Vicarious liability under Section 138 of the Negotiable Instruments Act, 1881 arises from being in charge of and responsible for the conduct of business of the company at the relevant time. Specific averments against the directors are necessary to establish their responsibility for the conduct of the company's business.

JUDGMENT :

1. The present proceedings are instituted under Section 482 Cr.P.C challenging the order dated 14.02.2017 passed by the Metropolitan Magistrate in CC No.874/2017 whereby the present petitioners were summoned for the offence punishable under Section 138 N.I. Act.

2. The respondent, a private limited company, had filed a complaint through its authorized representative stating that it was engaged in the business of plywood in the name and style of M/s Kit Marketing Private Limited. The accused are regular purchasers of goods from the complainant on credit basis and have made regular payment towards sale consideration from time to time in the past. On 01.12.2016, there was an outstanding balance of Rs.36,46,758/- payable by the accused against which following four account payee cheques were issued:

3. All the aforesaid cheques were drawn on State Bank of India, Nehru Place, New Delhi from the account maintained by accused company. The cheques were presented by the complainant in his bank namely Axis Bank Limited, Mundka Delhi within the period of limitation however the same were returned unpaid to the complainant vide bank’s return memo dated 21.11.2016 and 13.12.2016 with the remarks “Funds Insufficient”.

4. The complainant issued a legal notice of demand dated 19.12.2016, through speed post, calling upon the accused to make payment within 15 days from the date of its receipt. The notices were duly received by the accused persons on 20.12.2016. Since no payment was made within the statutory period of 15 days, a complaint under Section 138 read with Sections 141/142 of NI Act was filed on 30.01.2017. The complaint has been filed against the accused company along with 7 other accused persons including the present petitioners.

5. Learned counsel for the petitioners contended that the petitioners are the independent Non-executive Additional Directors and were never involved in the day to day affairs of the company at any point of time. In this regard, he has referred to the complaint where the present petitioners were wrongly described as Directors. He also referred to para 17 of the complaint which contained allegations against the present petitioners and the same is reproduced hereunder:

“17. That the accused no. 1 is liable because the cheques in question have issued on behalf of the accused no. 1 and the accused no.2 to 6 are liable being the managing directors and directors of the accused no.1 and also being responsible for the control and management and day to day affairs of the accused no.1 and the accused no. 7 and 8 are liable being the signatories of the cheques in question.”

6. The present petitioners were impleaded as accused nos. 5, 6 & 3. Learned counsel for the petitioners urged that it is an admitted case of the respondent that the petitioners were neither the Managing Directors nor the signatories to the cheques in question. Learned counsel for the petitioners also relied on the Form 32 with respect to Sunita Palta (petitioner No.1) and Bhagwan Singh Duggal (petitioner no.2) submitted on 29.06.2013 and 13.07.2013 respectively, showing them as independent Non-executive Additional Directors. Similarly, Form No. DIR-12 with respect to Ashwini Kumar Singh (petitioner No.3) shows his status as independent Non-executive Director w.e.f. 01.04.2014.

7. Learned counsel for the petitioners has also referred to the Annual Report for the year 2016-17 of the accused company and the certificate issued by the Company Secretary of the accused company which also shows the status of petitioners as independent Directors.

8. On the other hand, learned counsel for the respondent has supported the impugned order. It was submitted that the petitioners