15/03/2024

Merely because a person is a Director of a Company, it is not necessary that he is aware about the day-to-day functioning of the company | There is no universal rule that a Director of a Company is in charge of its everyday affairs – Susela Padmavathy Amma Vs. Bharti Airtel Ltd. – Supreme Court

Hon’ble Supreme Court in NI case, held that:

(i) A person cannot be made liable unless, at the material time, he was in-charge of and was also responsible to the company for the conduct of its business.
(ii) Merely because a person is a director of a company, it is not necessary that he is aware about the day-to-day functioning of the company.
(iii) There is no universal rule that a director of a company is in charge of its everyday affairs.
(iv) The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.

Merely because a person is a Director of a Company, it is not necessary that he is aware about the day-to-day functioning of the company | There is no universal rule that a Director of a Company is in charge of its everyday affairs – Susela Padmavathy Amma Vs. Bharti Airtel Ltd. – Supreme Court Read Post »

The exercise of power under Section 143A(1) of Negotiable Instruments (NI) Act, 1881 is discretionary. The provision is directory and not mandatory | Factors to be considered while exercising discretion under Section 143A of NI Act, 1881 – Rakesh Ranjan Shrivastava Vs. The State of Jharkhand and Anr. – Supreme Court

Whether the provision of Section 143A(1) of Negotiable Instruments (NI) Act, 1881, which provides for the grant of Interim Compensation, is directory or mandatory?

In this landmark judgment, Hon’ble Supreme Court held that:

(i) Section 143A(1)(b) of NI Act will apply only when the case is being tried as a warrant case. In the case of a summary or summons trial, the power under Section 143A(1) can be exercised after the plea of the accused is recorded.
(ii) The interim compensation is treated as a fine for the purposes of its recovery. Section 421 of the Cr.PC deals with the recovery of the fine imposed by a criminal court while passing the sentence.
(iii) The provision will have to be held as a directory and not mandatory. Hence, we have no manner of doubt that the word “may” used in Section 143A, cannot be construed or interpreted as “shall”. Therefore, the power under sub-section (1) of Section 143A is discretionary.
(iv) Tests applicable under Section 148(1) can never apply to Section 143A(1) of the N.I. Act.
(v) The Court also listed factors to be considered while exercising discretion.

The exercise of power under Section 143A(1) of Negotiable Instruments (NI) Act, 1881 is discretionary. The provision is directory and not mandatory | Factors to be considered while exercising discretion under Section 143A of NI Act, 1881 – Rakesh Ranjan Shrivastava Vs. The State of Jharkhand and Anr. – Supreme Court Read Post »

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