Anil Agrawal (Retired) 15 November 2009

138

I am posing this question and request an answer.

A pvt ltd co gives to loans to another pvt ltd co. on various dates in 1996 when it had 4 directors. On dishonour of cheques, the company sent notices u/s 138 to the company and all the 4 directors on 25/9/97. Two directors had resigned in Aug 97 i.e. before the date of occurrence of the offence and letters of resignation were sent to the company as well as to the ROC which were received and acknowledged. The two directors informed the company that they were not directors of the loanee company, were not drawers of the cheques and not liable to pay anything.

Company filed complaints against (1) company and (2) drawer of the cheque making them accused No.1 and 2. Names of other 2 directors were not included in the complaint and it read:

I say that the accused No.1 is a company duly registered as such of which he accused No.2 is the director who is in charge and responsible for the conduct of the business of accused No.1, and as such the accused No.2, shall be deemed to be guilty of the offence committed by the Accused No.1 and shall be liable to be proceeded against and punished for offences committed by Accused No.1.

Accused No.2 i.e. the drawer of the cheque died in 1998.

The company moved an application to include one of the other two surviving directors to "represent the company" at which the magistrate GRANDLY has made him an ACCUSED.

How long this process of including the surviving directors continue? Till all the directors are dead?

I request that he be asked to REPRESENT THE COMPANY; the magistrate says wait, I shall make him an ACCUSED.

Remember one thing. The case was filed in 1997 and we are in 2009. The trial had already started when Accused No.2 died.

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Anil Agrawal (Retired) 15 November 2009

Continuing with my above poser.

The same companies. The same situation. In this instance, the company sends notices to all the directors and also to a non-director. Complained filed on 1/12/98 summons issued in Jan 2000.

Averment:

“All the affairs of the accused No.1 (i.e. company) were being conducted and looked after by the accused.”

Refer SC’s following observations in Neeta Bhalla’s case:

“Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.”

The averment should also contain as to how and in what manner they were incharge and responsible for the conduct of the business.

The total amount of the claim: Rs.36000 Rate of interest charged: 32%.

Complaint reads:

“That by a notice dated 9/11/1998, the accused were called upon to make the payment within 15 days from the receipt of the said notice. The said notice was received by the accused No.2 denying the liability and the accused No.1 refused to accept the notice. The accused did not make any payment till today.”

The beauty is that notice was issued to accused No.2 (who denied liability) and who is shown to be a director but is not as per records of the ROC.

Same directors were issued notices in 1997 but included as accused then.

Date of first appearance 14/1/2000. Not a single hearing till date.

Any comment on the state of affairs.