IMPORTANT POINT
Dishonour of cheque – Offence by company – There is non-compliance on part of second respondent with requirements of sub-section (1) of Section 141 of NI Act – Cheques have been signed by Managing Director and not by any of appellants – Vicarious liability is attracted when ingredients of sub-section (1) of Section 141 are satisfied – Merely because somebody is managing affairs of company, per se, he does not become in charge of conduct of business of company or person responsible for company for conduct of business of company.

JUDGMENT :

Abhay S. Oka, J.

CRIMINAL APPEAL NO.879 OF 2023

1. We have heard the learned senior counsel appearing for the appellants. The appellants are Accused Nos.5, 6 and 7 in a complaint filed by the second Respondent under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the NI Act').

2. By the impugned Judgment, the High Court has dismissed a petition filed by the appellants under Section 482 of the Code of Criminal Procedure, 1973 (for short, 'the Code') for quashing the complaint. By the impugned Judgment, several petitions under Section 482 of the Code were decided arising out of different complaints filed by the same complainant.

3. At the outset, we may note here that in paragraph 10 of the impugned Judgment, the High Court has purported to quote the relevant paragraph from the complaint bearing CC No.1/2012, which is the subject matter of this appeal. We, however, find that the averments made in this complaint are different.

4. The main issue canvassed by the learned Senior Counsel appearing for the appellants is that though the appellants were directors of the first accused company at a relevant time, the mandatory averments which are required to be made in terms of sub-section (1) of Section 141 of the NI Act have not been made. The response of the learned counsel appearing for Respondent No.2 is that in substance, in paragraph 7 of the complaint, the said averments are found. Secondly, the learned counsel submitted that the appellants have not replied to the statutory notice issued under Section 138 of the NI Act. In support of the second contention regarding the failure of the appellants to give a reply to the statutory notice, he relies upon a decision of this Court in the case of “S.P. Mani and Mohan Diary Versus Dr. Snehalatha Elangovan”, 2022 SCC Online SC 1238.

5. We have carefully perused the complaint and the affidavit in support of the complaint. In paragraph 4 of the complaint, it is stated that the accused No.1 is the Company on whose account the two cheques were issued and accused No.2 is the Managing Director of the accused No.1. The present appellants have been described as the Directors of the accused No.1-Company. The cheques were signed by accused No.2 who is the Managing Director of the accused No.1 company. The only material averments even according to the case of learned counsel for Respondent No.2 are found in paragraph 7 of the complaint which read thus :

“7. The Accused 2 to 7 are fully aware of the business transactions of the Accused No.1 company. They are all jointly and severally liable for the transactions of the Accused No. 1 company. All the accused are fully aware of the issuance of the above cheques without balance in the account. They are also fully aware that the cheques will be dishonoured. It clearly establishes that all the Accused with an intention to deceive and defraud the complainant have issued the cheques and directed the complainant to present the cheques. So, the accused have issued the above cheques knowing fully well, that there are no funds in their account. The accused have not the cheques amount within 15 days after receipt of the notice. The cheques are issued towards legally enforceable debt and liability of the complainant. So, they have committed an offence, punishable under section 138 of N.I. Act.”

6. It is also necessary to note the averments made in Paragraph 8 of the complaint in which the second respondent stated that the statutory notice of demand was not served on the accused. In fact, the second respondent has relied upon the returned postal covers. Even in the affidavit in support of the complaint, the second respondent has come out with a case that the demand notice was not served.

7. In fact, the service of notice of demand is a condition precedent for filing a complaint in view of clause (c) of Section 138 of the NI Act. This is one ground on which the complaint must fail.

8. Now we come to the averments made in Paragraph 7. Firstly, it is st