Section 138 of Negotiable Instruments Act, 1881 and the Factors that Affect the Validity of Summons

Section 138 of Negotiable Instruments Act, 1881 and the Factors that Affect the Validity of Summons 

Section 138 - Corporate Criminal Liability - Criminal Liability of Company or its Directors - C (Complainant) was a Company which filed complaint under S.138 against A (Accused) who was director of a Company A5 -  Cheque in this case was issued after A was appointed as non-Executive Director of the accused company A5 - Petition was filed by A before High Court to quash the Order vide which summons were issued by Magistrate - Held, "a company is stated to be a juristic person and all the acts done on behalf of a company are done by the others. The officers of a company who are responsible for acts done on behalf of the company are personally liable for those acts including the criminal action. Every person who at the time of commission of offence is in charge and responsible for the conduct of the business of the company is liable for the offence stated to be committed by the company. However, the criminal liability arises when the offence was committed and not on the basis of merely holding a designation or office in a company." - Subhash Chandra Agarwal v. Planet Media Services Ltd [2022] GCtR 2001 (Delhi)

Section 141 - "Offences by Companies" - Who will be criminally liable when offence is committed by Companies - Held, "as per section 141 of the NI Act, a person is stated to be criminally liable when at the time of commission of offence was in charge and responsible for the conduct of the business of the company. Every person connected with the company may not fall within the ambit of section 141 of the NI Act." - Subhash Chandra Agarwal v. Planet Media Services Ltd [2022] GCtR 2001 (Delhi)

Section 141 - Role of Form DIR-12 in cases of cheque-dishonour - Role of Non-Executive Director - Promoters of Company and their liability - Nomenclature of accused and its effect - A was non-executive Director of accused company - Form DIR-12 showed that A was non-Executive Director - Held, "section 2(69) of the Companies Act, 2013 defines the Promoters. It reflects that Promoter also includes a person who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise. Chapter XI of the Companies Act, 2013 also deals with appointment and qualifications of the directors. Section 149 provides that a company is required to have a Board of Directors. Section 149(6) defines an independent director and provides that an independent director in relation to a company means a director other than a managing director or a whole time director or a nominee director who is or was not a promoter of the company or its holding, subsidiary or associate company and who is not related to the promoters and directors in the company, its holding, subsidiary or associate." Form DIR12 showed that A was inducted as a director in the category of Promoter which means that A was having control over the affairs of the accused company directly or indirectly and is not falling in the definition of an independent director. Held, "mere nomenclature in Form DIR-12 as Non-Executive Directed necessarily does not mean that the Director was not directly or indirectly related with the affairs of the accused Company". - Subhash Chandra Agarwal v. Planet Media Services Ltd [2022] GCtR 2001 (Delhi)