The central legal point established in the judgment is the interpretation of 'in charge of the affairs of the company' under Section 141 of the N.I. Act and the liability of non-executive directors.

JUDGMENT

1. The challenge in this petition, under Article 227 of the Constitution of India, is to the orders of issuance of process against the Petitioners herein in proceedings/prosecutions instituted under Section 138 r/w. 141 of the Negotiable Instruments Act (for short N.I. Act).

2. Heard. The Petitioners 1 to 3 are original accused nos. 2, 7 and 8, respectively, in the criminal complaints, the details whereof have been given in para 1 of this petition. The complaints have been instituted by Respondent No.2-Oriental Containers, against the Petitioners herein and Respondent Nos. 3 to 9.

3. It is the case of the Respondent/complainant that it is engaged in the business of manufacturing, selling and buying of packaging products, such as collapsible tubes crown caps, plastic closures, etc. Respondent No.3 (original accused no.1) is in the business of bottling and selling aerated and other beverages. It has, therefore, plants at some places in India. The original accused nos. 2 to 10, including the Petitioners herein, at the relevant time, were in charge of day-to-day management and business affairs of the accused Company. It is also the case of the complainant Company that accused no.1 placed purchase orders for supply of various quantity of bottle closures. The goods, namely, bottle closures, were supplied to the accused Company as per its requirement and in terms of the purchase orders. Various cheques, the details whereof have been given in para 3 of this petition, were issued towards price of goods purchased. The complainant Company presented the cheques for encashment. The cheques returned unpaid with remarks, 'payment stopped'. Statutory demand notices were, therefore, issued to the accused Company. Since there was no compliance of the demand notices, complaints for offence punishable under Section 138 r/w. 141 of N.I. Act came to be instituted. Learned Metropolitan Magistrate took cognizance of the offence/s and issued process against the accused Company and its directors, including the Petitioners herein.

4. Quashment of orders of issuance of process is asked for mainly on the following grounds:

(i) The Petitioners were neither whole-time directors/managing directors, nor authorised personal signatories of the original accused no.1 Company;

(ii) The Petitioners were not signatories of the cheques, allegedly bounced;

(iii) There are no specific averments in the complaints and no specific role has been attributed qua the Petitioners herein and in what manner they have participated in the day-today business affairs of the accused Company;

(iv) The Petitioners were the non-executive /independent directors;

(v) The Petitioners do not come under the purview of Section 141 of the N.I. Act and the principle of vicarious liability shall not be applicable to them in view of various judgments of the Apex Court;

(vi) The Petitioners have resigned as directors of the accused Company soon after the cheques in question were issued.

Learned Advocate for the Petitioners, in his arguments, reiterated the aforesaid grounds. He has relied on judgments of the Apex Court in case of Sunita Palita & Ors. vs. M/s. Panchami Stone Quarry[1] and ultimately, urged for allowing the petition.

[1] Criminal Appeal No. of 2022 Arising out of SLP (Cri.) No.10396 of 2 019, Supreme Court of India New Delhi dated 1 August 2022

5. Learned Advocate for the complainant Company would, on the other hand, submit that in para 4 of the complaint, specific averments have been made to the effect that the accused nos. 2 to 10, including the Petitioners herein, were the directors at the relevant time and were in charge of the day-to-day management and business affairs of the accused no.1 Company. As such, the accused nos.2 to 10 were responsible for all the acts and actions of accused no.1 Company and liable for the same. According to learned Advocate, the Petitioners appear to have put in their papers post issuance of the cheques. The grounds, on which orders of issuance of proce