IMPORTANT POINT
Dishonour of cheque – A person cannot be made vicariously liable under provisions of Section 141 of NI Act, merely by stating that he was in-charge and responsible for day-to-day-conduct of accused company at relevant time when offence was committed.

JUDGMENT

Amit Mahajan, J.—The present petitions are filed seeking quashing of the summoning orders dated 18.01.2024 in CC No. 163318/2023, 07.02.2024 in CC No. 7054/2023 and 07.02.2024 in CC No. 10565/2023. The petitioners are also seeking the consequential relief of quashing of the aforesaid complaint cases filed under Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’) read with Sections 141/142 of the NI Act.

2. The complaints were filed alleging that the management of Sadbhav, along with the petitioners herein, approached the respondent company/STCI for availing corporate loan to the tune of Rs.50 crores. It is alleged that on 30.03.2021, the loan facility agreements were executed and the amount of Rs.50 crores was disbursed to Sadbhav on 31.03.2021. Post-dated cheques were thereafter handed to the complainant towards payment of interest and re-payment of the principal loan amount.

3. It is alleged that on presentation for clearance, all the cheques were returned with the remark – “Funds insufficient”. Separate complaints were filed by the complainant for dishonour of cheques under the respective Loan Agreements.

4. It is not disputed that the petitioners were the independent Directors in the accused company and therefore, cannot be held to be vicariously liable under Section 141 of the NI Act. The petitioners have placed impeachable material on record, in the form of Form 32 of the accused company, filed with the Registrar of Companies, that clearly shows that the petitioners were appointed in the capacity of an Independent Additional Directors and that they were non-executive Directors.

5. The petitioners are sought to be implicated in the present case under Section 141 of the NI Act. Section 141 of the NI Act reads as under:

“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 any body corporate and includes a firm or other association of individuals; and

(b) “director”, in relation to a firm, means a partner in the firm.”

6. In terms of Section 141 of the NI Act, a person can be vicariously held responsible for the offence committed by a company if he is responsible for the conduct of the company’s business at the relevant time.

7. The respondent has not disputed that the petitioners are independent directors.

8. The Hon’ble Apex Court in the case of Sunita Palita v. Panchami Stone Quarry : (2022) 10 SCC 152, relying on a catena of judgments, quashed the proceedings under Sections 138/141 of the NI Act agains