IMPORTANT POINT
Where cheque was alleged to have been issued and draw towards discharge of loan liability of company but cheque was issued by one of the directors of company in his individual capacity and on his individual savings account, other director in company could not be prosecuted for vicarious liability.

Kailash Gambhir, J.—By way of this petition filed under Section 482, Cr.P.C., the petitioner seeks quashing of complaint case No. 399/2004 filed by the respondent No. 2 under Section 138 r/w Section 142 of the N.I. Act.

2. Brief facts relevant for deciding the present petition as stated by the petitioner are that the respondent No. 2 is a body corporate constituted by the Central Government to promote industrialization through the process of giving financial assistance to small and medium industries by way of loan advances as per the provisions of the State Financial Corporation Act 1955. In the complaint filed by the said Corporation i.e. Delhi Financial Corporation under Section 138 r/w Section 142, N.I. Act, the petitioner has been impleaded as accused No. 2 being Director of M/s. AAR EM Alloys (P) Ltd., Mr. Ramesh Chand Jindal, Director of the said company as accused No.1 and M/s. AAR EM Alloys (P) Ltd., as accused No. 3. It is alleged in the complaint that accused No. 3 i.e.

M/s. AAR EM Alloys (P) Ltd., approached the said Corporation for the advancement of loan amount of Rs. 59,00,000 and acceding to their request the said loan amount was advanced by the Corporation in terms of the loan agreement dated 15.3.1996 duly executed between the parties. The said loan agreement was signed by the said two Directors on behalf of the company. It is further alleged that in discharge of their outstanding liability pertaining to the said loan amount a cheque dated 8.12.2003 drawn on Indian Bank, Mehrauli Institutional Area for a sum of Rs. 1,00,000 was issued by Mr. Ramesh Chand Jindal, accused No. 1, although in the complaint filed by respondent No. 2 it is wrongly stated that the cheque was issued by Mr. Suresh Jindal, accused No. 2. The said cheque was returned dishonoured with the remarks ‘funds insufficient’ after the same was presented by respondent No. 2 with their bank. Legal notice of demand dated 15.1.2004 was sent by the complainant through registered A.D. cover and finding no response within the statutory period of 15 days, the said Corporation filed the complaint in question. The learned M.M. taking the cognizance of the complaint had issued summons against the petitioner as well as the other accused persons. During the pendency of the said complaint the other Director Mr. Ramesh Chand Jindal who was the signatory and drawer of the said cheque in question died on 2.7.2006. The petitioner has sought quashing of the said complaint case primarily on the ground that the petitioner is not a drawer of the cheque in question and, therefore, has not committed any offence punishable under Section 138 of the N.I. Act. It is also contended that the cheque in question was issued by late Shri Ramesh Chand Jindal in his individual capacity from his own saving bank account and, therefore, also the petitioner cannot be made liable for dishonour of a cheque issued by the other accused in his individual capacity. It is also contended that no specific allegations have been levelled in the complaint against the petitioner attributing any role in the issuance of the said cheque being responsible for day to day affairs and management of the company. It is also contended that even no valid notice as per requirement of Section 138 of Negotiable Instrument Act was served upon the accused. No legal notice was served upon the company M/s. AAR EM Alloys (P) Ltd., therefore, the petitioner cannot be held vicariously liable for the acts and deeds of the company. Another ground of attack by the petitioner is abatement of the complaint case due to the demise of Mr. Ramesh Chand Jindal who was the signatory and drawer of the cheque.

3. Counsel for the petitioner submitted that respondent No. 2 had failed to release the sanctioned credit facility to the said company due to which the said company became a sick unit. Counsel further submitted that respondent No. 2 had forcibly taken possession of the factory premises of company along with the pl