PETITIONER: MUIR MILLS CO., LTD. Vs. RESPONDENT: SUTI MILLS MAZDOOR UNION, KANPUR. DATE OF JUDGMENT: 19/11/1954 BENCH: BHAGWATI, NATWARLAL H. BENCH: BHAGWATI, NATWARLAL H. MAHAJAN, MEHAR CHAND (CJ) DAS, SUDHI RANJAN AIYYAR, T.L. VENKATARAMA CITATION: 1955 AIR 170 1955 SCR (1) 991 ACT: Bonus -Meaning of - Necessary conditions for the demand thereof-Industrial claim-Principles for the grant of it- Social Justice-Meaning of--Industrial Tribunals--Whether Tribunals within the meaning of Art. 136 of the Constitution. HEADNOTE: The term bonus is applied to a cash payment made in addition to wages. it generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained. 992 There are two conditions, which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. The formula for the grant of bonus is as follows:- As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges, The first charges on gross profits are (1) provision for depreciation. (2) reserves for rehabilitation, (3) a return at 6 per cent. on the paid up capital and (4) a return on the working capital at a lesser rate than the return on paid up capital. The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus. The claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. If it were so, it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can arise for distribution of any sum as bonus amongst the employees. Social justice is a very vague and indeterminate expression and no clear-cut definition can be laid down which will cover all the situations. The concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation. Industrial Tribunals are Tribunals within the meaning of Art. 136 and Art. 136 has vested in the Supreme Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or Tribunal within the territory of India has not given a fair deal to a litigant. In re Eddystone Marine Insurance Co. (L.R. [1894] W.N. 30), Sutton v. Attorney-General ([19231 39 T.L.R. 294), National Association of Local Government Officers v. Bolton Corporation (L.R. 1943 A.C. 166), Kenicott v. Supervisor of Wayne County ([1873] 83 U.S. 452: 21 L. Ed. 319), Great 'Western Garment Co. Ltd. v. Minister of National Revenue ([1948] 1 D.L.R. 225), Millowners' Association, Bombay v. Bashtreya Mills Mazdoor Sangh, Bombay '[1950] 2 L.L.J. 1247), Nizam Sugar Factory Ltd., Hyderabad v. Their Workmen ([1952], 1 L.L.J. 386), Textile Mills, Madhya Pradesh v. Their Workmen ([1952] 2 L.L.J. 62`), Famous Cine Laboratory v. Their Workmen ([1953] 1 L.L.J 466) and Bharat Bank Ltd., Delhi 993 v. Employees of the Bharat Bank Ltd., Delhi, ([1960] S.C.R. 469), referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 135 of 1951. Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 21st of May, 1951, from the Judgment and Order dated the 19th February, 1951, of the Labour Appellate Tribunal of India, Allahabad in Appeal No. 136 of 1950. C.K. Daphtary, Solicitor-General of India (J. B. Dadachanji, Rajinder Narain and Devinder Swarup, with him) for the appellant. S.C. Isaacs (0. P. Lal, with him) for the res. pondent. M.C. Setalvad, Attorney-General for India, (Rajin der Narain and Devinder Swarup, with him) for the Intervener (All India Organisation of Industrial Employers). S.C. Isaacs (Mohan Lal Saxena and C. P. Lal, with him) for the Intervener (State of U.P.). 1954. November 19. The Judgment of the Court as delivered by BHAGWATI J.-This appeal with special leave is directed against the judgment and order of the Labour Appellate Tribunal of India in a dispute regarding the workers' claim for bonus. During the year 1948 the appellant made a profit of Rs. 11,97,648-11-9. It paid 24 3 per cent. dividend on ordinary shares, being the maximum that could be paid under the Public Companies (Limitation of Dividend) Ordinance of 1948 and also paid to the workers their full share of bonus at annas 4 in a rupee of their basic earnings. During the year 1949 the selling rates for cloth and yarn were controlled by the Government and were approximately 4 per cent. below those obtained in 1948. The basic wages were increased from the 1st December, 1948, by order of the Government of Uttar Pradesh and the total wages paid were therefore higher than those in the previous year. There was moreover indiscipline amongst the workers and production suffered. There was a strike in the month of October and the mills were closed for nearly a month. Further the management were unable to secure cotton which resulted in the curtailment of the working hours. As a result of all these circumstances the appellant suffered a trading loss of Rs. 5,02,563-1-10. A sum of Rs. 2,50,000 being the excess reserve for taxation was written back and a sum of Rs. 10,01,871-13-5 being the amount of reserve transferred from the investment account was also brought in. An aggregate sum of Rs. 12,51,871-13-5 was thus brought into the balance- sheet by these two transfers. The trading loss was deducted from this amount leaving a credit balance of Rs. 7,49,308-11-7 and that amount was shown as the profit for the year 1949 in the balance-sheet for that year. The balance which had been brought forward from the previous year was added thereto and a dividend of 243/4 per cent. was paid to the ordinary shareholders. The appellant also paid ex gratia to the workmen bonus at the rate of annas 2 per rupee of their basic earnings making it clear by their notification dated the 7th April, 1950, that the directors had sanctioned the payment at that rate in spite of the appellant having suffered a trading loss for the year, that it was being paid entirely at the discretion of the appellant and was not related to or connected with any contract of employment of any worker. On the 4th May, 1950, the Secretary of the respondent Union petitioned to the Provincial Conciliation Officer (Textile) that there was more production in 1949 than in 1948, that there was no reason to hold that the profit in 1949 was less than in the previous year and that the rate of bonus was wrongly reduced and asked that bonus for 1949 should also be paid at the rate of annas 4 per rupee. The industrial dispute which thus arose was referred for enquiry and recording of an award to the Regional Conciliation Board (Textile), Kanpur. The Conciliation Board by a majority decision repelled the contention of the appellant and awarded the payment of bonus at annas 4 per rupee. On an appeal taken by the appellant to the Industrial Court (Textiles and Hosiery), Kanpur, the Industrial Court accepted the contention of the appellant, allowed the appeal and set aside the award. The respondent thereupon appealed to the Labour Appellate Tribunal which substantially agreed with the Industrial Court on questions of fact as well as the general position in law but imported considerations of social justice and treating this as a special case " where social justice would demand that labour should have bonus for the year where for that very year capital had not only a reasonable return but much in excess of that ", allowed the appeal and directed the appellant to pay to the workmen bonus at the rate of annas 4 per rupee within six weeks of their decision. The appellant filed this appeal against that decision after obtaining special leave from this Court. Both the Industrial Court as well as the Labour Appellate Tribunal found as a fact that there was a trading loss of Rs. 5,02,563-1-10 during the year 1949 and also that the dividend of 243/4 per cent. to the ordinary shareholders was distributed after transferring the aggregate sum of Rs. 12,51,871-13-5 from the reserves. The question which therefore arises for our consideration is mainly whether the workers are entitled to the payment of a bonus in spite of the employer having worked at a loss during the year and incidentally whether the workers have any right, title or interest in the reserves and the undistributed profits of the previous years. The primary meaning of the word " bonus " according to the definition given in the New English Dictionary is:-" A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good ". This definition was adopted by Stirling J. in In re Eddystone Marine Insurance Co. (1). Webster's International Dictionary defines bonus as "something given in addition to what is ordinarily received by or strictly due to the recipient ". The Oxford Concise Dictionary defines it as " something to the good, into the bargain (and as an example) gratuity to workmen beyond their wages". (1) L. R. (I894) W. N. 30. Corpus Juris Secundum, Volume XI, at page 515 ascribes the following meanings to the word bonus: " An allowance in addition to what is usual current or stipulated ; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by or strictly due to the recipient" and adds: It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid depending on varying circumstances and under particular conditions has been said to imply a benefit accruing to him who offers it and an inducement to the offeree." This imports the conception of a boon, a gift or a gratuity otherwise described as an ex gratia payment. The word 'bonus' has however acquired a secondary meaning in the sphere of industrial relations. It is classified amongst the methods of wage payment. It has been used especially in the United States of America to designate an award in addition to the contractual wage. It is usually intended as a stimulus to extra effort but sometimes represents the desire of the employer to share with his workers the fruits of their common enterprise. (Vide Encyclopaedia Britannica, Volume III, page 856). The Pocket Part of the Corpus Juris Secundum, Volume XI, under the heading "As Compensation for Services" quotes the following passage from Attorney-General v. City of Woburn(1) :- "The word 'bonus' is commonly used to denote an increase in salary or wages in contracts of employment. The offer of a bonus is the means frequently adopted to secure continuous service from an employee to enhance his efficiency and to augment his loyalty to his employer and the employee's acceptance of the offer by performing the things called for by the offer binds employer to pay the bonus so called." It also gives another meaning of the word bonus', viz., "increased compensation for services already (1) 317 Mass. 465. rendered gratuitously or for a prescribed compensation where there is neither express or implied understanding that additional compensation may be granted." This imports the conception that even though the payment be not strictly due to the recipient nor legally enforceable by him, a claim to the same may be laid by the employee under certain conditions and if such claim is entertained either by an agreement with the employer or by adjudication before a properly constituted Tribunal -as on an industrial dispute arising, the same would ripen into a legally enforceable claim. This position was recognised in Sutton v. Attorney-General (1), where the Earl of Birkenhead observed "The term 'bonus' may of course be properly used to describe payments made of grace and not as of right. But it nevertheless may also include, as here, payments made because legally due but which the parties contemplate will not continue indefinitely", and in National Association of Local Government Officers v. Bolton Corporation(2) "This payment, if made, cannot properly in my opinion be regarded as a mere gratuity. Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy............ I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary." To a similar effect are the observations in Kenicott v. Supervisors of Wayne County (1):- "But second, the meaning of the word 'bonus' is not given to it by the objection. It is thus defined by Webster. 'A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation'. It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given", (1) (1923) 39 T.L.R. 294, 297, (3) (1873) 83 U.S. 452 21 L., Ed. 319. (2) [1943] A.C. 166, I87. and also in Great Western Garment Co. Ltd. v. Minister of National Revenue (1):- "A bonus may be a mere gift or gratuity as a gesture of goodwill and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled. But in both cases it is something in addition to or in excess of that which is ordinarily received." The Textile Labour Inquiry Committee defined 'bonus' as follows :- "The term bonus is applied to a cash payment made in addition to wages. It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained." There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. The demand for bonus becomes an industrial claim when either or both these conditions are satisfied. The principles for the grant of bonus were discussed and a formula was evolved by the Full Bench of the Labour Appellate Tribunal in Millowners' Association, Bombay v. Rashtreeya Mill Mazdoor Sangh, Bombay (2) "As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges" and the following were prescribed as the first charges on gross profits, viz., (1) Provision for depreciation, (2) Reserves for rehabilitation, (3) A return at 6 per cent. on the paid up capital. (4) A return on the working capital at a lesser rate than the return on paid up capital. The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus. (1) (1948) D.L.R. 225, 233. (2) (1950) 2 L.L.J. 247. It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of -capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. Because if it were so it would necessarily rank for precedence before dividends' The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year. This has been clearly recognised even in the various decisions of the Labour Appellate Tribunal, e.g., Nizam Sugar Factory Ltd., Hyderabad v. Their Workmen(1), Textile Mills, Madhya Pradesh v. Their Workmen (2) and Famous Cine Laboratory v. Their Workmen (3). This was also the basis of the demand of the respondent in the case before us, its case being that the appellant had reaped substantial profits during the year 1949. This case was negatived by the Industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 had resulted in a loss. Whereas the Industrial Court declined to grant the respondent any relief because the working of the appellant during the year had resulted in a loss, the Labour Appellate Tribunal made a special case for the respondent in spite of its concurrence with that finding of the Industrial Court. It is significant to observe that this principle was accepted by the Labour Appellate Tribunal itself. "As at present advised a claim for bonus which had been rested on profits earned should ordinarily be determined on the basis of the profits earned in the year under claim and that the scale of bonus should be determined on the quantum of profits earned in the (1) (1952) I L.L.J. 386. (2) (1952) 2 L.L.J. 625. (3) (1953) I L.L.J. 466. year. So, it would follow that if there is trading loss in the year under claim, bonus should not ordinarily be awarded. It however observed: " But, in our opinion, that should not be the universal rule. Considerations of social justice cannot be disregarded altogether, in relations between capital and labour. There may be special cases, and we consider the case before us to be one, where social justice would demand that labour should have bonus for the year where for that very year capital had not only a.. reasonable return but much in excess of that. " The Labour Appellate Tribunal did not accept the contention of the respondent that bonus should be linked to dividends nor did it rest its decision on the respondent having a right, title and interest in the reserves and the undistributed profits of the appellant. Linking of bonus to dividend would obviously create difficulties. Because if that theory was accepted a company would not declare any dividends but accumulate the profits, build up reserves and distribute those profits in the shape of bonus shares or reduce the capital in which event the workers would not be entitled to claim anything as and by way of bonus. The workers not being members of the company would also not have any right, title and interest in the reserves or the undistributed profits which would form part of the assets of the company. Even on a winding up of a company the property of the company would be applied in satisfaction of its liabilities pari passu and, unless the articles of association of the company otherwise provided, in distribution amongst the members according to their rights and interest in the company. The employees would in no event be entitled to any share or interest in the assets and the capital of the company. A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers. The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss. It has also got to be remembered that the labour force employed in an industrial concern is a fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserves or undistributed profits of the Previous years. On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts. No further claimed payment of bonus out of those reserves or undistributed profits can therefore survive. To admit the claim for bonus out of the reserves transferred to the profit and loss account would tantamount to allowing a second bonus on the same profits in respect of which the workers had already received their full bonus in the previous year. The labour force which earns the profits of a particular year by collaborating with the employers is distinct from the one which contributed to the profits of the previous years and there is no continuity between the labour forces which are employed in the industrial concern during the several years. The ratio which applies in the case of the shareholders who acquire the right, title and interest of their predecessorsin-interest does not apply to the labour force and the fact that the shareholders get a dividend by transfer of funds from the reserves and undistributed profits of the previous years would not entitle the workers to demand bonus out of those funds if the working of the industrial concern during the particular year has resulted in a trading loss. The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable. Social justice is a very- vague and indeterminate expression and no clear-cut definition can be laid down which will cover all the situations. Mr. Isaacs, the learned counsel for the respondent,. attempted to give a definition in the following terms :- "social justice connotes the balance of adjustments of the various interests concerned in the social and economic structure of the State, in order to promote harmony upon an ethical and economic basis" and he stated that there were three parties concerned here, viz., the employers, the labour and the State itself, and the conception of social justice had to be worked out in this context. Without embarking upon a discussion as to the exact connotation of the expression "social justice" we may only observe that the concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation. Indeed the Full Bench of the Labour Appellate Tribunal evolved the abovequoted formula with a view to dispensing social justice between the various parties concerned. It adopted the following method of approach at page 1258 of that judgment :- " Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry. This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the, industry may be able to offer. " This formula was reiterated in Textile Mills, M. P. Their Workmen(1), and Famous Cine Laboratory v. ,Their Workmen( 2 ), and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula :- " And what is social justice ? Social 'justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India. In our Full Bench decision (See 1950,2 L.L.J., p. 1247), we care. fully considered the question of social justice in relation (1) (1952) 2 L.L.J. 625. (2) (1953) 1 L.L.J. 466. to bonus, and there we equated the rights and liabilities of employers and workmen with a view to achieving a just formula for the computation of bonus. That Full Bench decision stands, and this tribunal and all other tribunals are bound by it. " Without committing ourselves to the acceptance of the above formula in its entirety we may point out that the Labour Appellate Tribunal did not apply its own formula to the facts of the present case. It is also significant to note that even while importing considerations of social justice the Labour Appellate Tribunal was oblivious of the fact that it was by their own acts of indiscipline and strike that the workers of the appellant company themselves contributed, to the trading losses incurred by the appellant and it hardly lay in their mouth then to contend that they were none the less entitled to a payment of bonus commensurate with the dividend paid to the shareholders out of the undistributed profits of the previous years. The Labour Appellate Tribunal also overlooked the fact that but for the Public Companies (Limitation of Dividend) Ordinance of 1948 the whole of the profits of 1948 could have been distributed after paying the workers bonus in that year of four annas in the rupee. We may before concluding refer to an argument which was addressed to us by Mr. Isaacs, the learned counsel for the respondent, that this Court under article 136 should not interfere with the decisions of the tribunals set up by the Industrial Disputes Act, 1947. This contention can be shortly answered by referring to our decision in Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi(1), where we held that the Industrial Tribunals were tribunals within the meaning of article 136 and further that article 136 has vested in this, Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or tribunal within the territory of India has not given a fair deal to a litigant. (Vide (1) (1950] S.C.R. 459. Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal(1). The result therefore is that the decision of the Labour Appellate Tribunal appealed against must be reversed and that of the Industrial Court (Textiles and Hosiery), Kanpur, restored. The appeal will accordingly be allowed with costs. Appeal allowed.


REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S). 521 OF 2022 (Arising out of SLP(Civil) No(s). 22539 of 2014) MESSER GRIESHEIM GmbH (NOW CALLED AIR LIQUIDE DEUTSCHLAND GmbH) …APPELLANT(S) VERSUS GOYAL MG GASES PVT. LTD. …RESPONDENT(S) JUDGMENT Rastogi, J. 1. Leave granted. 2. The appellant/decree holder has challenged the judgment of the Division Bench of the High Court of Delhi dated 1 st July, 2014 Signature Not Verified Digitally signed by Anita Malhotra Date: 2022.01.28 17:06:51 IST Reason: relegating to file a petition for execution of a money decree dated 7 th February, 2006(in excess of Rs. 20 lakhs) of a foreign Court indisputedly notified as a superior Court of a reciprocating territory before the District Court in view of Section 44A of the Code of Civil Procedure, 1908(hereinafter being referred to as the “Code”). 3. It is an old saying that the difficulties of the litigant in India begin when he has obtained a decree. The evil was noticed as far back in 1872 by the Privy Council in relation to the difficulties faced by the decree holder in execution of the decree (MIA p.612) 1. After more than a century, there has been no improvement and still the decree holder faces the same problem what was being faced in the past. A litigant coming to Court seeking relief is not interested in receiving a paper decree when he succeeds in establishing his case. What he primarily wants from the Court of Justice is the relief and if it is a money decree, he wants that money what he is entitled for in terms of the decree, must be satisfied by the judgment debtor at the earliest possible without fail keeping in view the reasonable restrictions/rights which are available to the judgment debtor under the provisions of the statute or the code, as the case may be. 1 General Manager of the Raj Durbhunga v. Coomar Ramaput Sing, (1871-72) 14 MIA 605 : 20 ER 912 4. Instant case is the live illustration before us where the decree holder was able to get a money decree of a foreign Court which is notified as a superior Court of a reciprocating territory way back on 7th February, 2006 and after 16 years have been rolled by, still the screen is smokey and not clear as to which is the forum where he could approach for execution of a decree. 5. The brief facts culled out from the record are that the appellant initiated proceedings before the High Court of Justice, Queen’s Bench Division, Commercial Court, United Kingdom(“English Court”) which is a superior Court of a reciprocating territory(namely, United Kingdom of Great Britain and Northern Island) notified under Section 44A of the Code vide Notification No. SRO 399 dated 1st March, 1953 issued by the Ministry of Law as amended by GSR 201 dated 13 th March, 1958. 6. Earlier, a default decree was passed due to nonappearance of the respondent/judgment debtor in UK Court on 6th February, 2003. The appellant issued a winding up notice to the respondent, who objected the same as the judgment dated 6 th February, 2003 was a default decree. To meet the objection raised by the respondent, the appellant approached the English Court and sought setting aside of the default decree and prayed for passing a decree on merits of the case. At this juncture, the respondent entered appearance and the English Court by a judgment and decree dated 7th February, 2006 granted a money decree for a principal sum of US $ 5,824,564.74. 7. It is pertinent to note that the respondent did not file any appeal against the judgment and decree dated 7 th February 2006 and that has attained finality. 8. The total decretal amount indisputedly on the date of filing of the execution petition before the Delhi High Court on 27 th April, 2006 was exceeding Rs. 20 lakhs which was the pecuniary limits of the Delhi High Court in terms of Section 5(2) of the Delhi High Court Act, 1966(hereinafter being referred to as “Act 1966”) which was later enhanced to Rs.2 crores in the year 2015, to entertain the execution petition as the principal Court of original jurisdiction. 9. It has been alleged by the appellant that the decretal amount, if it is taken at the face value as on 20 th January, 2022, may come to approximately Rs. 99 crores. 10. The appellant filed a petition for execution of money decree in the High Court of Delhi on 27th April, 2006. A reply to the execution petition was filed by the respondent on 17 th January 2007, raising several objections which are available at its command as envisaged under Section 13 of the Code. Later a further objection was raised that the High Court of Delhi has no jurisdiction to entertain the execution petition in view of Section 44A of the Code. 11. Learned Single Judge of the High Court overruled the preliminary objections and held that taking value of the execution of the money decree dated 7th February, 2006 of the English Court exceeding Rs. 20 lakhs, at given point of time, i.e., 27 th April, 2006(the day on which the execution petition was filed), High Court of Delhi holds the exclusive jurisdiction of ordinary original civil jurisdiction and after meeting out other objections on merits decided the execution petition by a judgment dated 29 th November, 2013. The operative part of the judgment are as under: E.A. No. 653 of 2009 69. This is an application by the DH for a direction to the JD to deposit the original title deeds of Sahibabad property. 70. For the reasons stated therein, the application is allowed and a direction is issued to the JD to deposit the original title deeds of the property, land measuring 18774 sq. yds. At 8/7, SiteIV, Sahibabad, Industrial Area, Sahibabad, District Ghaziabad in the Court within two weeks, and when so deposited, it shall be kept in a sealed cover by the Court. At the time of filing the original title deeds, the JD will deliver to the learned counsel for the DH a photocopy thereof. EA No. 654 of 2009 71. By this application, the DH seeks a clarification that the order dated 3rd November, 2009 passed by the Court releasing the lien on the property at Ghaziabad, Uttar Pradesh should be made conditional upon the Managing Director (MD) or any other competent director of the JD furnishing a written undertaking that the Ghaziabad property is free from all encumbrances and further than no written consent from the State Bank of India (‘SBI’) under Clause 11 of the agreement for hypothecation of goods and assets dated 24th November, 2008 is required. 72. Despite notice having been served in both these applications way back on 20th November 2009, no reply has been filed to this application. 73. Consequently, the application is allowed and a direction is issued to the MD/authorized Director of the JD to file an affidavit in this Court within two weeks clarifying (a) that the property at Sahibabad, Ghaziabad is free from all encumbrances or charge as on the date of the order dated 3 rd November, 2009; (b) that no written consent from the SBI under Clause 11 of the Agreement for hypothecation of the goods and assets dated 24 th November, 2008 is required for enforcing the said order visàvis the said Sahibabad property in terms of the statement made by the JD to the Court on 27th April, 2006 and (c ) that, as on date, there is no lien/charge etc. created on the Sahibabad property. 74. The application is disposed of.” 12. The judgment of the learned Single Judge of the High Court of Delhi dated 29th November, 2013 was assailed by the respondent judgment debtor before the Division Bench of the High Court. 13. The Division Bench of the High Court, in the facts and circumstances, considered it appropriate to examine the singular issue confining it to the jurisdiction of the High Court of Delhi in executing the money decree dated 7 th February, 2006 of the English Court, in exercise of its original jurisdiction in terms of Section 44A of the Code and after the parties being heard, arrived at the conclusion that Section 44A is an independent right conferred on a foreign decree holder for enforcement of its decree in India. It is a fresh cause of action and has no corelation with jurisdictional issues. The scheme of Section 44A of the Code is alien to the scheme of domestic execution as provided under Section 39(3) of the Code and finally held that the High Court of Delhi, not being a District Court, in terms of Section 44A of the Code, is not vested with the jurisdiction to entertain execution petition and directed to be transferred to the Court of District Judge within whose jurisdiction the property sought to be attached is situated for being dealt with in accordance with law, which is a subject matter of challenge in appeal before us. 14. Dr. Abhishek Manu Singhvi, learned senior counsel appearing for the appellant submits that the jurisdiction for execution of a foreign Court’s decree of a reciprocating territory vests with the High Court of Delhi, provided the value of the money decree exceeds the pecuniary limits as notified under Section 5(2) of the Act 1966. 15. Learned counsel further submits that it is not in dispute that the judgment and decree dated 7th February, 2006 has been passed by a notified superior Court of the reciprocating territory, namely, United Kingdom of Great Britain and Northern Ireland within the meaning of Section 44A of the Code in terms of a notification dated 1st March 1953 issued by the Ministry of Law. The High Court of Delhi also vests with the ordinary original civil jurisdiction, subject to the pecuniary limits as being notified under Section 5(2) of the Act 1966 and it would be impossible to read into Section 44A that even though the pecuniary jurisdiction of a civil Court(which lacks the pecuniary jurisdiction) is restricted, only for the purpose of execution of a foreign decree, it becomes a District Court in respect of the matters which fall within the ordinary civil jurisdiction of the High Court and when there is a split jurisdiction in the cities like Delhi, Kolkata, Chennai and Mumbai, the High Court would have to be considered to be included as “a principal civil Court of original jurisdiction” where it exceeds its pecuniary jurisdiction as being contemplated in the respective statutes alike Section 5(2) of the Act 1966 in the instant case. 16. Learned counsel further submits that there can be two or more Courts which are concurrently a principal civil Court of original jurisdiction subject to their pecuniary limits as being envisaged under Section 5(2) of the Act 1966. If that being so, if pecuniary jurisdiction exceeds what is prescribed/notified under the Act, it is the High Court of Delhi which will be considered to be the principal Court of original civil jurisdiction as defined under Section 5(2) of the Act 1966 and the execution petition being a continuation of the suit proceedings, the Division Bench of the High Court has committed a manifest error in holding that the High Court of Delhi is not vested with the jurisdiction to entertain an execution petition as being a District Court defined in terms of Section 44A of the Code. 17. Per Contra, Mr. Rakesh Dwivedi, learned senior counsel for the respondent, while supporting the finding recorded in the impugned judgment, submits that Section 44A is an independent right conferred on a foreign decree holder for enforcement of its decree in India and the scheme of Section 44A of the Code is alien to the scheme of domestic execution as provided under Section 39(3) of the Code. The domestic decree can indeed be executed by the Court which passed the decree or Court of competent jurisdiction to which it is transferred for execution. So far as execution of foreign decree is concerned, it is being governed by an independent right conferred under Section 44A of the Code which unequivocally confers exclusive jurisdiction in this regard on a “District Court” and the words mandating the competence of the executing Court, to try the original cause, in which the decree was passed, are conspicuous by their absence, in this provision. 18. To be more specific, learned counsel submits that Section 44A of the Code is in the nature of an independent, enabling provision which gives the decree holder a fresh and new cause of action irrespective of the original character of the cause in which the decree came to be passed. 19. Learned counsel further submits that so far as the pecuniary competence to try a suit of the decretal amount is concerned, it may be in the context of the domestic decree for execution as referred to under Sections 38 and 39 of the Code and once Section 44A confers exclusive jurisdiction on District Court in which the money decree of a foreign Court has to be filed for execution, no other Court holds competence other than the District Court for execution of a foreign decree. 20. Learned counsel further submits that Section 5(2) of the Act 1966 conferred with a limited ordinary original civil jurisdiction qua ‘suits’ above a certain pecuniary value and further submits that the expression “suit” as used in Section 5(2) of the Act 1966 has to be understood in its ordinary, limited sense of a ‘Civil Suit’, and will not include execution proceedings. Section 4 of the Delhi High Court(Amendment) Act, 2003 draws a distinction between a “suit” and “other proceedings” and submits that it is the District Court alone which holds jurisdiction for executing a foreign decree and no error has been committed by the High Court in the impugned judgment which may call for interference of this Court. 21. We have heard learned counsel for the parties and with their assistance perused the material available on record. 22. The question that emerges for our consideration is whether the High Court of Delhi in exercise of its original jurisdiction is a competent Court to entertain a petition for executing a money decree(in excess of Rs.20 lakhs) of a foreign Court which is notified as a superior Court of reciprocating territory under Section 44A of the Code. 23. It is not disputed that so far as the expression “superior Court of any reciprocating territory” as defined under Section 44A of the Code is concerned, the judgment and decree dated 7 th February, 2006 has been passed by the notified superior Court of the reciprocating territory, namely, United Kingdom of Great Britain and Northern Ireland within the meaning of Section 44A of the Code vide notification dated 1st March, 1953 issued by the Ministry of Law, thus it leaves no doubt that the decree of the High Court of England would be considered to be a decree of superior Court of a reciprocating territory. 24. In order to appreciate the submissions made, it may be relevant to first take a look at the scheme of the Code and also relevant provisions of the Act 1966 which are reproduced hereunder: “Section 2(4) of the Code – “District” “district” means the local limits of the jurisdiction of a principal Civil Court of original jurisdiction (hereinafter called a “District Court”), and includes the local limits of the ordinary original civil jurisdiction of a High Court; Section 6 of the Code – “Pecuniary Jurisdiction” Save in so far as is otherwise expressly provided, nothing herein contained shall operate to give any Court jurisdiction over suits the amount or value of the subjectmatter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction. Section 13 of the Code – “When Foreign Judgement not Conclusive” A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except— (a) where it has not been pronounced by a Court of competent jurisdiction; (b) where it has not been given on the merits of the case; (c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable; (d) where the proceedings in which the judgment was obtained are opposed to natural justice; (e) where it has been obtained by fraud; (f) where it sustains a claim founded on a breach of any law in force in India. Section 44A of the Code  “Execution of Decrees passed by Courts in reciprocating territory” (1) Where a certified copy of a decree of any of the superior courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court. (2) Together with the certified copy of the decree shall be filed a certificate from such superior court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment. (3) The provisions of Section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the court that the decree falls within any of the exceptions specified in clauses (a) to (f) of Section 13. Explanation 1.—“Reciprocating territory” means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and “superior courts”, with reference to any such territory, means such Courts as may be specified in the said notification. Explanation 2.—“Decree” with reference to a superior court means any decree or Judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or Judgment.]] Section 5 Delhi High Court Act, 1966 – “Jurisdiction of High Court of Delhi” (1) The High Court of Delhi shall have, in respect of the territories for the time being included in the Union Territory of Delhi, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, is exercisable in respect of the said territories by the High Court of Punjab. (2) Notwithstanding anything contained in any law for the time being in force, the High Court of Delhi shall also have in respect of the said territories ordinary original civil jurisdiction in every suit the value of which exceeds Rupees twenty lakhs. 25. The expression ‘District” is defined under Section 2(4) of the Code and the term “District Court” referred under Section 44A of the Code although not defined, but on conjoint reading of the provision makes it clear that it refers to the local limits of the jurisdiction of a principal civil Court of original jurisdiction (provisions of the Code called a “District Court”) and it includes the local limits of the ordinary original civil jurisdiction of a High Court and it is not disputed that principal civil Court of original jurisdiction is normally a District Court (with whatever change in the nomenclature) and the High Courts in India exercising ordinary original civil jurisdiction are not too many, but where there is a split jurisdiction based on its pecuniary value, notified from time to time, the District Court or the High Court in its ordinary original civil jurisdiction is competent to exercise power for execution of decree, including money decree of the foreign Court of reciprocating jurisdiction, provided other conditions are complied with as contemplated under Section 44A of the Code. 26. Section 44A of the Code provides for execution of decrees passed by the foreign Courts in reciprocating territories. It, inter alia, stipulates that where a certified copy of a decree of any of the superior Court of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by a District Court. Together with the certified copy of the decree, a certificate from such superior court is to be filed stating the extent, if any, to which the decree has been satisfied or adjusted. Such a certificate is the conclusive proof of the extent of such satisfaction or adjustment. Subsection 3 of Section 44A of the Code further lays down that provisions of Section 47 of the Code shall apply to such execution proceedings and the Court can refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) in Section 13 of the Code. 27. The ordinary original civil jurisdiction of the High Court is always exercised, based on pecuniary limits. It would be impossible to read into Section 44A of the Code that even though the pecuniary jurisdiction of Civil Court is restricted, still for the purpose of execution of a foreign decree, it becomes the District Court in respect to those matters which fall within the ordinary original civil jurisdiction of the High Court and the expression “district” defined under Section 2(4) of the Code will have to be given its true effect. To read the expression “District Court” in Section 44A for execution of foreign decree, it will be construed to be a Court holding ordinary original civil jurisdiction in terms of its pecuniary limits as being notified under Section 5(2) of the Act 1966. 28. It leaves no manner of doubt that once the pecuniary jurisdiction at the given point of time exceeded Rs. 20 lakhs as notified by the High Court under Section 5(2) of the Act 1966 (later vide notification dated 10th August, 2015 (w.e.f. 26th October, 2015) pecuniary limits has been revised to Rs.2 crores), it is the High Court of Delhi which holds its exclusive jurisdiction as ordinary original civil jurisdiction to execute a foreign decree under Section 44A of the Code and it goes without saying that execution always is in continuation of the proceedings. 29. Section 24 of the Punjab Courts Act 1918, of which the Division Bench has put its emphasis, which is applicable to Delhi, the Court of District Judge would be the principal civil Court of original jurisdiction. Under Section 5(1) of the Act 1966, the High Court of Delhi exercises all such original, appellate and other jurisdiction as was exercisable by the High Court of Punjab in the Union Territory of Delhi. Then, there is Section 5(2) of the Act 1966 which starts with a nonobstante clause which empowers the High Court of Delhi to exercise its ordinary original civil jurisdiction in every suit where the pecuniary value exceeds, as being notified by the competent authority and thus, the High Court of Delhi indeed holds original civil jurisdiction in a suit where the value exceeds its pecuniary limits and if Section 24 of the Punjab Courts Act, 1918 is read with Section 5(2) of the Act 1966, it is quite clear that certain jurisdiction has been taken away from the District Court and conferred with the High Court of Delhi and this original civil jurisdiction is only in respect to the suits where the pecuniary limit exceeds as notified by the authority under Section 5(2) of the Act 1966 and that would make the High Court of Delhi, the principal Court of original civil jurisdiction, for all practical purposes. 30. The Division Bench has proceeded on the basis of the expression “District Court”, as being referred under Section 44A of the Code but it has not taken into consideration the other relevant provisions of which a reference has been made by us while coming to the conclusion that the expression “District” as defined under Section 2(4) of the Code only lays down the limits of the jurisdiction of the principal civil Court of original jurisdiction and that includes the ordinary original civil jurisdiction of the High Court and once the pecuniary jurisdiction exceeds as being notified under the relevant statute, the jurisdiction vests exclusively with the High Court as an ordinary original civil jurisdiction for execution of a foreign decree under Section 44A subject to the just objections which are available to the parties/judgment debtor as envisaged under Section 13 of the Code. 31. Consequently, the appeal succeeds and accordingly allowed. The judgment of the Division Bench of the High Court dated 1 st July 2014 is hereby quashed and set aside. Since the parties have not addressed on merits, E.F.A.(O.S.) No. 3 of 2014 is restored on the file of the Division Bench of the High Court of Delhi. This being an old matter where the foreign decree dated 7 th February, 2006 could not have been executed for almost 16 years by this time, we consider it appropriate to observe that let the Division Bench may take up the matter on priority and decide the same on its own merits as expeditiously as possible keeping in view its long awaiting execution in accordance with law, but in no case later than four months. 32. Pending application(s), if any, stand disposed of. ………………………J. (AJAY RASTOGI) ……………………...J. (ABHAY S. OKA) NEW DELHI JANUARY 28, 2022.


* IN THE HIGH COURT OF DELHI AT NEW DELHI CRL.M.C. 1410/2018 Reserved on : 26.02.2020 Date of Decision : 03.03.2020 IN THE MATTER OF: SUNITA PALTA & ORS ..... Petitioners Through: Mr. Saraswata Mohapatra, Advocate Versus M/S KIT MARKETING PVT LTD ..... Respondent Through: Mr. Rajiv Sharma, Advocate CORAM: HON'BLE MR. JUSTICE MANOJ KUMAR OHRI 1. The present proceedings are instituted under Section 482 Cr.P.C challenging the order dated 14.02.2017 passed by the Metropolitan Magistrate in CC No.874/2017 whereby the present petitioners were summoned for the offence punishable under Section 138 N.I. Act. 2. The respondent, a private limited company, had filed a complaint through its authorized representative stating that it was engaged in the business of plywood in the name and style of M/s Kit Marketing Private Limited. The accused are regular purchasers of goods from the complainant on credit basis and have made regular payment towards sale consideration from time to time in the past. On 01.12.2016, there was an outstanding balance of Rs.36,46,758/- payable by the accused against which following four account payee cheques were issued: Cheque Nos Dated Amount in Rs 489872 02.09.2016 95,718/- 489853 09.09.2016 7,62,548/- 489897 19.09.2016 3,31,740/- 640194 07.11.2016 1,55,142/- 3. All the aforesaid cheques were drawn on State Bank of India, Nehru Place, New Delhi from the account maintained by accused company. The cheques were presented by the complainant in his bank namely Axis Bank Limited, Mundka Delhi within the period of limitation however the same were returned unpaid to the complainant vide bank's return memo dated 21.11.2016 and 13.12.2016 with the remarks "Funds Insufficient". 4. The complainant issued a legal notice of demand dated 19.12.2016, through speed post, calling upon the accused to make payment within 15 days from the date of its receipt. The notices were duly received by the accused persons on 20.12.2016. Since no payment was made within the statutory period of 15 days, a complaint under Section 138 read with Sections 141/142 of NI Act was filed on 30.01.2017. The complaint has been filed against the accused company along with 7 other accused persons including the present petitioners. 5. Learned counsel for the petitioners contended that the petitioners are the independent Non-executive Additional Directors and were never involved in the day to day affairs of the company at any point of time. In this regard, he has referred to the complaint where the present petitioners were wrongly described as Directors. He also referred to para 17 of the complaint which contained allegations against the present petitioners and the same is reproduced hereunder: "17. That the accused no. 1 is liable because the cheques in question have issued on behalf of the accused no. 1 and the accused no.2 to 6 are liable being the managing directors and directors of the accused no.1 and also being responsible for the control and management and day to day affairs of the accused no.1 and the accused no. 7 and 8 are liable being the signatories of the cheques in question." 6. The present petitioners were impleaded as accused nos. 5, 6 & 3. Learned counsel for the petitioners urged that it is an admitted case of the respondent that the petitioners were neither the Managing Directors nor the signatories to the cheques in question. Learned counsel for the petitioners also relied on the Form 32 with respect to Sunita Palta (petitioner No.1) and Bhagwan Singh Duggal (petitioner no.2) submitted on 29.06.2013 and 13.07.2013 respectively, showing them as independent Non-executive Additional Directors. Similarly, Form No. DIR-12 with respect to Ashwini Kumar Singh (petitioner No.3) shows his status as independent Non-executive Director w.e.f. 01.04.2014. 7. Learned counsel for the petitioners has also referred to the Annual Report for the year 2016-17 of the accused company and the certificate issued by the Company Secretary of the accused company which also shows the status of petitioners as independent Directors. 8. On the other hand, learned counsel for the respondent has supported the impugned order. It was submitted that the petitioners have the remedy to appear and place their defence before the trial court. He, however, has not disputed the position with respect to Form 32/Form No. DRI-12 filed by the petitioners. He submitted that the petitioners were named as Directors in the complaint on the basis of the information which was downloaded from the official website of ROC. 9. I have heard learned counsels for the parties and have also gone through the case records. 10. The vicarious liability of a person arises in terms of Section 141 of the Negotiable Instrument Act. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla reported as (2005) 8 SCC 89, it was held as follows:- "10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the section are 'every person'. These are general words and take every person connected with a company within their sweep. Therefore, these words have been rightly qualified by use of the words: 'Who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence, etc' What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a director or manager or secretary was enough to cast criminal liability, the Section would have said so. Instead of 'every person' the section would have said 'every director, manager or secretary in a company is liable'..., etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action. xxx xxx xxx 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelt out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial." 11. Again in, K.K. Ahuja v. V.K. Vora reported as (2009) 10 SCC 48, the vicarious liability of the officers of the company was summarised as under:- "27. The position under Section 141 of the Negotiable Instruments Act, 1881 can be summarized thus: (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant time. This is because the prefix Managing to the word Director makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company. (ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under Sub-section (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Section 2(24) of the Companies Act) or a person referred to in Clauses (e) and (f) of Section 5 of Companies Act, an averment in the complaint that he was in-charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under Section 141(1). No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section. (iv) Other officers of a company cannot be made liable under Sub-section (1) of Section 141. Other officers of a company can be made liable only under Sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence." 12. The issue relating to vicarious liability of a Non-executive Director came up before the Supreme Court in Pooja Ravinder Devidasani v. State of Maharashtra and Anr. reported as 2014(14) SCALE, and it was held as under:- "17...Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-to- day affairs of the running of its business and only monitors the executive activity. To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the Company, one who actively looks after the day-to-day activities of the Company and particularly responsible for the conduct of its business. Simply because a person is a Director of a Company, does not make him liable under the N.I. Act. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the N.I. Act. In National Small Industries Corporation (supra) this Court observed: "13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. 14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141." 18. In Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC 189, this Court observed that a person 'in charge of a business' means that the person should be in overall control of the day to day business of the Company. 19. A Director of a Company is liable to be convicted for an offence committed by the Company if he/she was in charge of and was responsible to the Company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (See: State of Karnataka Vs. Pratap Chand & Ors). 20. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the N.I. Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company." 13. In Nandakumar & Ors. v. M/s ECE Industries Ltd. in SLP (Crl.) No.2770/2013 decided on 04.08.2014, while setting aside the order of dismissal of the petition of the accused filed under Section 482 Cr.P.C. by the High Court, the Supreme Court held as under:- "Therefore, it is clear that merely being a Director of a company is not sufficient to make the person liable under Section 141 of the Act, till it is shown that the said Director was in-charge of and responsible for the conduct of his business. The Court below and the High Court erred in not appreciating the fact that the complainant in the mechanical way cited the names of the appellants which alleged to have been obtained from the website of the Ministry of Corporate Affairs and unnecessary dragged the appellants in litigation who were not directly charged or responsible for the company for the conduct of business. The requirement of Section 141 of the Negotiable Instrument Act is against the persons responsible for the conduct or business of the company at the relevant time. In absence of such allegation against the appellants, we hold that the complainant misused the mandate of Section 138 of the Negotiable Instrument Act." 14. Recently, in Chintalapati Srinivasa Raju v. Securities and Exchange Board of India reported as (2018) 7 SCC 443, it has been held as follows:- "23....Non-Executive Directors are, therefore, persons who are not involved in the day-to-day affairs of the running of the company and are not in charge of and not responsible for the conduct of the business of the company." 15. To the similar effect are the decisions of Coordinate Benches of this Court in Kanarath Payattiyath Balrajh v. Raja Arora reported as 2017 SCC Online 7418, Har Sarup Bhasin v. M/s Origo Commodities India Pvt. Ltd. reported as 2020 SCC Online Del 9 and Chanakya Bhupen Chakravarti & Anr. v. Rajeshri Karwa & Ors. reported as 2018 SCC Online Del 12968. 16. Sub-sections (6) and (12) of Section 149 of the Companies Act, 2013 defines an "independent director" as under:- "149. Company to Have Board of Directors xxx xxx xxx (6) 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,-- (a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience; (b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company; (ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company." xxx xxx xxx (12) Notwithstanding anything contained in this Act,- (i) an independent director; (ii) a non-executive director not being promoter or key managerial personnel, shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently." 17. Admittedly, the petitioners are neither the Managing Directors nor the Authorized Signatories of the accused company. The accused company and the Managing Director are arrayed as accused No.1 and 2 along with others in the complaint pending before the concerned Metropolitan Magistrate. 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. 18. In Pepsi Foods v. Special Judicial Magistrate and Ors. reported as (1998) 5 SCC 749, it was held that summoning an accused person cannot be resorted to as a matter of course and the order must show due application of mind. 19. In view of the facts of the case and the aforementioned enunciation of law, I deem it fit to allow the present petition. The impugned order with respect to summoning the present petitioners for the offence under Section 138 of NI Act, is thus quashed. 20. Copy of this order be communicated to the concerned trial court. (MANOJ KUMAR OHRI) JUDGE MARCH 03, 2020 na