IMPORTANT POINT
Dishonour of cheque – Contents of notice, reply given by noticee and contents of complaint would form an important part of arraigning accused into proceedings under Section 138 of NI Act.

ORDER

The petitioners are before this Court calling in question proceedings in C.C.No.8836/2021, pending before the XX Additional S.C.J. and Additional Chief Metropolitan Magistrate (SCCH-22), Bengaluru, registered for the offences under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘the N.I.Act’). The petitioners are accused Nos.3 and 4 in the said proceedings.

2. Heard Sri Dilip Kumar I.S., learned counsel for the petitioners and Sri Ajay R.A., learned counsel for the respondent.

3. The facts adumbrated are as follows:

The petitioners are directors of Hoysala Projects Private Limited (for short ‘the Company’). The respondent is the complainant. The respondent and the Company entered into certain transaction, in furtherance of which, the authorised signatory of the Company issues certain cheques in favour of the respondent - complainant. The cheques, when presented for its realisation, were returned for want of sufficient funds, which leads the complainant to take recourse to legal proceedings against the Company and the office bearers, who are the petitioners herein the others. A complaint comes to be registered before the concerned Court invoking Section 200 of the Cr.P.C., for the offence under Section 138 of the Act. The learned Magistrate takes cognizance of the offence, issues summons to the petitioners and other accused. The issuing of summons to the petitioners is what drives them to this Court in the subject petition.

4. Learned counsel for the petitioners while taking this Court through the documents would seek to demonstrate that the petitioners have no role to play in the transaction, which is between the Company and the complainant. They are only the directors of the Company and were not aware of the day-to-day affairs of the Company. Accused No.1 is the Company and accused No.2 is the Chairman and Managing Director, accused No.5 is the Director, the signatory to the cheques. Therefore, accused Nos.1, 2 and 5 are the ones who have to answer the charge and not the petitioners. Contending no role to play in the entire proceedings, he would seek quashment of the entire proceedings against them in C.C.No.8836/2021.

5. On the other hand, learned counsel for the respondent taking this Court through the complaint, would contend that the complaint does narrate the role of the petitioners being the Directors of the Company. He has placed on record certain documents to demonstrate that the petitioners are not only Directors, but, whole time directors and promoters of the Company. Therefore, he would submit that the petition be dismissed, contending that it is for the petitioners to come out clean in the said case.

6. I have given my anxious consideration to the submissions made by the learned counsel for both the parties and have perused the material on record.

7. The afore-narrated transaction between the petitioners and the complainant is not in dispute. Before embarking upon the contentions of the respective learned counsel, I deem it appropriate to notice the law laid down by the Apex Court, in cases of hauling up a Director of a Company without there being indicated any role played by him in the complaint or otherwise. The Apex Court in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla & Another, (2005) 8 SCC 89, has held as follows:—

“19. In view of the above discussion, our answers to the questions posed in the reference are as under:—

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to