Delhi High Court
Kishore Kanna vs State & Anr on 19 December, 2023
Author: Sudhir Kumar Jain
Bench: Sudhir Kumar Jain
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 25th September, 2023
Decided on: 19th December, 2023
+ CRL.M.C. 2359/2019& CRL.M.A. 37450/2019
KISHORE KANNA ..... Petitioner
Through: Mr.M.P.Parthiban, Advocate.
V
STATE & ANOTHER ..... Respondents
Through: Mr. Yudhvir Singh Chauhan,
APP for State/R-1.
Mr. Nishant Datta, Mr.
Pradeep Bhardwaj and Mr.
Chirag Rathi, Advocates for
R-2.
CORAM
HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN
JUDGMENT
1. The present petition is filed under section 482 of the Code of
Criminal Procedure, 1973 (hereinafter referred to as "the Code") to
quash the criminal complaint titled as Lava International Ltd. V
Fanatic System Pvt. Ltd. & others bearing CC no. 16578/2017 filed
by the respondent no.2 under section 138 of the Negotiable
Instruments Act, 1881 (hereinafter referred to as "NI Act") which was
stated to be pending in the court of Ms. Ambika Singh, Metropolitan
Magistrate-02, Patiala House Courts, New Delhi/successor court
(hereinafter referred to as the "trial court").
2. The respondent no.2 filed a complaint titled as Lava
International Ltd. V Fanatic System Pvt. Ltd. & others bearing CC
no. 16578/2017 under section 138 of the NI Act implicating 5
accused therein including the petitioner as accused no.4. The
respondent no.2 pleaded that the accused no.1 is a private limited
company and is engaged in the business of trading and manufacturing
of mobile handsets and the accused nos. 2, 3, 4 and 5 are the
Directors/ Additional Directors of the accused no. 1 and are liable for
the day to day affairs of the accused no. 1. The accused no.1 is having
business relationship with the respondent no.2 being distributor for
goods of the respondent no.2/company as per Modern Trade
Agreement dated 12.11.2015. The respondent no.2 during the course
of business had supplied goods as per various tax invoices bearing no.
1014217023, 1014217032, 1014217048, 1014217070 and
1014217094 at times to the accused. As per ledger account maintained
by the respondent no.2, Rs.1,03,92,798/- is due and payable by the
accused to the respondent no. 2.
2.1 The accused issued five cheques bearing no. 000017-000021
each dated 23.08.2017 drawn on HDFC Bank amounting
Rs.10,00,000/- (hereinafter referred to as "the cheques in question")
towards partial payment of goods in favour of the respondent no 2.
The respondent no. 2 in pursuance of email dated 24.08.2017
deposited these cheques in its Bank for payment but they were
returned unpaid on 25.08.2017. The accused requested sometime to
arrange funds and assured the respondent no. 2 that the funds would
be available in its bank after few weeks and accordingly the
respondent no. 2 deposited these cheques but they again were returned
as dishonoured on 25.09.2017. The accused asked the respondent no. 2
to represent these cheques after some weeks to enable them to arrange
funds. The respondent no. 2 represented these cheques with its banker
at Bank of Baroda, Sansad Marg, New Delhi-110001 Branch in
account no. 25620200000406 but these cheques were again returned
as dishonoured vide cheque memo dated 18.10.2017 with remarks
"Funds Insufficient". The respondent no. 2 sent legal notice dated
24.10.2017. The respondent no. 2 received a reply dated 09.11.2017
on behalf of accused no. 4 i.e. the petitioner wherein the petitioner
denied his liabilities towards the respondent no. 2. The accused despite
notice dated 24.10.2017 did not pay cheque amount. Hence, the
respondent no. 2 filed the present complaint. The court of Ms. Ambika
Singh, Metropolitan Magistrate-02, Patiala House Courts, New Delhi
vide order dated 04.10.2018 stated to have issued notice against the
accused including the petitioner.
3. The petitioner being aggrieved filed the present petition. The
petitioner pleaded that he joined the accused no. 1on 28.09.2015 and
was appointed as regional sales manager. The cheques in question
were issued by the directors of the accused no. 1 and at that time, the
petitioner was not the Additional Director of the accused no. 1. The
petitioner did not sign the cheques in question and was not connected
with the transaction between the accused no. 1 company and the
respondent no. 2. The petitioner sent the reply dated 09.11.2017 to the
legal notice dated 24.10.2017 wherein he denied allegations of the
legal notice.
3.1 The petitioner challenged issuance of summons on grounds that
the present complaint was filed without appreciating that the petitioner
was not responsible for the conduct of the business of the Company at
the relevant time. The complaint does not contain any specific
allegation against the petitioner to attract sections 138 and 141 of the
NI Act. The directors of the accused no.1 issued the cheques in
question, not the petitioner. The petitioner never was the Additional
Director of the accused no.1 company. The petitioner did not sign the
cheques in question. There is no specific averment that the petitioner
was in charge of and responsible for the conduct of the business of the
accused no. 1. The petitioner was appointed as an employee of the
accused no. 1 vide appointment order dated 28.09.2015. The accused
nos. 2 and 3 were the original directors of the accused no. 1 company
and were responsible for the conduct of the accused no. 1. The
petitioner was promoted to the post of Additional Director only for the
purpose of convenience and never managed the affairs of the accused
no.1 and never played any vital role in the company. The petitioner
does not have any share in the accused no. 1 company like the other
directors i.e. the accused nos. 2 and 3. The accused no. 2 holds
99.99% shares and the accused no. 3 holds 0.1 % of the shares in the
accused no. 1.
4. The counsel for the petitioner advanced oral arguments and also
submitted written submissions. He argued that the petitioner was the
Executive Director of the accused no. 1 but was never involved or
responsible for day-to-day functioning of the accused no. 1. The
petitioner was later given the post of Additional Director but was
never involved in activities of the accused no. 1 and was working as
per the instructions from the accused nos. 2 and 3. The counsel for the
petitioner further argued that the petitioner was not the signing
authority on the cheques in questions and cannot be held guilty under
section 138 of the NI Act solely by virtue of being a Director. The
cheques in questions were issued by the accused nos. 2 and 3. The
Article of Association of the accused no. 1 stated that only 2 directors
were appointed to take decisions regarding all financial and
administrative matters. The counsel for the petitioner relied on
Mannalal Chamaria V State of West Bengal, (2014) 13 SCC571;
A.K. Singhania V Gujarat State Fertilizer Company, (2013)16
SCC 630; National Small Industries Corporation Ltd. V Harmeet
Singh Paintal, (2010) 3 SCC 330; State of Haryana V Brij Lal
Mittal, (1998) 5 SCC 343; Gunmala Sales Pvt. Ltd. V Anu Mehta
& others, (2015) 1 SCC 103; State of Haryana V Bhajan Lal, 1992
Supp (1) SCC 335; and A.R. Radha Krishna V Dasari Deepthi,
(2019) 15 SCC 550.
5. The counsel for respondent no.2 also advanced oral arguments
and submitted written submissions. He argued that the petitioner has
not mentioned that who are the Managing Director, Director,
Additional Director and/or Whole Time Director of the accused no. 1.
The petitioner is named as Director of the accused no. 1 as per FORM
32 available on the website of Ministry of Corporate Affairs. The
Company Master data also did not mention who are the Managing
Director, Director, Additional Director and or Whole Time Director of
the accused no. 1. The trial court prima facie came to the conclusion
that the petitioner was holding the post of Director and was liable for
the day to day affairs of the accused no. 1. The present petition is an
abuse of process of law and is not maintainable. The counsel for the
respondent no. 2 relied on K.K. Ahuja V V.K. Vora & others,
(2009) 10 SCC 48.
6. 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 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, within thirty days of the receipt of
information by him from the bank regarding the return of
the cheque as unpaid; and
(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:
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 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 anybody corporate and includes a
firm or other association of individuals;and
b) "director", in relation to a firm, means a partner in the
firm.
7. This court in K.S. Mehta V M/S Morgan Securities &
Credits Pvt. Ltd, Crl. M.C. no 1645/2019 decided on 23rd November,
2023 observed as under:-
Section 141 of NI Act extends criminal liability in case of a
company to every person who at the time of the offence, was
in charge of and was responsible for the conduct of the
business of the company. A company is a juristic person and
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. The criminal liability arises when the offence
was committed and not on the basis of merely holding a
designation or office in a company. Section 141 of the NI
Act mandates that a person is criminally liable when at the
time of commission of offence was in charge and responsible
for the conduct of the business of the company and person
connected with the company may not fall within the ambit of
section 141 of the NI Act.
7.1 The Supreme Court in SMS Pharmaceuticals Ltd. V Neeta
Bhalla & another, 2005 (8) SCC 89 held as under:-
The normal rule in the cases involving criminal liability is
against vicarious liability, that is, no one is to be held
criminally liable for an act of another. This normal rule is,
however, subject to exception on account of specific
provision being made in statutes extending liability to
others. Section 141 of the Act is an instance of specific
provision which in case an offence under Section 138 is
committed by a Company, extends criminal liability for
dishonour of cheque to officers of the Company. Section
141 contains conditions which have to be satisfied before the
liability can be extended to officers of a company. Since the
provision creates criminal liability, the conditions have to be
strictly complied with. The conditions are intended to ensure
that a person who is sought to be made vicariously liable for
an offence of which the principal accused is the Company,
had a role to play in relation to the incriminating act and
further that such a person should know what is attributed to
him to make him liable. In other words, persons who had
nothing to do with the matter need not be roped in. A
company being a juristic person, all its deeds and functions
are 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 incharge 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 proviso to
the sub-section contains an escape route for persons who are
able to prove that the offence was committed without their
knowledge or that they had exercised all due diligence to
prevent commission of the offence.
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 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
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
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 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. A reference to sub-section (2) of Section
141 fortifies the above reasoning because sub-section (2)
envisages direct involvement of any Director, Manager,
Secretary or other officer of a company in commission of an
offence. This section operates when in a trial it is proved that
the offence has been committed with the consent or
connivance or is attributable to neglect on the part of any of
the holders of these offices in a company. In such a case,
such persons are to be held liable. Provision has been made
for Directors, Managers, Secretaries and other officers of a
company to cover them in cases of their proved involvement.
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.
7.2 The Supreme Court in Siby Thomas V M/s Somany
Ceramics Ltd., Criminal Appeal no. 003139 of 2023 (arising out
of Special Leave Petition (Crl.) no.12 of 2020) decided on 10th
October, 2023 referred decision in S.P. Mani and Mohan Dairy V
Dr. Snehalatha Elangovan, 2022 SCC OnLine SC 1238 and
observed that it is the primary responsibility of the complainant to
make specific averments in the complaint, so as to make the
accused vicariously liable. The Supreme Court also referred
observations made in S.P. Mani which are as under:-
41. In Gunmala Sales Private Limited (supra), this Court
after an exhaustive review of its earlier decisions on Section
141 of the NI Act, summarized its conclusion as under:-
(a) Once in a complaint filed under Section 138 read with
Section 141 of the NI Act the basic averment is made that
the Director was in charge of and responsible for the
conduct of the business of the company at the relevant
time when the offence was committed, the Magistrate can
issue process against such Director;
(b) ......
(c) ......
(d) No restriction can be placed on the High Court's
powers under Section 482 of the Code. The High Court
always uses and must use this power sparingly and with
great circumspection to prevent inter alia the abuse of the
process of the Court. There are no fixed formulae to be
followed by the High Court in this regard and the exercise
of this power depends upon the facts and circumstances of
each case. The High Court at that stage does not conduct a
mini trial or roving inquiry, but nothing prevents it from
taking unimpeachable evidence or totally acceptable
circumstances into account which may lead it to conclude
that no trial is necessary qua a particular Director.
42. The principles of law and the dictum as laid in
Gunmala Sales Private Limited (supra), in our opinion,
still holds the field and reflects the correct position of law."
It was further observed as under:-
11. In the light of the afore-extracted recitals from the
decision in Gunmala Sales Private Limited v. Anu, (2015) 1
SCC 103 quoted with agreement in S.P. Mani's case (supra)
and in view of sub-section (1) of Section 141 of the N.I. Act it
cannot be said that in a complaint filed under Section 138
read with Section 141 of the N.I. Act to constitute basic
averment it is not required to aver that the accused
concerned is a person who was in charge of and responsible
for the conduct of the business of the company at the
relevant time when the offence was committed.
It is thereafter that in the decision in S.P. Mani's case
(supra) in paragraph 47 (a) it was held that the primary
responsibility of the complainant is to make specific
averments in the complaint so as to make the accused
vicariously liable.
7.3 The Supreme Court in Siby Thomas V M/s Somany Ceramics
Ltd. also referred Anita Malhotra V Apparel Export Promotion
Council & another,(2012) 1 SCC 520 wherein it was observed as
under:-
22. This Court has repeatedly held that in case of a Director,
the complaint should specifically spell out how and in what
manner the Director was in charge of or was responsible to
the accused company for conduct of its business and mere
bald statement that he or she was in charge of and was
responsible to the company for conduct of its business is not
sufficient. (Vide National Small Industries Corpn. Ltd. v.
Harmeet Singh Paintal). In the case on hand, particularly, in
Para 4 of the complaint, except the mere bald and cursory
statement with regard to the appellant, the complainant has
not specified her role in the day-to-day affairs of the
Company. We have verified the averments as regards to the
same and we agree with the contention of Mr. Akhil Sibal
that except reproduction of the statutory requirements the
complainant has not specified or elaborated the role of the
appellant in the day-to-day affairs of the Company. On this
ground also, the appellant is entitled to succeed.
7.4 The Supreme Court in Siby Thomas V M/s Somany Ceramics
Ltd. also referred Ashok Shewakramani & others V State of
Andhra Pradesh & another,2023 INSC 692wherein it was observed
as under:-
19. Section 141 is an exception to the normal rule that there
cannot be any vicarious liability when it comes to a penal
provision. The vicarious liability is attracted when the
ingredients of subsection 1 of Section 141 are satisfied. The
Section provides that 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 shall be deemed to be guilty of the
offence under Section 138 of the NI Act. 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 paragraph 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 the accused No.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 NI Act must be a 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. Merely because somebody is managing the affairs
of the company, per se, he does not become in charge of the
conduct of the business of the company or the person
responsible for the company for the conduct of the business
of the company. For example, in a given case, a manager of a
company may be managing the business of the company.
Only on the ground that he is managing the business of the
company, he cannot be roped in based on sub-section 1 of
Section 141 of the NI Act. The second allegation in the
complaint is that the appellants are busy with the day-to-day
affairs of the company. This is hardly relevant in the context
of subsection 1 of Section 141 of the NI Act. The allegation
that they are in charge of the company is neither here nor
there and by no stretch of the imagination, on the basis of
such averment, one cannot conclude that the allegation of
the second respondent is that the appellants were also
responsible to the company for the conduct of the business.
Only by saying that a person was in charge of the company
at the time when the offence was committed is not sufficient
to attract sub-section 1 of Section 141 of the NI Act.
7.5 The Supreme Court in Siby Thomas V M/s Somany Ceramics
Ltd. after referring the above mentioned decisions observed as under:-
16. Thus, in the light of the dictum laid down in Ashok
Shewakramani's case (supra), it is evident that a vicarious
liability would be attracted only when the ingredients of
Section 141(1) of the NI Act, are satisfied. It would also
reveal that merely because somebody is managing the affairs
of the company, per se, he would not become in charge of the
conduct of the business of the company or the person
responsible to the company for the conduct of the business of
the company. A bare perusal of Section 141(1) of the NI Act,
would reveal that only that 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 alone shall be deemed to
be guilty of the offence and shall be liable to be proceeded
against and punished. In such circumstances, paragraph 20
in Ashok Shewakramani's case (supra) is also relevant.
After referring to the Section 141(1) of NI Act, in paragraph
20 it was further held thus:
20. On a plain reading, it is apparent 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 to be read conjunctively in
view of use of the word "and" in between.
8. The counsel for the petitioner argued that the respondent no. 2
has not made necessary averments in complaint which can reflect that
the petitioner was in charge and responsible for the conduct of the
accused no. 1. The counsel for the petitioner cited Mannalal
Chamaria V State of West Bengal, (2014) 13 SCC 571 wherein it
was held that it is necessary for the complainant to state in the
complaint that the accused was in charge of and responsible for the
conduct of the business of the company and A.K. Singhania V
Gujarat State Fertilizer Company, (2013)16 SCC 630 wherein it
was observed that in the case of offence by a company, to bring the
Directors of the company within the ambit of section 138 of the NI
Act, it shall be necessary to allege that the Directors were in charge
and responsible for the conduct of the business of the company. The
counsel for the petitioner also cited National Small Industries
Corporation Ltd. V Harmeet Singh Paintal, (2010) 3 SCC 330.
8.1 It is accepted legal proposition in view of law laid down by the
Supreme Court in above referred decision that it is the primary
responsibility of the complainant to make specific averments in the
complaint so as to make the accused vicariously liable. If the basic
averment made in the complaint under section 138 of NI Act is that
the Director was in charge of and responsible for the conduct of the
business of the company at the relevant time when the offence was
committed, then the Magistrate can issue process against such
Director. The complaint should specifically spell out how and in what
manner the Director was in charge of or was responsible of the
accused company for conduct of its business and mere bald statement
that he or she was in charge of and was responsible of the company for
conduct of its business is not sufficient. The respondent no. 2 in
complaint stated that the accused no. 1 is a private limited company
and the accused nos. 2, 3, 4 (the petitioner) and 5 are the
Directors/Additional Directors for accused no. 1 and hence are liable
for day to day affairs of the accused no. 1. The respondent no. 2 also
stated that the respondent no.2 during the course of business had
supplied goods to the accused persons which also includes the
petitioner and the outstanding amount is also payable by the accused
persons and the respondent no. 2. The cheques in question were issued
by the accused. The respondent no. 2 also issued legal notice dated
24.10.2017. The averments mentioned in the complaint reflect that the
respondent no. 2 has made sufficient allegations to establish that the
petitioner was involved in day to day affairs of the accused no. 1. The
arguments advanced by the counsel for the petitioner is without any
basis and cannot be factually sustained.
9. The petitioner alleged that he joined the accused no. 1 company
on 28.09.2015 as regional sales manager. The petitioner never
remained the Additional Director of the accused no. 1 and the cheques
in question were issued by the Directors of the accused no. 1 and were
not signed by the petitioner. The petitioner was not responsible for the
conduct of the business of the accused no. 1 company at the relevant
time and the accused nos. 2 and 3 were responsible for the conduct of
the accused no. 1 being the original Directors of the accused no 1.
However, the petitioner stated that he was promoted to the post of
Additional Director only for the purpose of convenience and never
managed affairs of the accused no. 1. The accused no. 2 holds 99.99%
shares and the accused no. 3 holds 0.1 % of the shares in the accused
no. 1. The counsel for the petitioner argued that the petitioner was an
Executive Director of the accused no. 1 but was later given the post of
Additional Director and was working as per the instructions from the
accused nos. 2 and 3. The counsel for the petitioner cited State of
Haryana V Brij Lal Mittal, (1998) 5 SCC 343 wherein it was
observed that vicarious liability of a person for being prosecuted under
the NI Act by a company arises if at the material time he was in
charge of and also responsible to the company for the conduct of its
business and that simply because a person is a director of a company,
it does not necessarily mean that he was responsible for conduct of the
business of the company. The counsel for the respondent no. 2 argued
that the petitioner has failed to produce any document on the record
such as DIR-12 and any other document/evidence in support of his
contentions raised in the petition which are false and without any
basis.
9.1 Section 141 of the NI Act provides for a constructive liability
which is created by a legal fiction. Section 141 of the NI Act being a
penal provision should receive strict construction and compliance. If
the accused played insignificant role in the affairs of the company, it
may not be sufficient to attract the constructive liability under section
141 of the NI Act. The petitioner is claiming that he was appointed as
the Regional Sales Manager in the accused no. 1 with effect from
01.10.2015 vide offer letter dated 28.05.2015 at a monthly salary of
Rs. 50,000/-. The accused nos. 2 and 3 are the first director of the
accused no. 1 as per Memorandum of Association. The petitioner is
claiming that he was later promoted as Additional Director for sake of
convenience but he never managed the affairs of the accused no. 1.The
petitioner as per the Company Master Data is the Director/Signatory
of the accused no. 1 along with the accused no 5. If the petitioner was
not responsible for affairs of the accused no. 1 despite being promoted
as Additional Director of the accused no. 1, it can only be established
and proved in accordance with law during the trial of the complaint
under section 138 of NI Act. The petitioner has not placed or
submitted any document which can reflect that the petitioner has never
participated in conduct of business of the accused no. 1. The petitioner
cannot be absolved from his liability qua the cheques in question by
merely pleading that he was not responsible for day to day affairs and
conduct of the business of the accused no. 1. The arguments advanced
by the counsel for the petitioner are without any legal support.
10. The present complaint cannot be dismissed qua the petitioner.
The present petition alongwith pending application is accordingly
dismissed. None of the observation on factual position in the present
judgment shall be taken as opinion on final merits of the case.
DR. SUDHIR KUMAR JAIN
(JUDGE)
DECEMBER 19, 2023
AK
