Delhi District Court
Title : Mr. Sushil Suri vs M/S Pacl Ltd on 2 July, 2015
IN THE COURT OF SH. GURDEEP SINGH, ADDITIONAL
SESSIONS JUDGE, PATIALA HOUSE COURTS, NEW DELHI.
C.R. No. : 82/15
Unique Case ID no. : 02403R0084102015
Title : Mr. Sushil Suri,
C40, anand Niketan,
New Delhi110021.
.... Petitioner
Vs.
M/s PACL Ltd.
Through Sh. Vipin Shukla,
(Authorized Representative of the Company),
Having its Corporate office at:
7th Floor, Gopaldas Bhawan,
28, Barakhamba Road,
New Delhi110001.
.... Respondent
Date of Institution : 15.5.2015
Date of arguments : 29.6.2015
Date of pronouncement : 02.7.2015
(Appearances)
Sh. Vijay Aggarwal, Ld. Counsel for the petitioner/revisionist.
Sh. S.K. Rungta, Ld. Senior Counsel alongwith AR of the respondent
company.
ORDER
1. This Revision Petition is directed against summoning order dated 16.02.2015 passed by Sh. Sujit C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 1 / 9 Saurabh, Ld. Metropolitan Magistrate, Patiala House Courts, New Delhi under Section 138 of Negotiable Instruments Act, 1881.
2. The relevant facts are that the complaint for the offence punishable under Section 138 Negotiable Instruments Act, 1881 was filed by the respondent with respect to dishonour of cheque dated 12.01.2014 in the sum of Rs. 54,00,000/, bearing no. 639485 which was dishonored for the reason "Funds Insufficient".
3. It was alleged that the respondent no. 4 was the In Charge of affair of the company as confirming by signing an agreement between the complainant company and the accused company and had signed the Debenture Subscription Cum Security Agreement dated 08.12.2010. Accused no. 2 is the Executive Director of accused no. 1 company. Accused no. 3 is the Chairman and Managing Director as well as the Confirming party to the Debenture Subscription cum Security Agreement dated 08.12.2010 which was partially modified vide agreement dated 16.4.2011 between the complainant company and the accused company. The revisionist is one of the party of said subscription agreement in the capacity of one of the confirming party and they are liable for all the consequences of default.
4. It is stated that accused no. 1 through accused no. C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 2 / 9 2 to accused no. 4 approached the complainant company for giving financial assistance for the business. Thereafter, the complainant agreed for giving financial assistant to the accused no. 1 subject to certain terms and conditions and subject to furnishing of the security for repayment and hence, the agreement was signed. It is stated that accused no. 1 and accused no. 2 to accused no. 5 consequently being its Principal Officers/Chief Financial Officer/Director/Confirming Parties and InCharge of the affairs of accused no. 1 committed defaults in the discharge of the obligations. Accused persons issued 65 post dated cheques and two of them are involved in the present case.
5. It is also relevant to mention Clause 9.2.2 and Clause 9.2.3 of agreement which are reproduced as under:
Clause 9.2.2: In the event of PDCs issued by the company are dishonored, the confirming parties agree to jointly discharge the liability of the company in their capacity as surety within seven days from the date of dishonour of the cheques.
Clause 9.2.3: In the event of PDCs are dishonored and the confirming parties are unable to discharge the liability of the company, the debenture holders shall have the right to enforce the charge C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 3 / 9 created under Clause 5.1 of this agreement.
6. It is also stated that accused no. 2 to accused no. 4 are InCharge of affairs of the company as well as the Confirming Parties.
7. I have heard Ld. Counsel for the revisionist as well as Ld. Senior Counsel for the respondent.
8. It is submitted on behalf of the revisionist that as per Section 141 of Negotiable Instruments Act, only those persons who were InCharge of and was responsible to the company for its conduct of business as well as company shall be liable to be proceeded against.
9. The revisionist at the most is surety having liability towards the petitioner under Civil Law, however, he has not connected with the company and not responsible to the company for its conduct of business and, therefore, summoning order qua accused no. 4 is liable to be set aside. He has cited National Small Industries Corporation Ltd. Vs. Harmeet Singh Paintal, 2010 (1) JCC (NI) 86 wherein the Hon'ble Supreme Court has enumerated the principles which has emerged from the various judgments of Apex Court on this subject:
i) The Primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 4 / 9 fastening the criminal liability, there is no presumption that every Director knows about the transaction.
ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were incharge of and were responsible for the conduct of the business of the company.
Iii) Vicarious liability can be inferred against a company registered or incorporated under the companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company alongwith averments in the petition containing that accused were incharge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.
iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
v) if accused is Managing Director or Joint Managing Director, then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
vi) if accused is a Director or an officer of a company C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 5 / 9 who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint.
vii) The person sought to be make liable should be in charge of an responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.
10. He further cited judgment passed by Hon'ble High Court in Sudeep Jain Vs. M/s ECE Industries Ltd., 2013 (201) DLT 461 and submitted that the summoning of all the accused persons without their being specific averment as to in what manner the accused was discharging the day to day affairs of the company is not appropriate.
11. On the other hand, Sh. S.K. Rungta, Senior Advocate on behalf of the respondent has taken me through the Debenture Subscription Cum Security Agreement which shows that the accused, in the agreement was the confirming party. As per Section 3: Conditions Precedent, Clause (g), The confirming party has undertaken for discharging the obligations in the event of default by the company. Section 9 of the Agreement provides in Clause 9.2.2 that in the event of PDCs issued by the company are dishonoured, the confirming parties agreed to jointly discharge the liability of the company in the capacity of surety. Clause 9.2.3 provides that in case of default C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 6 / 9 of PDCs and the confirming parties are unable to discharge the liability of the company, the debenture holders shall have the right to enforce the charge created under clause 5.1. Its enforcement shall not preclude from initiating proper proceedings under the Law against the company for dishonour of cheque. He further submitted that in para no. 17 of the complaint, specific role of the accused/revisionist is mentioned wherein he had jointly and severely admitted the liability. In para no. 11 of the complaint, the details regarding the liability has been given.
12. Sh. Rungta, Senior Counsel further submitted that the role of the revisionist is categorically averred in the petition and he was incharge of affairs and responsible to the company for its conduct of its business. He was directly controlling the business and helping it in providing financial assistance. He further submitted that the cited judgments are not applicable to the facts of the present case as the agreement has been filed on record and specific averment has been made.
13. The first and foremost question to the answer is whether the present applicant/revisionist holds any position in the company being its Director or any of its officer and secondly whether he is responsible to the company for the conduct of its business?
C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 7 / 9
14. Admittedly, the revisionist is neither the Director nor its Principal Officer and does not hold apparently any position in the Company. An outsider may stand surety qua the liability towards the company but, cannot be termed as person in charge of the affairs and responsible to the company for the conduct of its business. He is confirming party who confirms Debenture Subscription Cum Security Agreement between the complainant and accused no. 1 and also undertakes to pay a sum/money in case of default. The conditions of agreement referred to by Sh. Rungta, Senior Advocate only shows that the confirming party agreed to jointly discharge the liability of the company in the capacity as surety and the complainant shall not be preclude to initiate the proceedings against the dishonouring of the cheque when the confirming parties are unable to discharge the liability of the company which will enable the debenture holders to enforce the charge created under Clause 5.1. Therefore, I find force in the arguments of Ld. Counsel for the revisionist that the confirming party can by no stretch of imagination be stated to be the person incharge of the affairs of the company and responsible to the company for conduct of its business. Accordingly, the summoning order qua accused no. 4 Sushil Suri i.e. the revisionist dated 16.02.2015 is set aside.
C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 8 / 9
15. Let Trial Court Record be sent back to the concerned court along with copy of this order.
16. File of revision petition be consigned to Record Room.
Announced in the open court on 02nd July, 2015.
(GURDEEP SINGH) ADDITIONAL SESSIONS JDUGE NEW DELHI/ 02.7.2015 C.R. No. 82/15 Sushil Suri Vs. M/s PACL Ltd. Page no. 9 / 9