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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Supreme Court Summons to directors justified, if complaint filed under Sections 138 & 141 of NI Act alleges that Directors were in charge of and were responsible for conduct of business of the company MANU/SC/0838/2021 - (08 Oct 2021) </td> </tr> <tr> <td align="left" valign="top">Ashutosh Ashok Parasrampuriya vs M/S. Gharrkul Industries Pvt. Ltd.</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">The present appeals are directed against the common judgment filed at the instance of the Appellants under Section 482 of Code of Criminal Procedure, 1973( “CrPC”) against the order pursuant to which they were summoned to answer to a charge of Section 138 of Negotiable Instruments Act, 1881( “NI Act”) that came to be dismissed by the High Court under the order impugned. 
The issue for determination is whether the role of the Appellants in the capacity of the Director of the defaulter company makes them vicariously liable for the activities of the defaulter Company as defined under Section 141 of the NI Act? In that perception, whether the Appellant had committed the offence chargeable under Section 138 of the NI Act? 
In present case, present Court is concerned with Directors who are not signatories to the cheques. So far as Directors who are not the signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is necessary to aver in the complaint filed under Section 138 read with Section 141 of the NI Act that at the relevant time, when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. 
On reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the cheques were issued by the Company and dishonoured by the Bank, the Appellants were the Directors of the Company and were responsible for its business and all the Appellants were involved in the business of the Company and were responsible for all the affairs of the Company. It may not be proper to split while reading the complaint so as to come to a conclusion that, the allegations as a whole are not sufficient to fulfil the requirement of Section 141 of the NI Act. The complaint specifically refers to the point of time when the cheques were issued, their presentment, dishonour and failure to pay in spite of notice of dishonour. 
Undisputedly, on the presentation of the cheque of Rs.10,00,000 dated 2nd June 2012, the cheque was dishonoured due to “funds insufficient” in the account and after making due compliance, complaint was filed and after recording the statement of the complainant, proceedings were initiated by the learned Magistrate and no error has been committed by the High Court in dismissing the petition filed under Section 482 of CrPC under the impugned judgment. 
The submission of learned counsel for the Appellants that they are the non-¬executive Directors in the light of the documentary evidence placed on record by Form No. 32 issued by the Registrar of Companies, both the Appellants are shown to be the Directors of the Company, still open for the Appellants to justify during course of the trial. The High Court has rightly not interfered in exercise of its jurisdiction under Section 482 of CrPC for quashing of the complaint. Appeals dismissed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Directors, Liability, Cheque bounce</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>