IN THE HIGH COURT AT CALCUTTA
ANANYA BANDYOPADHYAY, J.
Rekha Malhotra and Others – Petitioners
Versus
The State of West Bengal and Another – Respondent
C.R.R. No. 123 of 2012
Decided On : 16-07-2024
Negotiable Instruments - Quashing of Proceedings - Section 138, 141 - The court emphasized the necessity of specific averments in complaints under Section 141 to establish vicarious liability of directors, highlighting that mere directorship is insufficient without clear evidence of responsibility for the company's conduct.
Fact of the Case:
The petitioners sought to quash proceedings under Section 138 and 141 of the Negotiable Instruments Act, claiming they were no longer directors at the time of the cheque issuance and that the complaint lacked necessary averments regarding their responsibility for the company's conduct.
Finding of the Court:
The court found that the complaint did not adequately specify the petitioners' roles as directors responsible for the company's conduct at the time of the offence, thus failing to meet the requirements of Section 141.
Issues: Whether the complaint sufficiently established the petitioners' vicarious liability under Section 141 of the Negotiable Instruments Act.
Ratio Decidendi: The court held that specific averments regarding a director's responsibility for the company's conduct are essential for establishing vicarious liability under Section 141; mere directorship is insufficient.
Result: The proceedings under Complaint Case No. C-2250 of 2010 are quashed.
JUDGMENT :
ANANYA BANDYOPADHYAY, J.
1. The instant revisional application has been filed by the petitioners praying for quashing of the proceedings being Complaint Case No. C-2250 of 2010 pending before the Learned 10th Judicial Magistrate at Alipore under Section138 read with Section 141 of the Negotiable Instruments Act, 1881 (as amended till date) and all orders passed thereunder.
2. None appeared to represent the opposite parties.
3. The petition before the Court of Learned 10th Additional Chief Judicial Magistrate at Alipore states as follows:
4. That in course of such business, the accused persons on behalf of the company issued cheques amounting to Rs.5,00,000/- (rupees Five Lakhs) drawn on SBI Kalighat Branch, being cheque No. 221994 dated 10.3.2010 on putting the signatures of the accused persons with company seal, towards discharge of the legal and lawful liability and charges on account of consideration of legal service charges and principal amount to the accused company and/or directors.
5. That accused persons, in course of business, dealt in various investments to different companies on the basis of taking service charge from your petitioner a sum of Rs.5,00,000/- was due to the accused company and Directors for which the accused company and their directors issued A/c. Payee cheque in the name of complainant drawn on State Bank of India, Kalighat Branch being cheque No 221994 dated 10.3.2010. 6 That the complainant deposited the said account payee cheque, being cheque No 221994 dated 10.3.2010 amounting to Rs.5,00,000 and the cheque was drawn on State Bank of India, Kalighat Branch was deposited with the complainant's banker, Bank of Baroda, Prince Anwar Shah Branch on 06.09.2010 and the said cheque was returned with a remark: “Not Arranged For” and the matter was intimated by the banker on 8.9.10 and same was handed over to my client to your petitioner on 9.9.10.
7. That thereafter the complainant sent a notice under Section 138 of N.I. Act, through his Ld. Advocate Md. Abed Ali Laskar through Regd. Speed Post with A/D on 10th September, 2010 demanding of payment of the said amount within 15 days from the receipt of the said notices and the said notice was duly received by the accused company and directors No. 2 & 3 on putting their signatures and 4 & 5 of which were returned with the Postal Remark unclaimed. (The Accused persons intentionally avoided the notice, knowing fully well the facts) which is good service.
8. That thereafter the accused persons sent reply of the notice to their Ld. Advocate Krishnendu Bhattacharya on 20.09.2010 in the name of your petitioner’s advocate Md. Abed Ali Laskar acknowledging the receipt of the notice but till date no payment was made.
9. That your petitioner respectfully submits that the accused persons issued the said cheque in favour of your petitioner in discharge of their existing liabilities as mentioned hereinabove, and the said cheque being presented for encashment through the Banker which was returning being dishonored.
10. That the accused persons have committed offences punishable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 as amended up to date.”
4. The Learned Advocate for the petitioners submitted that the petitioner nos.1 and 3 ceased to be the Directors of the Company having resigned from the post. The complainant in accordance to the provisions under Section 141 of the Negotiable Instruments Act did not specifically mention at the relevant time the accused-petitioners were the Directors of the Company, namely, Sumosons Exports Private Limited, being in-charge of and responsible for the day to day conduct of the busines
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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....
A director cannot be held vicariously liable under the Negotiable Instruments Act without specific allegations demonstrating their active responsibility in the company's operations.
A Company Secretary, who is not involved in the day-to-day affairs of the company and is not responsible for the conduct of its business, cannot be held criminally liable for a dishonored cheque issu....
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....
Non-Executive Directors cannot be held liable under Section 141 of the Negotiable Instruments Act without specific averments demonstrating their involvement in the company's day-to-day affairs.
Point of Law : Where there is not even an averment against the Managing Director or joint Managing Director of the Company therein. [Para 11]
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