Legal Validity of Summons in respect of Offence under S.138 of Negotiable Instruments Act, 1881
The case of Kanarath Payattiyath Balraj v. Raja Arora [2017] GCtR 6459 (Delhi) has explained under what situations the summons issued in respect of alleged offence under S.138 of Negotiable Instruments Act, 1881 can be quashed. It was held that "the Companies Act, 2013 recognizes different categories of directors and creates a distinction in the status of independent and nominee directors. Section 2(47) defines an independent director as one referred to in sub section 6 of section 149."
Section 149 sub-section 6 of the Companies Act 2013 prescribes the qualification of an independent director. A Nominee Director has been defined under the Explanation to subsection (7) of Section 149 of Companies Act, 2013.
In this case, Petitioner - accused was appointed as an independent non executive nominee director in 2009 and he subsequently resigned from the company in the year 2015. In terms of Section 149(12) of the Companies Act, 2013 he shall be held liable, only in respect of such acts of omission or commission by the company which had occurred with his knowledge or consent or connivance or where he had not acted diligently attributable through Board processes. Thus specific averments are required to be made in the complaint to show that the offence was committed with the knowledge/ consent/ connivance of the Petitioner-accused. Ultimately, the summons issued to some of the accused persons were quashed.
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