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IN THE HIGH COURT AT CALCUTTA
ANANYA BANDYOPADHYAY, J.
Aashish Jhunjhunwala - Petitioner
Versus
Shri Kamal Dihidar - Respondent
C.R.R. No. 3794 of 2013 With CRAN 12 of 2022
Decided On : 03-07-2023
NEGOTIABLE INSTRUMENTS ACT - SECTION 138 - QUASHING OF PROCEEDINGS - COMPANY NOT ARRAIGNED AS ACCUSED - VICARIOUS LIABILITY - ESSENTIAL REQUIREMENTS - SUFFICIENCY OF COMPLAINT - JURISDICTION OF COURT - SECTION 142 - APPLICABILITY - SECTION 202 OF THE CODE OF CRIMINAL PROCEDURE, 1973 - INAPPLICABILITY.
Fact of the Case:
Petitioner challenges an order taking cognizance of an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) against him, alleging that the complaint did not contain the necessary averments to establish vicarious liability under Section 141 of the NI Act and that the provisions of Section 202 of the Code of Criminal Procedure, 1973 (CrPC) were not complied with.
Finding of the Court:
1. The complaint sufficiently averred the petitioner's role in the commission of the offence, including his status as Managing Director and authorized signatory of the company, and his responsibility for the conduct of the company's business. 2. The provisions of Section 202 of the CrPC are not applicable to proceedings under Section 138 of the NI Act, as the specific provisions of Section 142 of the NI Act govern the jurisdiction of the court.
Issues: 1. Whether the complaint contained sufficient averments to establish vicarious liability under Section 141 of the NI Act? 2. Whether the provisions of Section 202 of the CrPC are applicable to proceedings under Section 138 of the NI Act?
Ratio Decidendi: 1. The complaint must specifically aver that the person accused was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. 2. The provisions of Section 202 of the CrPC are not applicable to proceedings under Section 138 of the NI Act, as the specific provisions of Section 142 of the NI Act govern the jurisdiction of the court.
Final Decision: The revisional application is dismissed, and the impugned order is upheld.
JUDGMENT :
Ananya Bandyopadhyay, J.
1. The instant criminal revision is preferred by the petitioner against an Order dated 31.05.2013 passed by Learned Judicial Magistrate, 6th Court, Paschim Midnapore, seeking quashing of the proceedings of Case C.R. No. C/405 of 2013 of the Negotiable Instruments Act, 1881 pending before the Learned Judicial Magistrate, 6th Court, Paschim Midnapore.
2. On or about 06.05.2013 the opposite party filed a petition under Section 138 of the said Act in the Court of Learned Chief Judicial Magistrate at Paschim Midnapore against the present petitioner alleging as follows :
(b) The petitioner herein being the Managing Director/Authorized Signatory of M/s Ramsarup Lohh Udyog dealt in production of Pig Iron, sponge iron and various types of wire etc. and had business transaction with the opposite party and purchased coke from the same. The petitioner in order to reimburse the dues executed an agreement with the opposite party on 17.09.2011 wherein the petitioner handed over four post dated cheques dated 14.09.2012 towards discharge of the legal debts and/or liabilities. It was agreed between the parties that in the event the petitioner failed to arrange funds for the opposite party, the validity of the encashment of those cheques would be extended.
(c) As per the aforesaid agreement the petitioner could not arrange the said fund within the stipulated period and consequently on 14.09.2012 one agreement was again executed in between the parties as the addendum to the main agreement wherein the petitioner acknowledged his liability declaring that Rs.8,53,29,725.52/- was the outstanding and further 6 months time was granted to the petitioner for payment.
(d) In terms of the addendum agreement the petitioner in order to discharge his liability delivered four post dated cheques to the opposite party. The opposite party duly presented the above mentioned cheques for encashment through its banker. However the said cheques returned to the opposite party along with the cheque return memo dated 14.03.2013 with the remarks ‘Funds Insufficient’.
(e) The opposite party issued legal notice through its advocate dated 26.03.2013 under section 138(b) of the said Act. The notice was received by the petitioner on 01.04.2013. However, despite service of notice the petitioner did not pay the demanded amount, which called for initiation of the instant proceedings.
3. Vide Order dated 05.06.2013 the Learned Chief Judicial Magistrate, Paschim Midnapore was pleased to take purported cognizance and transferred the case to the Court of Learned Judicial Magistrate, 6th Court at Paschim Medinipore (herein after referred to as ‘the Learned Trial Court’ for inquiry and disposal.
4. On 31.05.2013 the opposite party was examined on dock under Section 200 of the Procedure Code and vide Order dated 31.05.2013 the Learned Trial Court was pleased to find prima facie case under Section 138 of the said Act and issued process against the present petitioner under Section 138 of the said Act directing him to appear on 22.07.2013.
5. On 22.07.2013 the case was adjourned to 16.09.2013 and further adjourned to 01.10.2013 for service return. After receiving the summons of the Court the petitioner surrendered and filed an application under Section 205 of the said Code when vide Order dated 01.10.2013 the Learned Trial Court was pleased to release the petitioner on bail and fixed the next date on 25.11.2013 for appearance and hearing of the said application.
6. The Learned Advocate for the petitioner submitted the petitioner to be completely innocent and in no way connected with any offence as alleged in the instant case. From a bare perusal of the petition of complaint it is evident
The main legal point established in the judgment is the necessity of arraigning the company as an accused for maintaining the prosecution under Section 141 of the NI Act, and the requirement of speci....
Dishonour of cheque – Offence by company – For maintaining prosecution under Section 141 of NI Act, arraigning of company as an accused is imperative and non-impleadment of company would be fatal for....
Specific averments regarding a director's responsibility for a company's conduct are essential for vicarious liability under Section 141 of the Negotiable Instruments Act.
Specific averments regarding a director's responsibility for a company's conduct are essential for establishing vicarious liability under Section 141 of the Negotiable Instruments Act.
Directors can only be held vicariously liable under Section 141 of the Negotiable Instruments Act if specific averments are made in the complaint regarding their responsibility for the company's cond....
(1) Dishonour of cheque – Offence by company – For fastening criminal liability, there is no legal requirement for complainant to show that accused partner of firm was aware about each and every tran....
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