Delhi District Court
M/S Surya Vinayaka Industries Ltd vs Central Bank Of India on 1 July, 2013
CR No.151/12, 150/12 & 149/12
IN THE COURT OF SHRI VIJAY KUMAR DAHIYA
ADDITIONAL SESSIONS JUDGE
DWARKA COURTS : DELHI
In the matter of :
CR No.151/12
I.
1. M/s Surya Vinayaka Industries Ltd.
Through its Director
having registered office at
Prem Sadan, 11, Rajendra Palace
New Delhi110008.
2. Sh. Sanjay Jain
S/o Late Sh. S.P.Jain
R/o I42, Ashok Vihar Phase1
New Delhi110052.
3. Sh. Rajiv Jain
S/o Late Sh. S.P.Jain
R/o I42, Ashok Vihar Phase1
New Delhi110052 ...Petitioners
VERSUS
1. Central Bank of India
Corporate Finance Branch
Parliament Street
New Delhi110001 ... Respondent
II
CR No.150/12
1. Sateesh Jain
S/o Sh. Subhash Chand Jain
Page 1 of 34 01.07.2013
CR No.151/12, 150/12 & 149/12
1/7439, East Gaurakh Park
Shahdara, Delhi110032. ...Petitioner
Vs.
1. Central Bank of India
Corporate Finance Branch
Parliament Street
New Delhi110001 ...Respondent
III
CR No.149/12
1. Ramesh Kumar Sareen
S/o Sh. Sardari Lal Sareen
3/5 East Patel Nagar
New Delhi110008 ...Petitioner
vs.
1. Central Bank of India
Corporate Finance Branch
Parliament Street
New Delhi110001 ...Respondent
CR No. 151/12, 150/12 & 149/12
Date of Institution: 04.10.2012
Reserved for orders on:24.05.2013
Judgment announced on: 01.07.2013
JUDGMENT
1. Vide this order, I shall dispose of the abovesaid revision petitions filed by the petitioners against the impugned order dated 24.08.2012.
Page 2 of 34 01.07.2013CR No.151/12, 150/12 & 149/12
2. Stating briefly, it is alleged that the complainant/respondent has filed a criminal complaint under section 138 NI Act against the petitioners for dishonour of cheque of Rs. 30 crores. It is alleged in the complaint that the petitioners in all the three petitions obtained loans from the complainant bank in the name of petitioner No. 1/accused No.1 in criminal revision No. 151/12 and to secure the loan, the cheque in question was issued as a security cheque and as per terms and conditions of the loan agreement, all formalities were completed and adhoc cash credit limit of Rs. 30 crores sanctioned vide letter dated 16.09.2011 for a period of three months in favour of petitioner No.1/accused No.1.
3. It is further alleged in the complaint that petitioner No.1/accused No.1 through other accused/petitioner approached the complainant bank for extension of the said cash credit limit and vide sanction letter dated 28.03.2012, the said loan facility was extended up to 30.04.2012 and the said cheque was presented in the last of May, 2012 which got dishonoured and the petitioner was duly informed by the complainant bank and legal notice dated 22.06.2012 was issued and petitioner no.1/accused no.1 in criminal revision No. 151/12 filed a vague reply stating therein that the cheque was issued as a security cheque and cannot be subject matter of NI proceedings and petitioner/accused No.5/ Satish Jain in criminal revision No. Page 3 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 150/12 filed a reply that he had resigned from the company/petitioner No.1/accused No.1 in criminal revision No. 151/12 w.e.f 15.05.2012 and Satish Jain had submitted all relevant documents alongwith form 32 but said Satish Jain was involved in the affairs of the company as well as he was an authorised signatory on behalf of the petitioner No.1 company and the petitioners in all three petitions failed to pay the amount and this complaint was filed. In criminal revision No. 149/12, petitioner/Ramesh Kumar Sareen stated to have resigned on 26.03.2012 i.e the date after which the cheque in question was presented and dishonoured and petitioner/Ramesh Kumar Sareen was not director or personal incharge or responsible for affairs of company and relevant documents placed on record clearly depicts that petitioner/Ramesh Kumar Sareen had already resigned before the cheque in question was presented for encashment. Petitioner/Ramesh Kumar Sareen in criminal revision No. 149/12 and petitioner/Satish Jain in criminal revision No. 150/12 are alleged to have resigned w.e.f 26.03.2013 and 15.05.2012 respectively before the cheque was presented for encashment by the complainant bank but the cheque was handed over in September 2012 when all the directors/petitioner No. 2 and 3 in Criminal revision No. 151/12 and petitioners Satish Jain and Ramesh Kumar Sareen in criminal revision No. 149/12 and 150/12 were directors of the petitioner company/accused company and they were also authorised signatory in terms of the documents placed on record by the complainant bank on record.
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4. It is contended that Ld. Trial Court has summoned the petitioner without appreciating the facts on record and the impugned order is passed in flagrant violation of the settled principle of law so far summoning of the director of the company under section 138 NI Act is concerned. It is further submitted that the cheque in question was a security cheque and the respondent bank has misused the said cheque by filling the date in the said chqaue without knowledge or consent of the petitioner and the petitioner has replied the legal notice issued by the respondent bank detailing therein that the cheque in question is a security cheque and as per agreed terms and conditions, it was not to be presented for encashment.
5. It is further contended that from the sanctioned letter, the loan amount was to be repaid on some future date and the cheque in question was issued for due performance and the payment was agreed to be made in some future date so there was no debt/liability on the date of the delivery of the cheque and there is no question of applicability of the provision of section 138 NI Act in the present case. In this regard, he had relied upon Shanku Concretes Pvt. Ltd and others vs State of Gujarat and another 2000(3) Crimes 602 and M.S.Narayana Menon @ Mani vs State of Kerala & Anr. 2006 JCC(NI) 198.
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6. It is further contended that post dated cheque issued for a debt due but payment is postponed to a future date would attract section 138 NI Act but the cheque issued not for existing debt due but issued by way of security would not attract 138 NI Act as such cheque has not been issued for a debt which had come into existence and the cheque issued by way of security would not attract section 138 NI Act. In this regard, he had relied upon M/s collage Culture & Ors vs. Apparel Export Promotion Council & Anr. 2007(4) JCC (NI) 388, Balaji Seafoods Exports (India) Ltd & Anr. Vs Mac Industries Ltd II (1999) CCR 424, Jyoti BuildTech Pvt. Ltd & Ors vs. Mideast Pipeline Products 2011(8) LRC 303 (DEL), Ravi Kumar D vs. State of Delhi & Anr. 2011(3) LRC 210 (DEL).
7. It has been further contended that there is no specific averment as to how and in what manner, the petitioners were responsible for day to day conduct of the business of accused company/petitioner No.1 in criminal revision No. 151/12. It is further contended that legal position is now well settled that the liability for an offence punishable under section 138 r/w section 141 of the Negotiable Instruments Act, 1881 will not arise by merely stating that the accused person hold some designation in the accused company or by merely reproducing the language of section 141 of the Act in the complaint. The complainant has to make Page 6 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 a specific averment in the complaint as to how and in what manner the person accused of the offence under section 138 of the Negotiable Instruments Act, 1881 was responsible or had a role in the conduct of the business of the accused company at the relevant time. A mere fact that the accused person was a Director or was holding some other office in the company cannot make a person vicariously liable to face the prosecution as per the mandate of Section 141 of the Negotiable Instruments Act, 1881 and the directors cannot be prosecuted on the bald assertion made in the complaint who had already resigned before presentation of the cheque in question as there is no universal rule that direction of the company is incharge of its every day affairs. Complainant is not only required to make specific allegations but also required to made specific allegations that in what manner, the director was incharge and responsible of conduct of the business of the company. In this regard, he had relied upon:
Anu Mehta & ors vs State 2012(4) JCC NI251 CAL., Manish Parwani vs NCT of Delhi 2010 (169) DLT 522, T.R.Bhagat vs DGCE & ors 2011(4) JCC 2667 (DHC), Anita Malhotra vs Apparel Export 2011(12) SCALE 471 (SC) and Ranjan Mayor & Anr vs Panalpina World Transport judgment in Cr. M. 2233/2007 passed by Delhi High Court, Meera Gupta vs Madan Lal Batra 2011(184) DLT 570.
8. It is further contended that the resignation of the direction is effected from the date it is submitted and it is over Page 7 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 to the company to comply with the formalities as provided under section 302/302 of the Companies Act and duty of the director is only to inform about the resignation and not to fill up forum 32 or inform the company as discharge duty of the company. In this regard, he has relied upon Manish Kant Aggarwal vs National Agricultural Marketing Federation of India 2009(1) JCC (NI) 41.
9. It is further contended that the court can also look into the material placed on record by the accused/petitioner which has significant bearing on the matter at the primary stage and director of the company/petitioner in criminal revision No. 151/12 had resigned after issuance of the cheque but before the presentation of the same i.e in May 2012, so they cannot be held reliable. In this regard, he had relied upon Harshendra Kumar D vs Rebatilata Koley etc 2011(3) LRC 147 (SC).
10. Per contra, Ld. Counsel for the respondent has contended that security cheque can be subject matter of the NI proceedings and it is settled law that the security cheque issued for debt payable in presenti but whose payment is deferred at a future date. In this regard, he had relied upon Balbhadra Singh Indrasurji Zala vs Shanku Concrete Pvt. Ltd.
2005 GLH (25) 685, ICDS vs Beena Shabir AIR 2002 SC 3014 and Krisha International P.Ltd & Ors vs. Manu/DE/0302/2013, Susamma Jacob vs Pyroguard Page 8 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 Engineers Cr. M 3682/2012 judgment passed by Hon'ble High Court of Delhi and Deepshika Kumari vs Leela Infrastructure & Ming Pvt. Ltd in Cr. M 2348/11 and Deepak Vig cs Avdesh Mittal Cr. M. 1136/2011 passed by Delhi High Court.
11. It is further contended that all the directors/petitioner company who have been arrayed as accused are authorised signatory as per the documents placed on record and they were at the helms of affairs and concerned with the day to day affairs of the company, therefore, it cannot be stated that the petitioners who were directors of the company were not related to the affairs of the company and there are specific averments of the complaint that they were authorised signatory on behalf of the accused company and concerned with the day to day affairs of the company. It is further contended that question as raised in these petitions are question of facts which are to be appreciated and adjudicated upon by the Ld. Trial Court during the course of trial and this court cannot go into these questions at this stage. It is further contended that petitioners/accused being directors were at the helms of affairs and liability under Companies Act depend upon the role played by one in the affairs of the company at the relevant time and does not depend upon his designation and status and if a cheque is dishonoured, it is upon the director to prove that he was not liable for dishonour of cheque that he was not looking after Page 9 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 business of the company and some other director was looking business of the company as the person whose cheque is dishonoured is not in a position to prove whether the director was responsible for the conduct of the business or not and this court at this stage cannot adjudicate as to the status of the directors who were responsible for the affairs of the company or at any role to play in the day to day discharge of the business of the accused company. In this regard, he had relied upon judgment Shree Raj Travels & Tours Ltd vs Destination of the World passed in Cr. M 2652/2010 passed by Delhi High Court, M.M.Pangarkar vs Rajendra Modani in CWP 172/12 Criminal Misc. 1648/11 passed by Aurangabad Bench, Bombay High Court, Four Seasons energy Venture vs State of NCT passed by Delhi High Court and Ved Prasad Gupta & Anr. Vs M/s Anchon Chemp last Pvt. Ltd in Cr. M 437/2013 passed by Delhi High Court.
12. I have heard counsel for the parties and gone through the record.
13. Chapter XVII was incorporated in the Negotiable Instruments Act, 1881 by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1998 with effect from 01.04.1989 for the purpose of imposing penalties in case of dishonour of cheque due to insufficiency of funds in the account of drawer of the cheque, in addition to the remedy of filing a recovery suit already available to the aggrieved under the civil law. Finding the Page 10 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 punishment contained in this chapter inadequate and the procedure to deal with such matters cumbersome, this chapter was further amended by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 for the purpose of early disposal of the cases related to dishonour of cheques as well as for enhancing punishment for the offenders. It would not be inappropriate to say that while this chapter's introduction has, on the one hand, reduced the civil litigation to a great extent, but, on the other hand, has led to the filing of countless complaints before the criminal courts which are mostly against companies, whether Private or Public Ltd., registered under the Companies Act.
14. Section 141 of the Negotiable Instruments Act, 1881 deals with the offences by the companies and says that if an offence has been committed by a company under section 138 Negotiable Instruments Act, 1881 then every person, who at the time the offence was committed was in charge of, and was responsible to the company in the conduct of the business of the company, as well as to the company is liable to be proceeded against and punished accordingly. What necessary averments are required to be made in the complaint to hold any Director or other post holder in the company as vicariously liable for an offence committed under section 138 of the Negotiable Instruments Act, 1881 by the company has been a subject matter of discussion in a number of cases. Despite the legal position now being well settled with the catena of pronouncements of the Apex Court on this Page 11 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 subject, the trend set up by the complainants to implead all the Directors, company secretaries, etc, of the accused company, irrespective of whether they were actually involved in the commission of alleged offence or not, has not yet ended. One of the earliest case, S.M.S.Pharmaceuticals Ltd vs. Neeta Bhalla and Anr., 2005 (7) SCALE 397, which threw light on the averments required to be made in the complaint under section 138 read with section 141 of Negotiable Instruments Act, the Hon'ble Supreme Court has observed as follows in paragraph 16:
(a) It is necessary to specifically aver in a complaint under section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of section 141 cannot be said to be satisfied.
b) .....Merely being a director of a company is not sufficient to make the person liable under section 141 of the Act. A director in a company cannot be deemed to be in charge of and Page 12 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 responsible to the company for conduct of its business. The requirement of section 141 is that the person sought to be made liable should be in charge of and 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 ion such cases.
c) ...the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company.
Therefore, they get covered under section
141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under Subsection (2) of Section 141.
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15. Right from the case law of SMS Pharmaceutical 2005(7) SCALE 397 which was reiterated in National Small Industries Corporations Ltd. vs. Harmeet Singh Paintal and Anr. 2010(2) SCALE 372, the following principles with regard to the liability of the directors are laid down namely:
24. ....if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was incharge of the business of the company" or by stating that "he was in charge of the daytoday management of the company" or by stating that "he was incharge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under section 141(1) of the Act. To put it clear that for making a person liable under section 141(2), the mechanical repetition of the requirements under section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence Page 14 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 and therefore, responsible under sub section (2) of Section 141 of the Act.
16. Summarizing the legal position, the Apex Court further laid down the following principles:
(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 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 in charge 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 tnhe Page 15 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 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) Of accused is Managing Directoror 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 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 made liable should be incharge of and Page 16 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 responsible for the conduct of teh 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.
17. The recent judgments of the Apex Court namely, Anita Malhotra vs Apparel export Promotion Council and Anr., (2011) 1 SCC 520 and Laxmi Dyechem vs. State of Gujrat and Ors., 2012(11) SCALE 365, have again reiterated the said legal position.
18. So for as the first contention of the counsel for the petitioner is concerned that security cheque cannot be subject matter under section 138 NI Act proceedings. It may be noted down here that the said controversy has been set at rest by Hon'ble High Court in Krish International P.Ltd & Ors vs. State & Manu/DE/0302/2013, Hon'ble High Court of Delhi, wherein after discussion of a catena of judgments, it has been observed as under:
8. There is no dispute about the proposition of law as laid down in M/s. Collage Culture that a cheque issued not for an existing due but issued by way of security would not attract the provisions of section 138 of the Act.
In M/s Collage Culture the Ld. Single Judge of Page 17 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 this Court (Pradeep Nandrajog, J.) drew distinction between a cheque issued for a debt in present but payable in future and second for a debt which may become payable in future upon the occurrence of a contingent event. Para 20 to 24 of the report in M/s. Collage Culture are extracted hereunder:
20. A post dated cheque may be issued under two circumstances. Under circumstance one, it may be issued for a debt in present but payable in future. Under second circumstance it may be issued for a debt which may become paybale in future upon the occurrence of a contingent event.
21. The difference in the two kinds of post dated cheques would be that the cheque issued under first circumstance would be for a debt due, only payment being postponed. The latter cheque would be by way of a security.
22. The word 'due means 'outstanding at the relevant date'. The debt has to be in existence as a crystallized demand akin to a liquidated damages and not a demand which may or may not come into existence; coming into existence being contingent upon the Page 18 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 happening of an event.
19. It may be noted here that even the Hon'ble Supreme Court in M.S.Narayana Menon @ Mani (supra) has mandated that security cheques can be a subject matter of 138 NI proceedings in some contingency and in that case, the defence of the appellant was found probable. Therefore, it is not the ratio of M.S.Narayan case that security cheques cannot be subject matter of NI proceedings under any contingency. Similarly, the ratio of case law Balaji Seafoods Exports (supra) is clearly distinguishable to the facts of the present case, otherwise also, this court is bound by the ratio of M/s Collage Culture (supra) and Krish International (supra). In addition to it, it may be noted that in Ravi Kumar D vs State of Delhi & Anr., it has been observed as under:
Plain reading of the above provision of law shows that criminal liability under section 138 NI Act is attracted only if the dishonoured cheque was issued for the discharge in whole or in part of any existing debt or liability. The Section does not apply to a cheque issued to meet future liability which may arise on happening of some contingency. Thus, it is clear that a postdated cheque, if issued for discharge of a debt due, in the event of Page 19 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 dishonour, would attract Section 138 of the NI Act but a cheque issued not for an existing debt/liability but issued by way of security for meeting some future contingency would not attract section 138 of the NI Act.
20. Therefore, as per the mandate of case law in foregoing para, it can safely be concluded that a security cheque of an amount which is owned by accused in presenti but the payment of which is deferred to a future date such security cheque is covered under the provision of section 138 NI Act.
21. The next contention agitated in the present petitions is that petitioners namely Ramesh Kumar Sareen and Satish Jain are not connected with the affairs of the company and they had resigned before the said cheque was presented by the complainant/respondent bank and dishonored so they cannot be arrayed as accused. It may be noted here that at this stage, the defence of the accused cannot be looked into as has been observed in Shree Raj Travels & Tours Ltd.(supra) as under:
This court under its inherent powers cannot adjudicate the facts as to who was the sleeping Director or a non working Director. It is undisputed that petitioner Page 20 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 was the Director of the company and the complainant has alleged him to be incharge of management. The resignation of the petitioner from the company, is a defence of the petitioner, which he can take before the trial court concerned and this Court cannot quash a judicial order of summoning on the ground that the petitioner had resigned. The petitioner shall be given an opportunity before the court concerned to prove that he was not a Director at the relevant time. If an offence is committed by the company under section 138 NI Act, all those who were Directors of the company, except those excepted by law are responsible. The accused/petitioner is not covered by exception laid down by law.
22. Therefore, the settled principle of law is that the revisional court is not a fact finding court and very averment made by the complainant in the complaint are required to be considered and in the absence of any authentic proof produced by the petitioners whether they are the directors of the accused company at the relevant time or not are the issued to be decided during the court of trial after giving opportunities to the parties to adduce evidence to that effect Page 21 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 which can be decided on cross examination and, therefore, today at this stage in the present petitions, one cannot jump to the conclusion that the petitioners/accused are namely Ramesh Kumar Sareen and Satish Jain are not responsible for the day to day affairs of the company.
23. The question whether a director resigned after issuance of cheque but before the presentation of such cheques has been dealt with in the judgment of Ved Prakash Gupta (supra), the facts were alleged by the petitioner therein which are detailed in para 2 of the said judgment and for reference are reproduced hereunder:
"2. The common ground of the challenge raised by the petitioners in the instant petitions is that the petitioners were prosecuted as Directors and persons in charge and responsible for the conduct of business of M/s Pragati Hitech Products Pvt. Ltd. (Pragati) as certain cheques issued by Pragati were dishonoured on presentation and the petitioners were made vicariously liable being Directors of the company. It is urged that the petitioners had tendered their resignation by letter dated 19.07.2011. The resignations were accepted by the company by the Page 22 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 Resolution dated 20.07.2011. Form 32 in respect of petitioner Ved Prakash Gupta was submitted with the Registrar of the company (ROC) immediately thereafter. Since the cheques in question were dated 10.08.2011, 20.08.2011, 30.08.2011, 10.09.2011, 10.10.2011 and 30.10.2011, the petitioners cannot be fastened with the vicarious liability as it was not within their power and competence to honour the cheques as they had already resigned from the directorship. Ld. Counsel for the petitioners places reliance on report of the Supreme Court in Harshendra Kumar D. Rebatilata Koley etc., (2011) 3 SCC 351."
24. It is relevant to note here that after taking into consideration the factual matrix and settled principle of law in para 9, the Hon'ble High Court observed as under:
"9. Turning to the facts of the instant case, there are specific averments that the petitioners negotiated for the purchase of goods by Pragati and they were responsible for the day to day affairs and conduct of the business of the company.
It was specifically stated that the goods were supplied from April, 2010 to Page 23 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 November, 2010. It was further stated that certain payments were made in the year 2010 and 2011. It was the complainant case that the post dated cheques in question were sent in the first week of June 2011 and that the same were dishonoured on presentation. Thus, as per the averments made in the complaint, the cheques were delivered much before the petitioners' resignation. All the transactions are related to the period when the petitioners were directors, and as stated above, according to respondent No.1 (the complainant) they had negotiated with regard to supply of goods. Of course, copy of Form No. 32 in case of petitioner Ved Prakash Gupta reveals that the resignation was sent to the ROC on w.e.f. 20.07.2011. Assuming that it was received immediately after 20.07.2011, the question for consideration is, even if the resignation is presumed to have been received in the office of Registrar of company immediately after 20.07.2011, can the petitioner be absolved of his liability? If this is allowed, perhaps no director nor any officer of the accused company can ever be made liable, Page 24 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 because they can enter into any transaction at their will, issue some post dated cheques and then tender their resignation before the date of its encashment."
25. Now coming to the liability of the Directors, in Anu Mehta case, Hon'ble High court of Calcutta reiterated the ratio of law as laid in S.M.S.Pharmaceuticals Ltd (supra) and National Small Industries Corporation Ltd (supra) and Pepsico India Holdings Pvt. Ltd (supra) but in Anu Mehta's case, it has been observed that the complaint was lacking details regarding the manner and as to what part was played by the directors and how they were responsible regarding the finances of the company at the time of issuance of cheques and control over the funds of the companies. Similarly in Manish Parwani (supra), it has been observed in para 9 as under:
"The three complaints in question under sections 138/142 of the Negotiable Instruments Act were filed by the complainant company in respect of total 14 cheques allegedly given by accused No. 1 company which were returned unpaid. All these 14 cheques, as per complaints, were of dates after the resignation by the Page 25 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 petitioners from the directorship of accused No.1 company. Admittedly, these cheques were returned unpaid by the banker of the complainant company after 24.10.2007 i.e date of resignation by the petitioners from the directorship of accused No.1 company."
26. Therefore in Manish Parwani case, the directors/petitioners have already resigned before issuance of cheque in question as the petitioners therein/directors have resigned w.e.f 24.10.2007 i.e much before the commission of the offence. Similarly in T.R.Bhagat (supra) in para No.10, it has been observed as under:
"10. In the matter of N.K.Wahi vs. Sheklhar Singh, AIR 2007 SC 1454, Hon'ble Supreme Court while dealing with the vicarious liability under section 141 NI Act observed :
8. To launch a prosecution, therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are incharge and responsible for Page 26 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the court can always come to a conclusion in facts of each case. But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable.
11. Legal position which emerges from the aforesaid is that in order to rope in a Director of a company as accused of an offence under section 138 NI Act vicariously with the aid of section 141 NI Act, the complainant is not only required to make a specific allegation that the person concerned was the Director of the company but he is also required to make specific allegation of fact indicating as to how and in what manner the said Director was incharge of and responsible for the conduct of business of the company. Since the language of Section 9AA(1) of Central Excise Act is exactly similar to Section 141 NI Act, the same principle of law would apply to the Page 27 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 Director of the company in order to hold him vicariously responsible for an offence committed by the company under section 9 of the Central Excise Act.
12. Having discussed the law, now it is to be seen whether the allegations in the complaint make out a case under section 9AA of the Central Excise Act to hold the petitioner vicariously liable for the offences punishable under section 9(1)
(a), 9(1)(b) and 9(1)(bb) of the Central Excise Act allegedly committed by the accused company M/s Office Machines Pvt. Ltd. On reading of the copy of the complaint annexed to the petition, which is not disputed, it transpires that the complainant is seeking to rope in the petitioner, who has been arrayed as respondent No.3 in the complaint, on the basis of allegations made in para 8 of the complaint, which is reproduced thus: "That the accused No.2 & 3, being the Directors of the accused firm No.1 and also being responsible in the day to day activity of the firm shall also be liable to be punished under section 9 of the Act in the same manner as the accused No.1".Page 28 of 34 01.07.2013
CR No.151/12, 150/12 & 149/12
27. Therefore the directors who are incharge and responsible for the conduct of the affairs of the company can be arrayed as accused by the complainant. Similarly in Anita Malhotra (supra), it has been observed in para 15 as under:
This court has repeatedly held that in case of a Director, 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 Corporation Ltd. vs. Harmeet Singh Paintal and Another, (20100 3 SCC 330). In the case on hand, particularly, in para 4 of the complaint, except sthe 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 regard to the same and we agree with the contention of Mr. Akhil Sibal that except reproduction of the statutory requirements the complainant Page 29 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 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.
28. It may be noted here that in Anita's case, the petitioner/director has resigned from the company as director in the year 1998, well before the relevant date, namely in the year 2004 when the cheque was issued. In the present case, director/accused/petitioner at the time when the security cheques were handed over to the petitioner No.1 company to the complainant bank/respondent and they were authorised signatory in terms of the documents placed on record by the complainant and only two directors namely Ramesh Kumar Sareen and Satish Jain had resigned from the directorship w.e.f 26.03.2012 and 15.05.2012 and they were also authroised signatory of accused company i.e Surya Vinayaka Industries Ltd. Therefore, it cannot be said that the petitioners/directors were not associated with the affairs of the company and not incharge and responsible for conduct of the day to day functioning of the director/petitioner No.1.
29. Similarly in Rajan Mayor case, the petition of the Rajan was dismissed and so far as C.P Vohra, who was only Vice President/Marketing was held not to be any incharge and responsible for the conduct of day to day functioning of the said company and summoning order qua him is quashed so the case of Rajan Mayor is distinguishable to the facts of the Page 30 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 present case. In Manish Kant Aggarwal (supra), it has been observed that resignation of the director is effective on or before the date it is tendered and submitted and in M.K.Aggarwal's case, the petitioner/director has resigned from the company on 25.10.2005 and the three cheques involved were issued on 30.06.2006 and one of the petitioner involved in the case of Manish Kant (supra) had resigned on 25.10.2005 and form 32 was accordingly submitted to the Registrar Company before the issuance of 36 cheques. Therefore, facts of the Manish Kant Aggarwal are distinguishable to the facts of the present case.
30. So far as defence of the petitioners/accused regard uncontroverted documents is concerned in Harshendra Kumar D (supra) in para 21, it has been observed as under:
21. In our judgment, the above observations cannot be read to mean that in a criminal case where trial is yet to take place and the matter is at the stage of issuance of summons or taking cognizance, materials relied upon by the accused which are in the nature of public documents or the materials which are beyond suspicion or doubt, in no circumstance, can be looked into by the High Court in exercise of its jurisdiction Page 31 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 under section 482 or for that matter in excise of revisional jurisdiction under section 397 of the Code. It is fairly settled now that while exercising inherent jurisdiction under section 482 or revisional jurisdiction under section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations.
However, in an appropriate case, if on the face of the documentswhich are beyond suspicion or doubtplaced by accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage.
Therefore, the documents tendered in defence can be gone into if such documents are uncontroverted documents in an appropriate.
Page 32 of 34 01.07.2013CR No.151/12, 150/12 & 149/12
31. Now adverting to the facts of the present case, in view of the settled principle of law, the accused has availed a loan of Rs. 30 crores from the respondent bank for the period of three months, which expired in December 16.12.2011. Thereafter, the petitioner/accused company through its directors sought extension of the said loan and such extension was sanctioned vide letter dated 28.03.2012 upto 30.04.2012but when the security cheque given by the petitioners/accused were presented, the same was dishonoured and this complaint was filed. It is not the case of the accused No.2 to 5/petitioners in complaint case herein that they had resigned before issuance of the cheque in question by the accused company to the complainant. Therefore, keeping in view the ratio of law laid down in Ved Prakash (supra), I am of the opinion that the petitioners Satish Jain and Ramesh Kumar Sareen were directors and authorised signatory of the petitioner company on the date when the cheque in question was handed over to the complainant bank and it cannot be said that they were having no connection with the day to day affairs of the company and even if they had resigned before presentation of the cheque in question but they can be held to have played no role in this transaction which led to the bouncing and filing of the present complaint against them and provisions of section 138 NI Act are also attracted to both these petitioners.
32. From the above discussion, I am of the opinion that these petitions are devoid of merits and are hereby Page 33 of 34 01.07.2013 CR No.151/12, 150/12 & 149/12 dismissed.
33. Copy of this order be placed in Criminal revision Nos. 149/12, 150/12 and 151/12.
34. TCR be sent to the Ld. Trial Court for information and compliance.
35. File be consigned to record room.
Announced in the open court (Vijay Kumar Dahiya) on the 1st day of July 2013 ASJ/ Dwarka Courts New Delhi Page 34 of 34 01.07.2013