IMPORTANT POINT
Where an incontrovertible document, admittedly, executed by the complainant and another, that too signatory of the cheque, would disclose that liability covered by such cheque had been taken over by another company, and, that the company proceeded against has no liability over the cheque issued in its name, it is not even a matter touching upon disputed facts but one unmistakably showing that the holder of the cheque is not entitled to the presumption under S.139 of the N.I. Act.

S.S.Satheesachandran, J.—Petitioners are directors of a company who are proceeded with that company and its managing director in a complaint, for the offence under S.138 of the Negotiable Instruments Act, 1881, for short, ‘the Act’. First respondent, which is also a company, is the complainant. Petitioners have filed the petition to quash the criminal proceedings against them contending such proceedings are an abuse of the process of the court, under S.482 of the Code of Criminal Procedure, for short, ‘the Code’.

2. Complainant a private limited company is a builder and developer of property. That company entered into Annexure B agreement with the first accused, another private limited company, on 18.12.2007, for joint development of a property belonging to that accused, situate in Kasaba Village, Kozhikode Taluk, for putting up a multi storied commercial complex, named, ‘The Blue Diamond Mall’. The Director Board of first accused, then, consisted of the second accused as its managing director and his two sons as directors. Complainant advanced an amount of Rs.3 crores and spent another sum of Rs. 61,33,752 for the betterment of first accused. The first accused under Annexure-B agreement has to pay back the amount advanced and spent on completion of the project or on realization of sale revenue from the project, whichever is earlier, In addition the agreement stipulated that the first accused has to pay the complainant 10% of the total sale proceeds collected by sale of the developed space. While so petitioners, who are accused 3 to 6 in the complaint, purchased the Blue Diamond Mall by transfer of shares, for a total consideration of Rs.85 crores. On such sale two directors of first accused, two sons of the second accused, retired, and petitioners stepped in as Directors. The first accused, then, according to complainant was liable to it for Rs.3 crores, received as advance, and further sum of Rs.8.5 crores—10% of 85 crores, the value paid for transfer shares of that company. Towards part payment of that liability a cheque for Rs.2 crores from the account maintained by first accused was issued to the complainant, that cheque presented for encashment was dishonoured due to insufficiency of funds, and notice of dishonour and demand made to accused Nos.2 to 6 was responded with reply from accused Nos.3 to 6 denying their liability, is the case of the complainant to proceed against first accused company and its directors for the offence under S.138 of the Act. Cheque was issued with the knowledge, consent, concurrence and approval of accused Nos.3 to 6, all of them had participated in the deliberations held in the negotiations for sale of Blue Diamond Mall by second accused and others, accused persons 3 to 6 with the second accused are in charge of the affairs of first accused and after issue of cheque accused Nos.2 to 6 requested the directors and officers of complainant company to defer presentation of the cheque till June 2011 on account of financial constraints of first accused, is the further case of complainant to prosecute the directors, accused Nos.2 to 6, with the first accused for the offence imputed.

3. The magistrate took cognizance of the offence on the complaint and issued process to the accused. Receiving summons petitioners (A3 to A6) have filed the petition to quash the criminal proceedings against them. Complaint is not maintainable against them since they were not in charge of the company when the liability was allegedly incurred, and, further, Annexure B agreement entered by the first accused with complainant company has been annulled and cancelled by a subsequent agreement (Annexure F) between the complainant and another company M/s Swargachitra Property Developers Private Ltd., for short, Swargachitra, in which also the second respondent is the managing director, according to them. First petitioner (A3) is a, nonresident Indian, second petitioner (A4) is his wife and petitioners 3 and 4 (A5 and A6) a