Delhi High Court
Subhash Chandra Agarwal vs Planet Media Services Ltd & Ors. on 7 December, 2022
Neutral Citation Number: 2022/DHC/005428
$~8 & 9
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: October 11, 2022
Decided on: December 07, 2022
+ CRL.M.C. 1155/2019 & CRL.M.A. 4487/2019(stay)
SUBHASH CHANDRA AGARWAL .... Petitioner
Through: Mr. Abhishek Bharti, Advocate.
V
PLANET MEDIA SERVICES
LTD & ORS .....Respondents
Through: Mr. Anshu Mahajan, Advocate
for R-1 along with
Mr.Deepanshu Yadav, AR of
R-1.
Mr. Akil R., Advocate for R-2.
+ CRL.M.C. 1745/2019 & CRL.M.A. 7012/2019
SUBHASH CHANDRA AGARWAL .....Petitioner
Through: Mr. Abhishek Bharti, Advocate.
V
PLANET MEDIA SERVICES
LTD & ORS .....Respondents
Through: Mr. Anshu Mahajan, Advocate
for R-1 along with
Mr.Deepanshu Yadav, AR of
R-1.
Mr. Akil R., Advocate for R-2.
%
CORAM:
HON'BLE MR. JUSTICE SUDHIR KUMAR JAIN
JUDGMENT
Signature Not Verified
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By:HARVINDER KAUR
BHATIA
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1. This common judgment shall decide the present petitions
which are filed under section 482 of the Code of Criminal Procedure,
1973 (hereinafter referred to as "the Code") for quashing the
summoning orders dated 01.04.2017 and 23.02.2017 (hereinafter
referred to as the "impugned orders") passed in criminal complaints
titled as Planetcast Media Services Ltd V Beret Media Services
bearing CC no. 5229/2017 and CC No. 3047/2019 by the court of
Shri Lovleen, Metropolitan Magistrate, Patiala House Courts, New
Delhi (hereinafter referred to as the "trial Court").
2. The respondent no. 1/complainant (hereinafter referred to as
"the respondent no. 1") has filed two complaints under section 138
of the Negotiable Instrument Act, 1881 (hereinafter referred to as the
"NI Act") titled as Planetcast Media Services Ltd V Beret Media
Services & Others bearing CC no. 5229/2017 subject matter of
CRL.M.C 1745/2019 and CC No. 3047/2017 subject matter of CRL.
M.C 1155/2019 respectively on the allegations that the respondent
no. 1 is engaged in the business of providing Playout, Satellite
bandwidth & Teleport (Up linking) services under the license of the
Ministry of Information & Broadcasting (MIB), Government of
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BHATIA
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India. The respondent no. 2, namely, Beret Media Pvt. Ltd./accused
no. 1 (hereinafter referred to as the "respondent no. 2") is stated to
be a company registered under the Companies Act, 1956. The
petitioner/accused no. 2, respondent no. 3/accused no. 3 and
respondent no. 4/accused no. 4 are stated to be directors of the
respondents no. 2, and are in charge and responsible for the conduct,
management and day-to-day affairs of the respondents no. 2. The
respondents no.2 and 3 are jointly, severely liable for acts of the
respondent no. 2. The accused no. 5 i.e. Bhola Baba Developers Ltd
is stated to be company registered under the Companies Act, 1956
and is running a TV channel "India Crime". The accused no. 6,
namely, Virender Kumar Agarwal (hereinafter referred to as the
"accused no. 6"), accused no. 7, namely, Hari Shankar Agarwal
(hereinafter referred to as the "accused no. 7"), accused no. 8,
namely, Jitendra Agarwal (hereinafter referred to as the "accused no.
8") are the directors of the accused no. 5. The accused no. 6 to 8 are
responsible for day-to-day affairs of the accused no. 5.
2.1 The accused no. 5 through accused no. 6 to 8 approached the
respondent no. 1 for availing the Uplinking and Bandwith services
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BHATIA
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for their TV Channel "India Crime" by using respondent no. 1
Teleport and Satellite resources alongwith Teleport/Hub. The
accused no. 5 through the accused no. 6 to 8 as per mutually agreed
understanding had entered into Uplinking Service Agreement and
Space Segment Service Contract dated 17.01.2013 with the
respondent no. 1. The accused no. 5 also gave a written confirmation
dated 28.10.2015 to the respondent no. 1 wherein it is stated that all
the payments towards the invoices raised after 28.10.2018 for
Uplinking and Bandwith charges to accused no. 5 shall be done by
the respondent no. 2. The respondent no. 2 also gave a written
confirmation dated 30.10.2015 to the respondent no. 1 by stating that
all the payments towards the invoices raised after 28.10.2015 for
Uplinking and Bandwith charges to Bhola Baba Real Estate
Developers Pvt. Ltd. i.e. the accused no. 5 shall be borne by the
respondent no. 2, after all clearances and given frequency of channel
from the date, the respondent no. 2 shall be liable to give payment to
Essel Shayam (now known as the respondent no. 1) for Uplinking
charges. The respondent no. 1 has fulfilled all its obligations and
started providing Uplinking and Bandwith services for the T.V.
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BHATIA
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channel, namely, "India Crime" w.e.f. 23.11.2015 and accordingly,
the accused no. 1 to 8 have availed the facilities and services
provided by the respondent no. 1 under the agreements.
2.2 The respondent no. 1 in lieu of services rendered by it, issued
various invoices from time to time to the accused no. 5 on account of
the respondent no. 2. In terms of the invoices raised by the
respondent no. 1, still a principal balance of Rs.53,81,557/- is
outstanding and payable by the petitioner, the respondents no. 2 to 4
and accused no. 5 to 8 as on 31.01.2017 and they are also liable to
pay interest amounting to Rs.9,75,946/- in terms of the agreement.
The respondent no. 2 in terms of the letter/written communication
dated 30.10.2015, admitted its liability and accordingly, in discharge
of its liability, the respondent no. 2 through petitioner, respondents
no. 3 and 4, issued cheque bearing no. 190325 dated 03.02.2017
amounting to Rs.39,58,988/- subject matter of complaint bearing CC
no. 5229/2017 and Crl.M.C.1745/2019 and cheques bearing no.
214270 dated 30.09.2016, 214281 dated 20.10.2016 and 214280
dated 30.10.2016 each amounting to Rs.6,00,000/-, drawn on Axis
Bank, Meerut, Uttar Pradesh-250001 subject matter of complaint
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BHATIA
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bearing CC No. 3047/2017 and CRL. M.C 1155/2019, respectively.
However, when the said cheques were presented for encashment,
returned back from the Bankers of the respondents no. 1 with
remarks „fund insufficient‟ vide return memo dated 06.02.2017 and
27.12.2016 respectively issued by the Canara Bank, Branch-Janpath
i.e. the Banker of the respondent no. 1. The respondent no. 2 through
the petitioner and the respondents no. 3 and 4, did not make the
payment of the cheque amount despite the notice dated 15.02.2017.
Hence, the present complaints.
3. The trial Court vide impugned orders dated 23.02.2017 passed
in complaint no. 3047/2017 and 01.04.2017 passed in complaint no.
5229/2017 took the cognizance for the offence punishable under
section 138 of the NI Act against the petitioner and the respondents
no. 2 to 4. The accused no. 5 to 8 were not summoned by the Trial
Court. The impugned orders reads as under:-
CC No. 3047/2017 and 5229/2017
23.02.2017 and 01.04.2017
Fresh complaint received by way of assignment. It be
checked and registered.
Present: AR of the complainant with Ld. Counsel
Evidence by way of affidavit tendered. Documents
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BHATIA
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exhibited. Vide separate statement, pre-summoning
evidence stands closed. Arguments on summoning of
accused heard. Perused. The complaint appears to be
well within the limitation period of law. From the
perusal of complaint, affidavit tendered and
documents filed, there are sufficient material on
record to proceed against the accused under Section
138-of N.I. Act.
Accordingly, issue summons to accused no. 1, 2, 3 &
4 only on filing of PF/RC returnable for 13.10.2017.
Complainant is directed to send copy of complaint
along with 'necessary documents to the accused.
Steps be taken within 04 weeks from today, in case of
non availability/refusal/premises found locked,
summons be served by way of affixation with
photograph.
As per the guidelines laid down in the case titled as
'Damodar S. Prabhu Vs. Sayed Baba Lal H', AIR
2010 (SC) 1907, Ahlmad is directed to make a
mention on the summons (add separate sheet. If
required) that the accused can make an
application for compounding of the offence at the
first or second hearing of the case and if such an
application is made, compounding may be
allowed by the court without imposing any cost on
the accused.
4. The petitioner being aggrieved by the impugned orders dated
23.02.2017 and 01.04.2017, filed the present petitions to challenge
the impugned orders by pleading that the petitioner was appointed as
director in the respondent no. 2 w.e.f. 10.01.2016 only to lend
prestige to the respondent no. 2 due to his standing in the society. The
petitioner never took part nor was in charge and responsible for the
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BHATIA
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day-to-day affairs and conduct of the respondent no. 2. The
petitioner challenged the impugned orders dated 23.02.2017 and
01.04.2017 on the ground that the impugned orders are abuse of
process of law. There is no proximate of direct or indirect
involvement of the petitioner in the affairs of the respondent no. 2 as
he was only a Non-Executive Director as such, he never involved in
its day-to-day activities. The impugned orders would cause
unnecessary hassles, prejudice, embarrassment and loss of reputation
to the petitioner. The petitioner did not have any role to play in the
entire transaction. The Trial Court has failed to appreciate that the
entire transaction took place between the respondent no. 1 and the
accused no. 5 i.e. M/s Bhola Baba Real Estate Developers Pvt. Ltd.
The petitioner has not given any undertaking or confirmation to
admit the alleged liability. The alleged undertaking/confirmation was
given prior to the petitioner being inducted as the director in the
respondent no. 2 and as such, the petitioner was not having any
knowledge regarding the said undertaking and confirmation. There is
no specific averment made against the petitioner in the complaints.
The petitioner is not the signatory of the cheques in question. The
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BHATIA
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petitioner was only the Non-Executive Director of the respondent
no.2. The petitioner also raised other grounds as mentioned in the
petitions. It is prayed that the impugned orders dated 23.02.2017 and
01.04.2017 be quashed qua the petitioner.
5. The counsel for the petitioner advanced oral arguments and
also submitted written submissions on the basis of pleas and grounds
as taken in the present petitions. The counsel for the petitioner in the
brief note in support of the argument, primarily stated that the
petitioner was a non executive director of the company and was never
involved in its day to day activities and the confirmation/undertaking
was prior to the induction of the petitioner in the respondent no. 2.
The counsel for the petitioner relied upon the judgments of supreme
court in Sunita Palita And Others V Panchami Stone Quarry,
Special Leave Petition (Criminal) No. 10396/2019 decided on
01.08.2022 and SMS Pharmaceuticals Ltd. V Neeta Bhalla &
Anr., 2005 (8) SCC 89 passed by the Supreme Court.
6. The counsel for the respondent no. 1 in the oral arguments as
well as in the written arguments, submitted that the petitioner
primarily pleaded and argued that he is a Non-Executive Director of
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BHATIA
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the respondent no. 2 as such, there is no proximate and direct
involvement of the petitioner being Non-Executive Director of the
respondent no. 2. The counsel for the respondent no. 1 further argued
that as per the Form DIR-12 pertaining to the petitioner, the
petitioner has been shown in the category of the Promoter and Non-
Executive Director and was appointed as director on 10.01.2016.
The petitioner as such, was the director when the cheques in question
were issued and still he is continuing to be as one of the directors.
The status of the respondents no. 3 and 4 in the respondent no. 2 is
identical as that of the petitioner and as such, it cannot be pleaded
that the petitioner is not full time director of the respondent no. 2.
The counsel for the respondent no. 1 also referred sections 2(69) and
149(6) of the Companies Act, 2013. The counsel for the respondent
no. 1 argued that the case law relied upon by the petitioner is not
relevant for the purpose of decision in the present petition. The
counsel for the respondent no. 1 relied on the cases titled as Malwa
Cotton and Spinning Mills Ltd V Virsa Singh Sindhu and Ors
(2008)17 SCC 147 Paras 8-11 and Krishna Murari Lal V IFCI
Factors Ltd. 2012(10) AD (Del).
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BHATIA
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7. The section 138 and section 141 of the NI Act read as under:-
138 Dishonour of cheque for insufficiency, etc., of
funds in the account. --Where any cheque drawn by
a person on an account maintained by him with a
banker for payment of any amount of money to
another person from out of that account for the
discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either
because of the amount of money standing to the
credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be
paid from that account by an agreement made with
that bank, such person shall be deemed to have
committed an offence and shall, without prejudice to
any other provisions of this Act, be punished with
imprisonment for 19 [a term which may be extended
to two years], or with fine which may extend to twice
the amount of the cheque, or with both: Provided
that nothing contained in this section shall apply
unless--
(a) the cheque has been presented to the bank within
a period of six months from the date on which it is
drawn or within the period of its validity, whichever
is earlier;
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a
notice in writing, to the drawer of the
cheque, 20 [within thirty days] of the receipt of
information by him from the bank regarding the
return of the cheque as unpaid; and
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BHATIA
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(c) the drawer of such cheque fails to make the
payment of the said amount of money to the payee
or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the
said notice.
Explanation.-- For the purposes of this section,
"debt or other liability" means a legally enforceable
debt or other liability.
141 Offences by companies. --
(1) If the person committing an offence under
section 138 is a company, every person who, at the
time the offence was committed, was in charge of,
and was responsible to the company for the 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: 22 [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
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BHATIA
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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 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.]
8. A company is stated to be a juristic person and all the acts
done on behalf of a company are done by the others. The officers of
a company who are responsible for acts done on behalf of the
company are personally liable for those acts including the criminal
action. Every person who at the time of commission of offence is in
charge and responsible for the conduct of the business of the
company is liable for the offence stated to be committed by the
company. However, the criminal liability arises when the offence
was committed and not on the basis of merely holding a designation
or office in a company. As per section 141 of the NI Act, a person is
stated to be criminally liable when at the time of commission of
offence was in charge and responsible for the conduct of the business
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BHATIA
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of the company. Every person connected with the company may not
fall within the ambit of section 141 of the NI Act.
8.1 The Supreme Court on various occasions, considered the
liability of directors of a company in complaints filed under section
138 of NI Act. The Supreme Court in SMS Pharmaceuticals Ltd. V
Neeta Bhalla & Anr., 2005(8)SCC 89 held as under:-
4. a company being a juristic person, all its deeds
and functions are the result of acts of others.
Therefore, officers of a company who are responsible
for acts done in the name of the company are sought
to be made personally liable for acts which result in
criminal action being taken against the company. It
makes every person who, at the time the offence was
committed, was in charge of, and was responsible to
the company for the conduct of business of the
company, as well as the company, liable for the
offence. 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
company may be liable if he satisfies the main
requirement of being in charge of and responsible
for the conduct of business of a company at the
relevant time. Liability depends on the role one plays
in the affairs of a company and not on designation or
status.
8.2 The Supreme Court in judgment titled as SBI V Gaurav
Varshney (2016) 14 SCC 430 held as under :-
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BHATIA
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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 section are "every person".
These are general words and take every person
connected with a company within their sweep.
Therefore, these words have been rightly qualified
by use of the words:
"Who, at the time the offence was committed, was in
charge of, and was responsible to the company for
the conduct of the business of the company, as well
as the company, shall be deemed to be guilty of the
offence, etc." 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. It follows from
this that if a director of a company 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 under the provision. 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 company may be liable if he
satisfies the main requirement of being in charge of
and responsible for the conduct of business of a
company at the relevant time. Liability depends on
the role one plays in the affairs of a company and not
on designation or status. If being a director or
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manager or secretary was enough to cast criminal
liability, the section would have said so. Instead of
"every person" the section would have said "every
director, manager or secretary in a company is
liable"..., etc. The legislature is aware that it is a case
of criminal liability which means serious
consequences so far as the person sought to be made
liable is concerned. Therefore, only persons who can
be said to be connected with the commission of a
crime at the relevant time have been subjected to
action.
12. The conclusion is inevitable that the liability
arises on account of conduct, act or omission on the
part of a person and not merely on account of
holding an office or a position in a company.
Therefore, in order to bring a case within Section
141 of the Act the complaint must disclose the
necessary facts which make a person liable.
9. As per the averment made in the complaint under section 138
of the NI Act, the accused no. 5(which is not summoned) gave a
written confirmation dated 28.10.2015 to the respondent no. 1 and
thereafter, the respondent no. 2 also gave a written confirmation to
the effect that all the payments towards the invoices raised after
28.10.2015 for Uplinking and Bandwith charges to the accused no. 5
shall be borne by the respondent no. 2. The petitioner was appointed
as director in the respondent no. 2 after written confirmation given by
the accused no. 5 on 28.10.2015 and respondent no 2 on 30.10.2015.
The perusal of complaint under section 138 of the NI Act also
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reflects that the cheques in question were issued in favour of the
respondent no. 2 after the petitioner was appointed as one of the
directors of the respondent no. 2 i.e. after 10.01.2016.
9.1 It is reflecting from the Form DIR-12 pertaining to the status
of the petitioner in respondent no. 2 that the petitioner was
admitted/appointed as director on 10.01.2016 as Non-Executive
Director and was falling in the category of Promoter.
10. The section 2(69) of the Companies Act, 2013 defines the
Promoters and it reads as under:-
"promoter" means a person-
(a) who has been named as such in a prospectus or is
identified by the company in the annual return
referred to in section 92; or
(b) who has control over the affairs of the company,
directly or indirectly whether as a shareholder,
director or otherwise; or
(c) in accordance with whose advice, directions or
instructions the Board of Directors of the
company is accustomed to act.
It reflects that Promoter also includes a person who has control
over the affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise.
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BHATIA
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11. Chapter XI of the Companies Act, 2013 also deals with
appointment and qualifications of the directors. Section 149 provides
that a company is required to have a Board of Directors. Section
149(6) defines an independent director and provides that an
independent director in relation to a company means a director other
than a managing director or a whole time director or a nominee
director who is or was not a promoter of the company or its holding,
subsidiary or associate company and who is not related to the
promoters and directors in the company, its holding, subsidiary or
associate.
12. As mentioned hereinabove and reflecting from the Form DIR-
12 that the petitioner was inducted as a director in the category of
Promoter which means that the petitioner was having control over the
affairs of the company directly or indirectly and is not falling in the
definition of an independent director. The Form DIR-12 clearly
reflects that the petitioner was not away from the affairs of the
respondent no. 2 and was directly or indirectly involved in the affairs
of the respondent no. 2. The petitioner is not an independent director
of the respondent no. 2 although the petitioner is named as Non-
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BHATIA
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Executive Director in Form DIR-12. Mere nomenclature in Form
DIR-12 as Non-Executive Directed necessarily does not mean that
the petitioner was not directly or indirectly related with the affairs of
the respondent no. 2. If the petitioner is having the evidence that he
was not responsible for the affairs of the respondent no. 2, it can be
established and proved in accordance with law during the trial of the
present complaints. The petitioner cannot be absolved from its
liability qua the cheques in question by pleading that the
confirmation letter were issued prior to his appointment of director,
particularly, when the cheques in question were issued after the
petitioner was appointed as director. The nomenclature of Non-
Executive Directors does not reflect and mean that the petitioner was
a non-functional director in the respondent no. 2.
13. The arguments and the case laws relied upon by the counsel
for the petitioner does not provide any help to the case of the
petitioner. The arguments advanced by the counsel for the
respondent no. 1 are having legally force and are sustainable in the
eyes of law.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:09.12.2022 CRL.M.C.1155/2019 & 1745/2019 Page 19
16:49:59
Neutral Citation Number: 2022/DHC/005428
14. In view of the above discussions, the present petitions are
dismissed. The petitioner is directed to appear before the Trial Court
on the next date as already fixed by the concerned Trial Court.
15. The present petitions alongwith pending applications, if any,
stand disposed of.
SUDHIR KUMAR JAIN
(JUDGE)
DECEMBER 07, 2022
N/KG
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:09.12.2022 CRL.M.C.1155/2019 & 1745/2019 Page 20
16:49:59
