Additional directors are not vicariously liable under the Negotiable Instruments Act without specific allegations of their direct involvement in the company's conduct, as general claims of responsibility are insufficient.

JUDGMENT :

SANDEEP N. BHATT, J.

1. This application is filed under Section 482 of the Code of Criminal Procedure, 1973 (‘the Code’ for short) for quashing and setting aside the process issued by the learned Metropolitan Magistrate (NI Act), Court No. 36 at Ahmedabad in Criminal Case No. 6635 of 2019 qua the present applicants filed under the provisions of the Negotiable Instruments Act (‘the NI Act’ for short).

2. The brief facts leading to filing of this application are such the impugned complaint is filed by the respondent no. 2 alleging that the complainant is a non-banking finance company constituted under the COMPANIES ACT , 1956; that the company is having its regional office at address mentioned in the cause title of the complaint; that the complainant-company is in the business of providing various loans. It is further alleged in the complaint that the complainant-company has sanctioned to the respondent no. 3-accused no. 1 of credit facility upto Rs.40 crores by way of channels finance facility; that the original accused nos. 2 to 4 are the directors/guarantors of the accused no. 1, accused no. 5 is Managing Director of the accused no. 1; accused no. 6 is the Director of the accused no. 1, accused nos. 7 and 8 (present applicants) are the Additional Directors of accused no. 1 and accused nos. 9 to 11 are the guarantors of the accused no. 1 (against whom no process is issued yet); it is further averred in the complaint that the accused nos. 2 to 11 are responsible for the day-to-day business of the accused no. 1; that the accused no. 3 in his capacity as director/authorized signatory of the accused no. 1 has executed a channel finance agreement dated 22.2.2018 with the complainant company and thereby agreed to adhere to and comply with all the terms and conditions of the said agreement; that as per the terms and conditions of the agreement, the accused no. 3 has issued the cheque in favour of the complainant towards the repayment of the said facility for Rs.18,99,63,688/- drawn on Kotak Mahindra Bank Ltd., Kunnur and that when the said cheque was presented by the complainant, it was returned dishonoured with an endorsement ‘Drawer’s sign not as per mandate” and that the intimation of the dishonour of the cheque was received by the complainant vide memo/advise dated 29.11.2018; thereafter the demand notice was issued, however, as the accused failed to make the payment and therefore the complaint is filed and the process is issued against the accused nos. 1 to 8 by the learned Metropolitan Magistrate. It is this complaint and process which are prayed to be quashed by way of this application qua the applicants i.e. accused nos. 7 and 8 of the complaint.

3. Heard learned advocates for the parties.

4. Learned advocate Mr. Kinariwala for the applicants submits that the applicants herein are the original accused nos. 7 and 8 in the complaint; that they are the additional directors and additional directors cannot be joined as an accused as the director is not defined under the provisions of the NI Act and as per Section 141 , the director is with reference to the company and therefore, one has to refer to the definition clause under the COMPANIES ACT ; that as per Section 2(34) of the COMPANIES ACT , 2013, the director means a director appointed on the board of the company in accord