Independent and non-executive directors cannot be held liable under NI Act unless directly involved in the company's day-to-day operations. (Sections 138, 141)

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. The aforesaid two Petitions under Section 482 of Code of Criminal Procedure, 1973 have been filed seeking quashing of CC No. 11997/2017 and the Summoning Order dated 09.08.2017, for the Offence under Section 138 read with 141 Negotiable Instruments Act (NI Act).

2. Briefly stated, the Complainant/Kotak Mahindra Bank Ltd. has its registered office at BKC, Bandra, Mumbai. Mr. Pranav Kumar, has been authorized, vide letter dated 24.08.2016, by the Board of Directors of the Bank to sign, verify and file on behalf of the Complainant.

3. According to the Complainant, Accused No. 1 M/s Ballarpur Industries Ltd through its Directors No. 4 to 12 and its authorised signatories Accused no. 2/Mr. Mahajan Ram Rana and Accused no. 3/Mr. Nakul Khanna, approached the Complainant requesting for funding facilities and agreed to abide by the terms and conditions for all such facilities. After a series of discussions, the Complainant acceded to the request of the Accused and agreed to sanction Financial Facilities in the form of WCDL and other related facilities.

4. Loan Agreement was signed and executed by Accused No. l in respect of the said Facilities confirming the terms and conditions mentioned therein. All the accused persons also executed various other Loan documents. Further, it is averred that all the Members of the Board of Accused No. 1 were fully aware of and were kept abreast of all such facilities, documents, sanctions etc. Further, Accused No. 1 had from time to time, also passed several Board Resolutions thereby inter-alia authorizing Accused No. 2 to 12 to execute and deliver on behalf of Accused No. l, all such Loan Facility documents as were necessary for the said Loan Facilities.

5. The Complainant disbursed Rs.1,57,36,00,000/- pursuant to these facilities. There was no dispute regarding the Terms and Conditions pertaining to the said financial facilities sanctioned to Accused No. l and all the Accused never raised any grievance about the same.

6. Thereafter, there were several irregularities in the functioning of the Loan account of the Accused No. l. In spite of repeated requests and reminders from Complainant, all the accused failed and neglected to pay the legitimate amounts due and payable to the Complainant.

7. There were several discussions with Accused No.2 to 3 as the Authorized Signatories and Representatives and 4 to 12 as Directors of Accused No. l. The Accused persons assured that their Account will be regularised at the earliest.

8. The Accused No. 2 & 3 towards part payment of outstanding dues, issued two impugned cheques, bearing No. 062122 dated 18.04.2017 for Rs. 10,00,00,000/- and No. 062123 dated 28.04.2017 for Rs. 9,84,73,271/-, in favour of the Complainant, with an assurance that the same would be honoured on its presentation.

9. However, on presentation, the impugned cheques were returned dishonoured vide Return Memo dated 30.05.2017 for the reason “funds insufficient”. It is submitted that all the Accused persons, at the time of issuing the impugned cheques, knew that they had no sufficient funds in their Account.

10. It is asserted that the Accused persons had fraudulently induced the Complainant to extend the said financial services on the pretext of paying it back, as per the agreed terms a