Court is ousted from weighing the material evidence. If this is allowed, the accused may be given an un-merited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favour of the complainant/prosecution, as the accused will have due opportunity to adduce defence evidence during the trial, to rebut the presumption. 18. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. Based ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." 13. In accordance with Section 141 of the NI Act, in instances where the principal offender under Section 138 of the NI Act is a company, every person who at such time when the cheque was dishonoured, and no subsequent payment was made, was in charge of the business of the company, and was responsible for the conduct of business, is deemed to be guilty of the offence under Section 138 of the NI Act. 14. It is trite law that a person cannot be arrayed as an accused person merely due to association with the accused company. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla : (2005) 8 SCC 89, the Hon'ble Apex Court analysed Section 141 of the NI Act and observed as under: "10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, 1956 provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other Directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business." 16. Recently, the Hon'ble Apex Court in Susela Padmavathy Amma v. M/s. Bharti Airtel Limited : 2024 INSC 206 while quashing the proceedings under Section 138 read with Section 142 of the NI Act against the director of the company observed as under: "10. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-to-day functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, nece....
X X X X Extracts X X X X
X X X X Extracts X X X X
....company, then any person who was in charge of and was responsible to the company for the conduct of the business of the company shall be liable to be proceeded against. The relevance of the term "and" appearing between the phrases "was in charge of" and "was responsible to the company for the conduct of the business of the company" as appearing in Section 141 (1) of the NI Act was emphasised by the Hon'ble Apex Court in the case of Ashok Shewakramani and Others v. State of Andhra Pradesh and Another : (2023) 8 SCC 473 as under: "22. In the light of sub-section (1) of Section 141, we have perused the averments made in the complaints subject-matter of these three appeals. The allegation in Para 1 of the complaints is that the appellants are managing the Company and are busy with day-to-day affairs of the Company. It is further averred that they are also in charge of the Company and are jointly and severally liable for the acts of Accused 1 Company. The requirement of sub-section (1) of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section (1) of Section 141 of the NI Act must be a person who at the time the o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt that the words "was in charge of" and "was responsible to the Company for the conduct of the business of the Company" cannot be read disjunctively and the same ought be read conjunctively in view of use of the word "and" in between." (emphasis supplied) 20. From a perusal of the material on record, the following facts emerge in relation to the position held by the petitioners: a) The petitioner company - M/s. SAM India Builtwell Pvt. Ltd. initially held 2000 equity shares in Accused No. 1 company amounting to 0.3% shareholding in Accused No. 1 Company at the time when the MoU was entered between the Accused No. 1 Company and the complainant. In the assessment year 2014-2015, the petitioner company transferred its 2000 equity shares to accused Vinay Jain/authorised signatory of the subject cheques and accused Asha Jain in equal proportion. b) Petitioner - Nutan Goyal holds 1,00,000 shares in the petitioner company and is wife of Arvind Goyal who is the director of the petitioner company - M/s. SAM India Builtwell Pvt. Ltd. c) Petitioner - Kamlesh Garg holds 1,00,000 shares in the petitioner company and is wife of Madan Lal who is a director in the petitioner company - M/....