High Court of Delhi was dealing with petition filed under Section 482 Cr.pc. on behalf of the petitioner assailing the summoning orders passed by the learned Metropolitan Magistrate-03, Delhi. The petitions arise out of different complaints filed under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 and involve the same parties.
Petitioner’s Contention:
The counsel for the petitioner submitted that vide the impugned orders, the petitioner has been summoned by the learned Magistrate in the aforesaid complaint cases without due application of mind. It was contended that while passing the impugned orders, learned Metropolitan Magistrate failed to appreciate that all the four cheques in question issued on behalf of the accused company were signed by respondent No. 3, being the sole authorized signatory and Managing Director thereof.
It was further submitted that prior to the issuance of the cheques in question, the petitioner had already resigned as a director of the accused company. It was also submitted that the only specific role assigned to the present petitioner is that at earlier point of time, he had executed personal guarantee deeds in favour of the complainant company. However, after he resigned from the accused company, he had no role to play. It was submitted that on the date of the alleged offence being committed, he was not in-charge of the day-to-day affairs of the accused company.
Respondent’s Contention:
Learned Counsel for the respondent submitted that specific averments against the petitioner are evident in the complaints filed by the complainant company, wherein it was stated that the petitioner was a director of the accused company and had executed a guarantee deed, thereby undertaking personal liability. It was also submitted that the proceedings before the Trial Court are at the nascent stage and may not be quashed at the outset.
HC’s Observations:
The issue involved in this case is whether execution of guarantee deeds by the petitioner prior to issuance of cheques in question would make him vicariously liable for the offence under Section 138 read with Section 141 NI Act, when he had tendered his resignation to the accused company prior to issuance thereof. Court found that it is no longer res integra that to attract vicarious liability under Section 141 NI Act against any person, the accused person should have been in-charge and responsible for the conduct of the business of the accused company at the time of commission of offence. Court stated that a person who was not a director, and/or not in-charge of the affairs of the accused company or for the conduct of the business thereof, at the time when the offence was committed, cannot be held vicariously liable. To make a Director of a company vicariously liable under Section 141 NI Act, specific allegations have to be made out against him in the complaint.
HC relied upon the case of Pooja Ravinder Devidasani v. State of Maharashtra and Another where, in a similar fact situation, it was opined that execution of guarantee deed/letter of guarantee by an erstwhile Director, who ceased to hold office prior to the issuance of the cheques in question, may attract civil liability but not one under Section 138 NI Act.
Court stated that from a perusal of the said decision and considering that Section 141 NI Act is a deeming provision, whereby liability is attributed to Directors who were in-charge and responsible for the affairs of the accused company “at the time when the offence was committed”, it is discernible that regardless of a guarantee deed being executed as part of the impugned transaction, no criminal liability would be attributable to a Director of the accused company who executed such deed if he resigned therefrom prior to the issuance of the cheques in question. Court stated that the petitioner had ceased to be a Director of the accused company prior to the issuance of the cheques in question and thus, he could not be attributed vicarious liability for the offence punishable under Sections 138/141 NI Act.
HC Held:
After evaluating submissions made by both the parties the Court held that “the execution of guarantee deeds by the petitioner at an earlier point in time would not attract vicarious liability under Sections 138/141 NI Act. Besides, there is nothing on record to indicate that the petitioner was in-charge of and responsible for the conduct of the affairs of the accused company at the time of the commission of the offence under Sections 138/141 NI Act. This Court is of the opinion that the summoning orders against the petitioner are liable to be set aside. Accordingly, the petitions are allowed and the summoning orders are set aside.”
Bench: Hon'ble Mr. Justice Manoj Kumar Ohri
Case Title: Sanjeev Kumar Agarwal v. IFCI Factors Ltd & Ors.
Case Details: CRL.M.C. 280/2021 and CRL.M.A. 1436/2021
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