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PUNJAB AND HARYANA HIGH COURT
HON'BLE V.M. JAIN, J.
Criminal Misc. No. 20573 - M of 2001
Decided on 5.12.2001
S.C. CHHABRA, DIRECTOR
versus
M/S. GONTERMANN PEIPERS (INDIA) LIMITED
The main legal point established in the judgment is that specific allegations fulfilling the requirements of Section 141(1) of the Negotiable Instruments Act can make individuals, in this case, the accused-petitioners who were directors of the company, liable for the offence under Section 138 read with Section 141 of the Act.
Headnote:
Negotiable Instruments Act - Criminal Complaint - Section 138, Section 141 - Summary of Acts and Sections: The court discussed the provisions of Section 138 and Section 141 of the Negotiable Instruments Act, which deal with the liability of individuals in charge of and responsible for the conduct of a company's business in cases of dishonored cheques. The court emphasized that the complainant's specific allegations against the accused-petitioners in the criminal complaints fulfilled the requirements of Section 141(1) of the Act, making the accused-petitioners liable for the offence under Section 138 read with Section 141 of the Act. The court also highlighted the provisions of sub-section (2) of Section 141, which hold individuals accountable for neglect or connivance in the commission of the offence by the company. The court's decision was influenced by the complainant's fulfillment of the obligations required under Section 141 of the Act, and the court's interpretation of the accused-petitioners' liability under the Act.
Fact of the Case:
The complainant filed a criminal complaint under Section 138 read with Section 141 of the Negotiable Instruments Act against a company and its office-bearers for dishonoring cheques. The accused-petitioners, who were directors of the company, sought the quashment of the criminal complaint and summoning orders, alleging that the complaints were malafide and that no case for proceeding against them was made out.
Finding of the Court:
The court found that the complainant's specific allegations against the accused-petitioners in the criminal complaints fulfilled the requirements of Section 141(1) of the Act, making the accused-petitioners liable for the offence under Section 138 read with Section 141 of the Act. The court dismissed the petitions, finding no merit in the accused-petitioners' arguments.
Issues: The issues involved the liability of the accused-petitioners, who were directors of the company, in the dishonor of cheques and the legality of the criminal complaints and summoning orders against them.
Ratio Decidendi: The court held that the complainant's specific allegations against the accused-petitioners in the criminal complaints fulfilled the requirements of Section 141(1) of the Act, making the accused-petitioners liable for the offence under Section 138 read with Section 141 of the Act. The court also emphasized the provisions of sub-section (2) of Section 141, which hold individuals accountable for neglect or connivance in the commission of the offence by the company.
Final Decision: The court dismissed all the petitions, finding no merit in the accused-petitioners' arguments.
V.M. Jain, J. - This order shall dispose of 17 petitions, bearing Criminal Misc. No.s 20573-M of 2001, 20575-M of 2001, 20577-M of 2001, 20579-M of 2001, 20581-M of 2001, 20583-M of 2001, 48751-M of 2001, 48753-M of 2001, 48755-M of 2001, 48757-M of 2001, 48759-M of 2001, 48761-M of 2001, 48763-M of 2001, 48765-M of 2001, 48767-M of 2001, 48769-M of 2001 and 48771-M of 2001, filed by the complainants against M/s. Bhiwani Denim and Apparels Limited and its various office-bearers, including Managing Director and Directors. Six of the petitions have been filed by accused-petitioner S.C.Chhabra, the other six petitioners have been filed by accused-petitioners S.K.Chhibar and R.L.Sarmi, while remaining five petitions have been filed by accused-petitioners S.K.Sahni and V.K.Garg, Directors of M/s. Bhiwani Denim and Apparels Ltd. Since common questions of law and facts are involved in the 17 petitions, all the 17 petitions are being disposed of by a single order. For the sake of convenience, the facts of Criminal Misc. No. 20573-M of 2001 titled as S.C. Chhabra v. M/s. Gontermann Peipers (India)Ltd. are being noticed.
2. The complainant M/s. Gontermann Peipers (India) Ltd. had filed the criminal complaint under Section 138 read with Section 141 of the Negotiable Instruments Act (hereinafter referred to as the Act) against M/s. Bhiwani Denim and Apparels Ltd. as accused No. 1 and 10 other officebearers of the said company, including the Managing Director, the Chairman and the Directors of the said company. In the said complaint, it was alleged that the complainant-company had been supplying cotton yarn to the accused-company and the supplies started in October, 1997 and that total material worth Rs. 1,34,68,299/- was supplied, out of which total payment of Rs. 47,48,000.41 had been paid from time to time and that there was a total balance of Rs. 86,85,298.59/- which was still payable by the accused-company to the complainant. It was alleged that in order to clear the above said outstanding amount, the accused-company issued six cheques, out of which two cheques were dated 2.1.1998, two cheques were dated 2.2.1998 and two cheques were dated 3.2.1998, as detailed in para 5 of the complaint. The said complaint was filed in respect of one of the two cheques dated 2.1.1998 for Rs. 5,34,551.53, while the remaining five complaints had been filed in respect of the other cheques. It was alleged in the complaint that all these cheques were presented but the same were dishonoured, vide dishonouring memo dated 28.2.1998 and the complainant-company had been informed by its bankers on various dates. It was alleged that as per the dishonouring memo dated 28.2.1998, the cheques were dishonoured with the remarks "Funds Insufficient". It was alleged that in spite of being informed by the complainant-company in this regard, the accused had failed to make any payment up till now. It was further alleged that accused No.l is the company, accused No. 2 is the signatory to the cheque (also the authorised signatory-cum- Managing Director/Director of the said Company), accused No.3 was the General Manager, accused No. 4 was the Chairman, while accused Nos. 5 to 11 were the Directors, "who were actively involved in the entire business of the company and were responsible to the company for the conduct of the business as well as the company and were responsible for the encashment of the cheques and were having the knowledge of the issuance of the cheques, as well as dishonouring of the cheques. Therefore, all these persons are guilty of an offence committed under Section 138 read with Section 141 of the Act."
3. After the criminal complaints were filed, the learned Judicial Magistrate, recorded the preliminary evidence of the complainant and thereafter, vide order dated 30.7.1998, the learned Judicial Magistrate 1st Class, Chandigarh, ordered the summoning of the petitioners (in all the cases) as accused for the offence under Sections 138 and 141 of the
