IMPORTANT POINT
Principles guidelines for deciding petition u/s 482 CrPC with regard to offence u/s 138/141, NI Act discussed an laid down.

Headnote:(a) Negotiable Instruments Act, 1881 – Section 141 – Liability of Directors – There is no deemed liability of every Director of a Company for dishonoured cheques – Directors, other than Managing or Joint Managing Director, not signatory of cheque – Not liable for its dishonour if not in charge and responsible for conduct of business of the company at relevant time – Averment to this effect – Basic requirement of section 141. (Para 26)
       (2009) 10 SCC 48; (2005) 8 SCC 89; 2013(12) SCALE 673; (2011) 13 SCC 88; (2010) 3 SCC 330; (2007) 9 SCC 481; (2007) 3 SCC 693; (2007) 4 SCC 70; (2006) 10 SCC 581; (2008) 7 SCC 442 – Relied upon
       2014 (4) SCALE 55; (2008) 7 SCC 442; (2008) 17 SCC 147; (2007) 5 SCC 108; 66 Comp Cas 26 (Delhi); (2014) 4 SCC 282; (2012) 1 SCC 520; (2010) 11 SCC 374 - Referred
       (b) Negotiable Instruments Act, 1881 – Section 138 and 141 /w Sections 200 to 204, CrPC – Basic averment of the Director concerned, if he is not Managing Director or Joint Managing Director or signatory of the cheque, regarding his being in-charge and responsible for conduct of business of the Company at relevant time – Essential – In absence of such averment Magistrate would be legally justified in not issuing process. (Para 27)
       (2005) 8 SCC 89 – Relied upon
       (c) Code of Criminal Procedure, 1973 – Section 482 r/w section 141, NBI Act, 1881 – Basic averment regarding liability of a Director – Necessary for Magistrate to issue process u/s 141 – Something more is required for High Court to quash proceedings u/s 482 – Mere that complaint is bald assertion is not enough – Director must show that no case is made out against him – Principles and procedures to be adopted by Magistrates and High Courts stated. (Para 30, 33)
       (2011) 3 SCC 351; (2012) 1 SCC 520 – Relied upon.
       (d) Negotiable Instruments Act, 1881 – Section 141 r/w section 482, CrPC – Respondent Directors assailing complaint on ground that it makes only bald averment regarding their liability – High Court accepting and quashing process – Directors also making bald assertion about their resignation and not being in charge and responsible for conduct of affairs of the Company at relevant time – Not producing any evidence – Quashing of process not justified – Impugned judgment set aside – Matter remitted back. (Para 34)
       Facts of the case:
        One Navkar Buildestates Private Limited through its Directors - respondents 1 to 3 approached the appellant for certain financial assistance to meet the working capital requirement of the said Company. Accordingly the appellant lent and advanced certain amount of money to the said Company. The said amount carried interest at the rate of 6% per annum. Respondents 1 to 3 along with the Managing Director of the said Company agreed and undertook to pay the said amount on or before 31/7/2011. It was further agreed by the respondents that on their failure to pay the amount on or before 31/7/2011, the appellant would be entitled to claim interest at the rate of 18% per annum.
        The respondents failed to repay the entire amount on or before 31/7/2011.
        On 31/7/2011, in acknowledgment of their liability and towards repayment of the amount due, the said Company issued cheques in favour of the appellant. On 2/8/2011, when the appellant presented the said cheques to its banker – Canara Bank, the same were returned unpaid with the remark “Insufficient Funds”.
        On 20/8/2011, the appellant sent a statutory demand notice to respondents 1 to 4 under Section 138 of the NI Act. The said notice was received by respondents 1 to 4 on 27/8/2011. As respondents 1 to 4 failed to repay the amount as demanded in the said notice, on 26/9/2011, the appellant filed a complaint in the Court of the Chief Metropolitan Magistrate at Calcutta. Learned Magistrate accepted the said complaint and passed the summoning order.
        Respondents 1 to 4 filed an application before the High Court of Calcutta under Section 482 of the Code for quashing the proceedings pending before the learned Magistrate.
        The High Court quashed the proceedings.
       Finding of the Court:
        Impugned cannot be sustained.
       Result: Appeal disposed of.

JUDGMENT

Mrs. Ranjana Prakash Desai, J.— Leave granted.

2. In these appeals, we are concerned with the question as to whether the High Court was justified in quashing the proceedings initiated by the Magistrate on the ground that there was merely a bald assertion in the complaint filed under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (“the NI Act”) that the Directors were at the time when the offence was committed in charge of and responsible for the conduct and day-to-day business of the accused-company which bald assertion was not sufficient to maintain the said complaint.

3. These appeals arise out of several complaints filed under Section 138 read with Section 141 of the NI Act. The complaints were filed by Gunmala Sales Private Limited or Rooprekha Sales Private Limited or by both. In the complaints, the respondents herein and others were arrayed as accused. After the process was issued, the respondents filed various applications under Section 482 of the Code of Criminal Procedure, 1973 (“the code”) in the High Court. The High Court disposed of one application being C.R.R. No.4099 of 2011 by a reasoned order. As the same issue was involved in all the applications, the other applications were disposed of in terms of judgment in C.R.R. No.4099 of 2011. Special Leave Petition (Crl.) No.1724 of 2013 was filed challenging the said judgment in C.R.R. No.4099 of 2011. We may, therefore, for the disposal of these appeals, refer to the facts in civil appeal arising out of Special Leave Petition No.1724 of 2013, treating the same as the lead case.

4. It is the case of the appellant that in or about February, 2008, one Navkar Buildestates Private Limited (“the said Company”) through its Directors - respondents 1 to 3 approached the appellant for certain financial assistance to meet the working capital requirement of the said Company. Accordingly, at the request of respondents 1 to 3, the appellant lent and advanced certain amount of money to the said Company. The said amount carried interest at the rate of 6% per annum. Respondents 1 to 3 along with the Managing Director of the said Company agreed and undertook to pay the said amount on or before 31/7/2011. It was further agreed by the respondents that on their failure to pay the amount on or before 31/7/2011, the appellant would be entitled to claim interest at the rate of 18% per annum. The respondents failed to repay the entire amount on or before 31/7/2011.

5. On 31/7/2011, in acknowledgment of their liability and towards repayment of the amount due, the said Company issued cheques in favour of the appellant. On 2/8/2011, when the appellant presented the said cheques to its banker – Canara Bank, the same were returned unpaid with the remark “Insufficient Funds”. On 20/8/2011, the appellant sent a statutory demand notice to respondents 1 to 4 under Section 138 of the NI Act. The said notice was received by respondents 1 to 4 on 27/8/2011. As respondents 1 to 4 failed to repay the amount as demanded in the said notice, on 26/9/2011, the appellant filed a complaint in the Court of the Chief Metropolitan Magistrate at Calcutta. Learned Magistrate accepted the said complaint and passed the summoning order.

6. Respondents 1 to 4 filed an application before the High Court of Calcutta under Section 482 of the Code for quashing the proceedings pending before the learned Magistrate. The High Court framed two questions as under:

“(i) Whether the Directors can be prosecuted on the bald assertion made in the complaint, that “the Directors thereof and were at the time when the offence committed in charge of and were responsible for the conduct and day to day business of the said accused No.1 company”.

(ii) Whether the Director who has resigned can be prosecuted after his resignation has been accepted by the Board of the Directors of the Company”.

So far as the first question is concerned, the High Court, after referring to certain judgments of this Court, held that e

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IMPORTANT POINTPrinciples guidelines for deciding petition u/s 482 CrPC with regard to offence u/s 138/141, NI Act discussed an laid down.

Cases Referred (18)

IMPORTANT POINT
Principles guidelines for deciding petition u/s 482 CrPC with regard to offence u/s 138/141, NI Act discussed an laid down.