The main legal point established in the judgment is the requirement of existing liability for cheques issued, the responsibility of directors for the company's business, and the sparing exercise of inherent powers under Section 482 of the Code.

G.P. Mittal, J.

1. By virtue of these three petitions under Section 482 of the Code of Criminal Procedure, 1973 (the Code), the Petitioners seek quashing of the three criminal complaints preferred under Section 138 of the Negotiable Instruments Act, 1881(the Act) against the Petitioners. Petitioner No.1 is a company, Petitioner No.2 is its Chairman and Chief Executive Officer and Petitioners No.3 to 7 are its Directors. The dispute which led to the filing of the three criminal complaints is recapitulated hereunder.

2. Petitioner No.1 entered into a lease agreement to let out premises No. A-573, Phase-V, Gurgaon consisting of basement, ground floor, second floor, terrace, etc. etc. The tenancy came into existence in the year 2004. Initially, the rate of rent was Rs. 1.5 lakhs per month. An interest free security of Rs. 9 lakhs was also deposited by Petitioner No.1 at the time of creation of the initial lease. The rent of the premises was increased from time to time. Ultimately, the new lease in question was entered into on 15.07.2009 and was to be effective for a period of four years w.e.f. 16.12.2008. The rate of rent which was fixed was Rs. 2,90,000/- per month. The rent was liable to be increased further by 10% after completion of the initial term of one and a half years. Petitioner No.1 was also liable to pay interest @ 15% on delayed payment of rent.

3. The three complaints have been filed in respect of various cheques issued by the Petitioner to the Respondent. For instance, Complaint No.357/1/10(Crl.M.C.2805/2012) relates to following seven cheques:

4. Similarly, Complaint No.492/1/10(Crl.M.C.2804/2012) relates to following three cheques:

5. Further, Complaint No.324/1/10(Crl.M.C.2803/2012) relates to following two cheques:

6. The case of the Petitioners is that above said cheques were issued in pursuance to the registered agreement dated 15.07.2009 and that when the cheques were presented with ICICI Bank, Vasant Kunj Branch, New Delhi on 28.05.2010, 12.07.2010 and 20.04.2010 respectively, the same were returned back to the Complainant by Petitioner’s Bank with the remarks “payment stopped by drawer”. It is also alleged in the complaint that Accused No.2 to 6 and 8 (the Petitioners) are the Directors of the Company and are in-charge of and responsible for the day to day affairs of the company and for conduct of the business of the company. It was stated that the offence was committed with wilful knowledge and the accused persons (Petitioners herein) did not exercise any effort to prevent the offence from being committed by the company. It is pleaded that as per clause 8 of the lease deed, the Directors of Petitioner No.1 stood as guarantors in their individual and personal capacity to make payment. It is averred that in spite of service of legal notice, the accused persons (Petitioners herein) failed to make the payment in terms of the demand notice. It is stated that Accused No.5 had resigned after the cheques were dishonoured but the resignation was ante-dated. The resignation was, however, sent to the Registrar of Companies only on 01.06.2010.

7. The quashing of the complaint is sought on two grounds. Firstly, that the cheques in question were not issued towards existing liability and, in fact, as per the understanding between the Petitioner Company and the Respondent, the cheques were to be returned. The learned counsel urges that in the year 2009, the Petitioner No.1 company started suffering heavy losses and, therefore, in the month of September and October, 2009, it decided to vacate the rented property. A communication in this regard was sent to the landlord, that is, the complainant. The complainant, however, expressed his inability to refund the security deposit and offered the Petitioners to continue the tenancy for a further period without payment of any further rent by merely issuing advance cheques. It is stated that a specific assurance was also given by the complainant that no interest shall