Preeti vs State CRLMC 1219/20 02/11/22 [ KANTA JJ ] [ DELHI HIGH COURT ]

• Section 482 CRPC NI ACT Sections 138 and 141 Summoning order Quashing of Dishonour of cheque Petitioner, Independent/Non-Executive Director in accused company at time of commission of offence Plea of Held, director of company not in charge or responsible for conduct of business of company at relevant time, will not be liable On facts, perusal of Form No. DIR-12 shows that petitioner was independent director at time of commission of offence – Petitioner could held vicariously liable only if shown that she was in charge of and responsible for conduct of business of company at time of commission of offence Nothing can be inferred from complaint filed – Petition allowed

Relevant Paras

14. Recently, the Apex Court in Sunita Palita & ors. v. Panchami Stone Quarry 2022 SCC OnLine SC 945, in regard to fixation of vicarious liability on directors of a company under Section 141 of Negotiable Instruments Act, 1881, has held that:

“42. A Director of a company who was not in charge or responsible for the conduct of the business of the company at the relevant time, will not be liable under those provisions. As held by this Court in, inter alia, S.M.S. Pharmaceuticals Ltd. (supra), the liability under Section 138/141 of the NI Act arises from being in charge of and responsible for the conduct of the 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. It would be a travesty of justice to drag Directors, who may not even be connected with the issuance of a cheque or dishonour thereof, such as Director (Personnel), Director (Human Resources Development) etc. into criminal proceedings under the NI Act, only because of their designation.
43. Liability depends on the role one plays in the affairs of a com- pany and not on designation or status alone as held by this Court in S.M.S. Pharmaceuticals Ltd. (supra). The materials on record clearly show that these Appellants were independent, non-executive Directors of the company. As held by this Court in Pooja Ravinder Devidasani v. State of Maharashtra and Anr. (supra) a non-Executive Director is not involved in the day-to-day affairs of the company or in the running of its business. Such Director is in no way responsible for the day-to-day running of the Accused Company. Moreover, when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs.
*** 46. As held by this Court in National Small Industries Corporation Ltd. v. Harmeet Singh Painta quoted with approval in the subsequent decision of this Court in Pooja Ravinder Devidasani v. State of Maharashtra and Anr. (supra)the impleadment of all Directors of an Accused Company on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company, without anything more, does not fulfil the requirements of Section 141 of the NI Act…”

17. Coming to the facts of the present case, a perusal of Form No. DIR-12, dated 16.01.2017, of the accused company K.S. Oils Limited shows that the petitioner was an independent director at the time of commission of the offence. In view of Section 141 of Negotiable Instruments Act, 1881 and Section 149 of Companies Act, 2013 petitioner could have been held vicariously liable only if it was shown that she was incharge of and was responsible for the conduct of the business of the company at the time of commission of offence, and not otherwise
18. As per settled legal propositions, it was to be specifically averred in the complaint as to how the petitioner, being an independent director, was incharge of day to day affairs of the company as well as the conduct of business. However, nothing of this sort can be inferred from the complaint filed before the learned Trial Court. The relevant para of the complaint casting allegations against all the directors of the accused company is as under:
“2. That Accused No.l Is a company registered under the provisions of the Companies Act 1956. Accused Nos. 2 to 14are the Directors of the Company who were incharge of managing the day to day affairs of the Company. All the accused nos. 2 to 14 were at the helm of affairs of the Company at the time of Its dealing with the Complainant and/or at the time when the subject matter SI cheques were issued to the Complainant and at the time of dishonour of cheques.
3. That in or around August 2012, Accused No.l acting through the Accused persons approached the Complainant and expressed its intention to import Crude Palm Oil through the Complainant, while making assurances to the Complainant that you were in sound financial position assuring the Complainant of timely payment against such imports. That since the quantities of Import was huge, several rounds of meetings took place between the representatives of the Complainant and Accused persons. Each of the accused persons had been dealing with the Complainant on behalf of Accused No.l…”

24. In view thereof, the impugned order dated 28.11.2018 passed by the learned MM-04, Patiala House Courts, New Delhi in CC No.16201/2017 is thus, quashed to the extent of issuing of summons to the present petitioner for alleged commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

For read the judgment click here 

judgement delhi high court

all rights reserved (Vaibhav Tomar 𝔸𝕕𝕧)