IN THE HIGH COURT OF JUDICATURE AT BOMBAY
V.L. ACHLIYA, J.
Gaurav Vijay Bhatia - Applicant
Versus
Ramnath P. Subramaniam & Anr. - Respondents
Criminal Application (APL) Nos. 336 & 337 of 2014
Decided on : 14.08.2015
NI Act - Dishonour of Cheque - Section 138, Section 141 - The court held that the complaint failed to make out a case for issuance of process under Section 138 read with Section 141 of the Negotiable Instruments Act against the applicant/accused No. 3. The court emphasized that vicarious liability under Section 141 of the NI Act requires the person to be actively involved in the day-to-day activities and responsible for the conduct of the business of the company at the time of the offense. The court referred to the decisions in National Small Industries Corp. Ltd. Vs. Harmeet Singh Paintal & Anr. and Pooja Ravinder Devidasani Vs. State of Maharashtra to support its interpretation of the legal provisions and concluded that the applicant's resignation as a Director of the company prior to the dishonour of the cheque and the cause of action for filing the complaint was supported by documentary evidence, thus setting aside the order of issuance of process and quashing the proceedings against the applicant/accused No. 3.
Fact of the Case:
The complainant filed a criminal complaint under Section 138 r/w 141 of the Negotiable Instruments Act, alleging dishonour of cheques issued by the accused, including the present applicant as Director of the company. The Metropolitan Magistrate issued process against the accused, leading to the present application u/s 482 of the Code of Criminal Procedure by the applicant/accused No. 3 to set aside the order and quash the criminal proceedings.
Finding of the Court:
The court found that the complaint failed to establish a prima facie case for issuance of process under Section 138 r/w 141 of the NI Act against the applicant/accused No. 3. It noted that the applicant had resigned as a Director of the company prior to the dishonour of the cheque and the cause of action for filing the complaint, which was supported by documentary evidence. Therefore, the court set aside the order of issuance of process and quashed the proceedings against the applicant/accused No. 3.
Issues: The issues revolved around whether the complaint made out a case for vicarious liability of the applicant/accused No. 3 under Section 138 r/w 141 of the NI Act and whether the order of issuance of process by the Metropolitan Magistrate was sustainable in law.
Ratio Decidendi: The court's decision was based on the interpretation of Section 141 of the NI Act, emphasizing the requirement for the person to be actively involved in the day-to-day activities and responsible for the conduct of the business of the company at the time of the offense. It also relied on the documentary evidence of the applicant's resignation as a Director of the company prior to the dishonour of the cheque and the cause of action for filing the complaint.
Final Decision: The court allowed the application to the extent of the applicant/accused No. 3, setting aside the order of issuance of process and quashing the proceedings against the applicant.
Rule. Rule made returnable forthwith. By consent, taken up for final disposal at the stage of admission.
2. The applicant/accused No. 3 in the complaint has filed this application u/s 482 of Code of Criminal Procedure (Cr.P.C.) to set aside the order of issuance of process dt. 12/08/2013 passed in Criminal Complaint Case No. 2917/SS/2013, by Metropolitan Magistrate, 7th Court at Dadar, Mumbai and further to quash the said criminal proceedings to the extent of applicant.
3. Few facts leading to filing of the present application are as under :
The complainant (respondent No. 1) herein filed criminal complaint u/s 138 r/w 141 of the Negotiable Instruments Act, 1881 (in short “NI Act”) as against accused No. 1–Managing Director of M/s. Tricom India Limited and three others, which include the present applicant as Director of accused No. 4–Company. In the complaint filed, the complainant has alleged that in discharge of liabilities of legitimate dues on account of part payment towards full and final payment of I.C.D. (Inter Corporate Deposit) Loan/re-payment of the loan by the accused to complainant, the original accused No. 4–Company had issued cheques to the complainant. Towards the repayment of loan, accused No. 4–Company issued two cheques viz. Cheque bearing No. 009227 dt. 25.4.2013 for Rs. 1,00,000/- and Cheque having No. 009228 dt. 25.5.2013 for Rs. 2,00,000/- drawn and payable from the account of accused with the Axis Bank Ltd, Kurla (W), Mumbai – 400 070. The cheques was issued on behalf of accused No. 4 under the signature of authorized signatory. The said cheques when presented for realization on 10/6/2013 with HDFC Bank Ltd, Parel Branch, same were dishonoured by bankers of accused with endorsement “funds insufficient” and was communicated vide memo dt. 11/6/2013. According to the complainant though he has given considerable time, the amount was not paid. Therefore he issued notice on 21/6/2013 to all the accused through his Advocate. The notice issued by Regd. A.D. and Speed Post was duly served upon accused Nos. 1 and 3 on 08/7/2013 and accused No. 4 on 9/7/2013, respectively. It appears from the complaint that, accused No. 3 in the complaint sent reply dt. 23/7/2013 through his Advocate denying his liability as Exh. H to complaint. Since the payment towards the cheques dishonoured was not made by the accused, the complainant has filed complaint. The complaint appears to be filed on 12/8/2013. Learned Metropolitan Magistrate on consideration of the complaint documents filed on record pleased to issue process u/s 138 r/w 141 of the NI Act, against the accused persons making it returnable on 16/11/2013. Being aggrieved by the said order, the applicant/accused No. 3 has filed the present application u/s 482 of the Code of Criminal Procedure to set aside the order passed by Ld. Metropolitan Magistrate and further to quash the criminal proceedings to the extent of the applicant.
4. I have heard the submissions advanced by Mr. Manoj S. Mohite, learned Counsel appearing on behalf of the applicant and Mrs. Mane, learned APP for respondent/State. Respondent No. 1 in-person has not caused his presence, though served.
5. By referring the contents of the complaint filed by the complainant, the learned Counsel for the applicant has contended that on the face of the complaint filed, no prima facie case has been made out for issuance of process u/s 138 r/w 141 of NI Act, as against the applicant/accused No. 3. By referring the provisions of Section 141 of NI Act, the learned Counsel has submitted that, in order to attract the vicarious liability u/s 141 of NI Act, it is obligatory on the part of the complainant to specifically plead as to how and in what manner the accused was guilty of commission of offence u/s 138 r/w 141 of the NI Act. It is pointed out that the facts pleaded in the complaint nowhere make out any case to
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