Prosecution of Individuals Involved with A Company in a case of Dishonour of Cheque under Section 138 of Negotiable Instruments Act, 1881

Prosecution of Individuals Involved with A Company in a case of Dishonour of Cheque under Section 138 of Negotiable Instruments Act, 1881 

Section 141 - Offences by Companies - Corporate Criminal Liability -  Liability of Directors of Company - Acquittal of Accused - Quashing of Complaint - Quashing of Summons - A was a Director of the Accused Company A7 - 7 agreements were entered into between accused company A7 and complainant C - Agreement was in respect of crude oil - Cheque were issued in favour of drawer company - Cheque was returned with remarks "Funds insufficient" - Complaint was filed against Company A7 and A who was a director of the Company - Held, it will be relevant to consider Section 149 of the Companies Act, 2013 which deals with the aspect of independent and non executive directors, since as per the case of petitioner, that was the position of the petitioner in the accused company - A perusal of Form No. DIR-11, of the accused company A7 shows that A was an independent director at the time of commission of the offence. In view of Section 141 of Negotiable Instruments Act, 1881 and Section 149 of Companies Act, 2013 A could have been held vicariously liable only if it was shown that he was incharge of and was responsible for the conduct of the business of the company at the time of commission of offence, and not otherwise -  As per settled legal propositions, "it was to be specifically averred in the complaint as to how the accused, being an independent director, was incharge of day to day affairs of the company as well as the conduct of business" - In the instant case However, nothing of that sort can be inferred from the complaint filed before the learned Trial Court in the instant case -  It was seen from the contents of the complaint that general allegations have been made against all the directors of the accused company. Such mere allegation or bald assertion may be sufficient to implicate the Managing directors as well as those who are signatories to cheque, but not the other directors or persons, especially independent or non-executive directors - Held, in absence of any specific averments or allegations carving out a specific role attributable to A in relation to conduct of business of accused company A7, merely making bald statements that all the accused persons/directors were incharge and responsible for the day to day affairs of the company, does not suffice to make the accused Director "A" vicariously liable for dishonouring of the cheques not signed by him and there being material on record to show that he was an independent director in the company - Held, prosecution of "A" would not sustain - Power under S.482 of Code of Criminal Procedure, 1973 was exercised by High Court to set aside the summons issued to accused "A" - Prakash Chand v. State [2022] GCtR 2503 (Delhi)