TaxTMI 
TaxTMI 
2025 (7) TMI 207
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....aring CRL.M.C. 3501/2018 under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'Cr.P.C.'), has been filed on behalf of the Accused Company, Innoventive Industries Limited through its Official Liquidator. 2. The other two Petitions bearing CRL.M.C. 4379/2024 and CRL.M.C. 4381/2024, have been filed on behalf of Mr. Chandu Laxman Chavan and Mr. Ravindra Waman Katre, the two Directors of Innoventive Industries Limited. 3. Petitioners are aggrieved by the Order dated 09.04.2018 of the Ld. Metropolitan Magistrate, vide which they have been summoned under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I Act') in Complaint Case under S.138 NI Act. 4. Briefly stated, the Complainant/IFCI Factors Limited, Respondent No. 2 (Complainant) issued a Sanction Letter dated 23.07.2009 for Domestic Factoring Facilities to the Petitioner Company, Innoventive Industries Limited (formerly known as Arihant Domestic Appliances Limited). In terms of Clause 1(b) of the Sanction Letter dated 23.07.2009, in terms of which Petitioner Company, gave 30 security cheques of Rs.50,00,000/- each, with a Letter....
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....nder the Companies Act and registered at Pune. CIRP under the provisions of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") got initiated by Admission Order dated 17.01.2017, the Adjudicating Authority (National Company Law and Tribunal, Mumbai) and subsequently, Moratorium in terms of Section 14 IBC was imposed. It is asserted that Mr. Dhinal Shah was appointed as interim Resolution Provisional and subsequently confirmed as Resolution Professional (for short 'RP'). 10. It is further stated that after the Admission Order dated 17.01.2017 in terms of Section 17 IBC, the management of the affairs of the Petitioner Company and the powers of Board of Directors, got suspended and came to be exercised by erstwhile RP. The Banks where the Petitioner had the Bank Accounts, were duly informed. A Letter dated 06.05.2017 for closure of specified Bank Accounts, was sent to IDBI, by the RP. 11. A Legal Notice dated 01.07.2017 under Section 138 of N.I. Act, was received from the Complainant/IFCI Factors Limited calling upon the Petitioners to pay Rs. 14 Crores along with the interest @24% p.a. w.e.f. 06.07.2017, till the date of payment. 12. The Petitioner Compan....
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.... the erstwhile RP, for initiation of Liquidation of the Petitioner Company. The Adjudicating Authority on 08.12.2017 passed the Order under Section 33 IBC for commencement of liquidation proceedings and appointed the Liquidator. 18. The Summoning Order dated 09.04.2018 has been challenged on the grounds that despite being aware that during the Moratorium, no action could be taken for recovery of any amount from the Petitioner Company, the Complainant/IFCI Factors Limited filed the Complaint under Section 138 of the N.I. Act. The imposition of Moratorium and commencement of IBC proceedings, have been completely ignored. 19. It is further contended that reliance on M/s Indo Rama Synthetics (supra) is misplaced, since it was in the context of Companies Act, 1956, which has been replaced by IBC. It is asserted that under the provisions of IBC, the Complainant/IFCI Factors Limited's only remedy was to file a Claim before the RP so that it could be validly dealt with in accordance with the provisions of IBC. 20. It is further stated that the Ld. MM has erroneously relied on Section 35(1)(k) IBC, to hold that the initiation of Liquidation would not have any bearing to the Complai....
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..... It is claimed that in the year 2009, when the cheques were issued, there was no existing debt and liability and these Cheques could have been presented only within three months of date of issue and therefore, the cheques could not have been a subject matter of Complaint under Section 138 of N.I. Act. 29. This argument raised on behalf of the Petitioners, is completely fallacious. The concept of Security Cheques was explained by the Apex Court in the case of Sripati Singh v. State of Jharkhand, (2022) 18 SCC 614, wherein it was observed: "21. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. "Security" in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time-frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the d....
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....que. 35. The liability under a signed blank cheque was discussed in the case of Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, wherein the Apex Court observed: "33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. ..... 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused,....
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....case of P. Mohanraj & Ors. vs. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258 wherein while considering the impact of proceedings under IBC on a corporate debtor (Company and its Directors), the Apex Court observed that in view of the legal impediment contained under Section 14 IBC, it would be impossible to continue the proceedings under Section 138 of N.I. Act or be instituted against the Corporate Debtor. However, it was further noted that such statutory bar would apply only to the Corporate Debtor while the natural persons mentioned in Section 141 NI Act, continue to be statutorily liable under Section 138 N.I. Act. 43. Two aspects emerged from this Judgment of P. Mohanraj & Ors. (supra); firstly, that once the proceedings have been commenced under IBC, no proceedings under Section 138 of N.I. Act, can be commenced or continued against the Corporate debtor/Company. The second aspect is that the proceedings under Section 138 N.I. Act, may be continued against the natural persons mentioned in Section 141 N.I. Act. 44. In the present case as well, the CIRP proceedings commenced prior to S.138 proceedings when the Company got taken over by RP. In the light of P. Mohanraj & O....
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....that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so. 43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. 44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada (Supra), the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making....
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....v. Paresh Manna, 2024 SCC OnLine SC 3833, the Apex Court relying upon Aneeta Handa (Supra) held that "the drawer Company which must be first held to be the principal offender under Section 138 of the NI Act before culpability can be extended, through a deeming fiction, to the other Directors or persons in-charge of and responsible to the Company for the conduct of its business. In the absence of the liability of the drawer Company, there would naturally be no requirement to hold the other persons vicariously liable for the offence committed under Section 138 of the NI Act." 51. The contention of the erstwhile Directors of the Petitioner Company is that after the admission order and imposition of Moratorium, they cease to have the control over the affairs of the Company and the proceedings under the NI Act were initiated after the imposition of Moratorium. 52. The law on the point of whether the proceeding under the NI Act can be commenced when the cheque was dishonoured after the initiation of the CIRP was discussed by the Apex Court in Vishnoo Mittal v. Shakti Trading Co., 2025 SCC OnLine SC 558. On similar facts, the proceedings under the NI Act against the Director of a Co....
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....resentation of the cheques. The Directors of the Petitioner Company, could not have been held liable, once the proceedings under IBC had commenced, prior to institution of the Complaint under Section 138 of N.I. Act. 56. Therefore, to say that the proceedings under Section 138 of N.I. Act can be continued against the Directors, would be against the principles of vicarious liability of the Directors for the debts of the Company, since the Directors can be only be held vicariously liable for the acts of the Company, once the Company has been found to be liable. 57. In the present case, the IBC proceedings had already got commenced in January, 2017 i.e. almost six months prior to the proceedings under S.138 NI Act. At the time when the Legal Notice dated 02.07.2017 was issued by the Complainant, the entire powers of Board of Directors, had come to be vested in the RP. Therefore, they were no powers either with the Company or that the Board of Directors and they had no managerial authority to pass any Board Resolution for repayment of the amounts under the impugned cheques. 58. In the circumstances, no vicarious liability can be attributed to the Directors in the absence of th....