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2010(2) Bankmann 70 (Mad.)
MADRAS HIGH COURT
P.R. Shivakumar, J.
Bluechip Services International
Pvt. Ltd. & Ors. —Petitioners
versus
Vimon Air Travel and Tours
(P) Ltd. —Respondent
Criminal O.P. No. 3383 of 2008 and MP No. 1 of 2008
Decided on 14.9.2009
Counsel for the Parties:
For the Petitioners:C. Bauliah, Advocate.
For the Respondent:S. Venkateswaran, Advocate.
IMPORTANT POINT
There is no requirement to give notice to Directors proposed to be prosecuted but notice to company is mandatory.
Headnote:Negotiable Instruments Act, 1881—Sections 138 and 141—Criminal Procedure Code, 1973—Section 482—Dishonour of cheque—Cheque issued towards payment of air ticket returned unpaid—Challenge to criminal prosecution on the ground that tickets booked were not utilised by persons for whom they were booked— There is no requirement to give notice to Directors proposed to be prosecuted but notice to company is mandatory—Launching of prosecution against second and third respondent cannot be challenged on the ground of absence of notice under Section 138(b) —However, vicarious liability of Managing Director and other Directors can be inferred only if clear averments to effect that such Directors were in-charge of business of company and they were responsible to company for its conduct of business are made—No specific averment against second and third petitioners—Mere recital that one is Chairman and Managing Director and other is Executive Director shall not be enough—Criminal proceeding in respect to petitioner numbers 2 and 3 quashed—Petition of first petitioner-company dismissed. (Paras 12, 13, 15, 17, 20 to 23)
AIR 2005 SC 3512; (2006) 2 MLJ (Cri) 1152 (SC) —Relied on.
AIR 1999 SC 2182; AIR 2001 SC 518—Referred.
1992 (2) KLT 35; 1998 Cri. LJ 43—Noticed
P.R. Shivakumar, J.—This petition has been filed under Section 482 CrPC for quashing the criminal proceedings initiated against the petitioners herein on the file of the XVII Metropolitan Magistrate, Saidapet, Chennai as CC No. 6583 of 2007. The petitioners herein have been arraigned as accused Nos.1 to 3 in the above said case. The said calendar case was instituted on a private complaint preferred by the respondent herein for an alleged offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
2. The first petitioner is the company of which the second petitioner is the Chairman and Managing Director, whereas the third petitioner is the Executive Director. The issuance of process of notice by the trial Court to the petitioners herein/accused is challenged in this petition and the petitioners have sought for an order quashing of the criminal proceedings initiated against them on the following grounds:
Though it is true that the allegations found in the complaint that air tickets were booked for six persons on behalf of the first petitioner company for Madras-Kuwait-Madras under Invoice No.334 dated 19.4.2007 for a sum of Rs.99,000 and for the payment of the said amount a cheque bearing No. 36572 dated 12.5.2007 was issued to the complainant and that the same was returned unpaid when presented in the bank, according to the petitioners the tickets booked on behalf of the first petitioner were not issued and the tickets booked were not utilized by the persons for whom they were booked and hence there was no legal liability to pay the amount. (2) The complaint does not contain necessary averments as to who are all managing the affairs of the company, the details regarding the signatories of the cheque and the capacity in which each one of the petitioners is liable for being proceeded with for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. (3) Without there being necessary averments a director of a company or a partner of a firm cannot be prosecuted for the dishonour of the cheque issued in the name of the company or partnership firm, as the case may be. (4) Notice should have been issued to all the persons arraigned as accused and the notice issued to the company shall not be enough to prosecute its directors and the non-issuance of notice to the petitioners 2 and 3 will vitiate the proceedings initiated against them.
3. Based on the above said contentions, the petitioners have prayed for an order quashing the criminal proceedings instituted against the petitioners in CC No.6583 of 2007 on the file of XVII Metropolitan Magistrate for the alleged offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
4. The petition is resisted by the respondent/complainant contending that none of the grounds alleged in the petition is enough to quash the criminal proceedings instituted against the petitioners herein. It is the contention of the respondent/complainant that the notice issued to the company (drawer) is enough and no separate notice need be issued to the directors of the company for launching a prosecution against a company as well as its directors responsible for the conduct of the business of the company. It is also the contention of the respondent/complainant that, apart from making a clear and unambiguous averment to the effect that the persons sought to be prosecuted as directors of the company which committed the offence under Section 138 of the Negotiable Instruments Act, 1881, are looking after the affairs of the company and are responsible to the company for the con- duct of its business, detailed particulars narrating the particular instances on which the directors were taking part in the conduct of the business of the company need not be stated in the petition. Stating that the cheque was issued on behalf of the first petitioner company and the second petitioner being the Chairman and Managing Director of the company and the third petitioner
