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HC held that Criminal Proceedings u/s 138 of NI Act not maintainable for Non-Executive Directors of a Company
The High Court of Delhi held that Independent Non-Executive Directors of a company shall not be maintainable for criminal proceedings under section 138 of Negotiable Instruments Act, 1881 for dishonour of cheque. In re Sunita Patla & Ors V. M/s Kit Marketing Ltd the single bench Justice Manoj Kumar Ohri relied on various judgments given by the hon’ble Supreme Court. The court held that in the matter of Pooja Ravinder Devidasani v. State of Maharashtra & Anr., 2014(14) it must be proved that the directed being accused of must be shown as concern in charge and was responsible for the Company in conduct of its business. The court held that the cheques submitted which was maintained by the Company where the Non-Executive Directors never involve in day to day affairs of the Company. It has been said that the titled directors are not involved in the Managerial aspects of the Company. The court held that “A perusal of the complaint filed under Section 138 r/w Sections 141/142 of NI Act filed by the complainant shows that except for the general allegation stating that the petitioners were responsible for control and management and day to day affairs of the accused company, no specific role has been attributed to the petitioners. To fasten the criminal liability under The Negotiable Instruments Act, 1881, the above generalised averment without any specific details as to how and in what manner, the petitioners were responsible for the control and management of affairs of the company, is not enough.” The court also referred to the most recent verdict of the apex court in re AD Radha Krishnan V. Dasari Deepthi & Ors held that in order to initiate criminal proceedings against the Director in charge, must contain the conduct of the business at the time of commission of the offence. The court referred to Chintalapati Srinivasa Raju v. Securities and Exchange Board of India, (2018) 7 SCC 443 where the judgment given by the SC also upheld the verdict given in Pooja Ravinder Devidasani (supra) that every person connected to the said Company shall not be held liable. The court mentioned that there shall be existence of reasonable justification in order to initiate the criminal proceedings u/s 138 of NI Act against the Director. Thus, the court quashed the petition u/s 482 of Code of Criminal Procedure on the reason of upbringing some unimpeachable evidence to the record. In conclusion, “the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time.”
