Non-executive directors are not automatically liable under the Negotiable Instruments Act, and specific averments are required to establish vicarious liability.

JUDGMENT

1. This petition has been filed seeking quashing of complaint qua the petitioner, being C.C. No.515453/2016 P.S. Rajendra Nagar pending in the court of Ld. MM, Tis Hazari Court, New Delhi and for setting aside order dated 6th July, 2017 by which Crl. Rev. No.219/2017 filed by petitioner was dismissed by the Ld. Special Judge (PC Act), CBI-08, Central District, Tis Hazari Court, New Delhi.

2. The said complaint was filed under section 138 read with section 141 & 142 of the Negotiable Instruments Act, 1881 against the principal accused M/s Birla Cotsyn (India) Ltd. (A-l) an incorporated company with its registered office at Mumbai. Its Managing Director, Mr. P.V.R. Murthy, who is also a signatory to the cheque in question, has been arrayed as A-2 while the Directors of A-1, who are stated to be in charge and responsible for the conduct of day-to-day affairs of the accused company, have been arrayed as A-3 to A-8. The gravamen of the complaint was that the accused company had approached the complainant company (M/s. Cecil Webber Engineering Ltd.) for advancement of a business loan of Rs.5 crores as an Inter Corporate Deposit (ICD). The said loan was advanced on mutually agreed terms, and in discharge of its liability the accused company issued a cheque for Rs.5 crores with the assurance that the same would be honoured. The said cheque, on presentation, was dishonoured vide cheque returning memo dated 27th July, 2012 with remarks "insufficient funds". Thereafter, pursuant to legal notices, the said complaint was lodged under section 138 NI Act.

3. As per the summoning order dated 9th November, 2012, summons were issued to all accused, including A-1 (the accused company) and A-2 to A-8. During the pendency of the complaint, A-4 to A-8 were dropped from the array of accused by the complainant on the ground that the complainant "does not want to prosecute them". This was recorded in the order dated 31st August 2015 by the Ld. MM. The proceedings continued with respect to A-1 to A-3.

4. This petition has been filed on behalf of A-3, the petitioner herein on the basis that the petitioner was an independent and non-executive Director who was not managing the day-to-day affairs of the accused company and was not a signatory to the cheque.

5. Ld. Senior Counsel for the petitioner submitted as under:

i) Firstly, the complainant made the same allegations against all the accused, as evident from para no.2 where a bald averment is made and no difference is also apparent from the summoning order whereby all the accused have been summoned. However, even though A-4 to A-8 were dropped from the array of accused at the behest of the complainant, A-3, who was in a similar position as others, was continued as an accused in the array of parties. This was despite the fact that A-2, who was the Managing Director of A-1 (accused company) and was arrayed on that account.

ii) Secondly, the petitioner sought discharge and the Ld. MM by order dated 21st November 2016, noted petitioner's submissions that he was a non-executive Director, had no active role to play in the functioning of day-to-day affairs of A-1 (the accused company) and further had resigned from A-1 on 29th December 2012. Refuting the said submissions, complainant's contention was that the petitioner was a Director at the time of issuance of the cheque and that the letterhead on which the promissory note and the receipt was given by A-1 reflected that it was "Yash Birla Group" and therefore being part of the conglomerate of which the petitioner was a Chairperson, it would be assumed that the petitioner was in charge of and responsible for the affairs of the accused company. After hearing the submissions of the parties, the Ld. MM noted that the complaint had stated that A-3 was the Director of A-1 and was in charge of and responsible conduct of affairs of A-1's business and on the basis that the letterhead by which the promissory note and the receipt was given, had the appellation