The necessity of specific averments in a complaint to establish vicarious liability under Section 141 of the Negotiable Instruments Act.

PRADEEP NANDRAJOG, J.

1. The matter was listed for September 13, 2016 which was declared a holiday and therefore is being taken up today.

2. The petitioner by way of present petition prays quashing of the criminal complaint bearing CC No.1780/1 (old number CC 3864/11) and CC No.1781/1 (old number CC 3864/11/2011) under Section 138 read with Section 141 of the Negotiable Instruments Act (hereinafter referred to as ‘Act’), titled Countrywide Promoters Pvt. Ltd. Vs. Era Landmarks Ltd. & Ors., and the summoning orders dated March 01, 2011 and May 14, 2013 and all proceedings arising there from.

3. The brief facts necessitating the disposal of the present petitions are that the accused company, in which the petitioner was alleged to be a director, entered into an MOU with the Complainant Company/respondent No.2 for development of a parcel of land in Haryana. Pursuant to the MOU, a Development Rights Agreement dated April 13, 2007 was entered into between the parties and subsequently a Share Purchase Agreement dated May 05, 2008 was entered into between the parties. It is the case of the complainant that vide letter dated August 14, 2010 the accused company communicated to the complainant company that an amount of Rs.2458.39 Lacs shall be paid by the complainant company as External Development Charges to the Government Department on behalf of the accused company, which shall be repaid by the accused company along with 18% interest to the complainant company. It is alleged that in lieu of part payment of the aforesaid liability in sum of Rs.2458.39 Lacs, post dated cheques bearing Cheque No.291473 dated December 31, 2010, Cheque No.291474 dated December 31, 2010, Cheque No.291477 dated December 31, 2010 and Cheque No.291476 dated December 31, 2010 of the amounts Rs.500 Lacs, Rs.500 Lacs, Rs.229.195 Lacs and Rs.74.196 Lacs respectively totalling Rs.13,03,39,100/-, were handed over by the accused company to the complainant company on August 14, 2010 itself. The cheques were presented for encashment on January 07, 2011 but were returned unpaid by the banker vide return memo dated January 08, 2011 stating the reason for dishonour of the cheque as ‘payment stopped by the drawer’. The complainant company sent a demand notice to the accused company vide letter dated January 17, 2011 demanding the payment of the aforesaid amount of Rs.13,03,39,100. The accused company replied to the demand notice stating that the cheques were handed over to the complainant merely as security and not for the satisfaction of any debt or liability. It resulted in above noted complaints as also another complaint, with which I am not concerned, being filed by the complainant in the Court of the learned Metropolitan Magistrate, in which after recording pre-summoning evidence the company and its Directors, including the petitioner have been summoned.

4. It is the case of the petitioner that at the time when the alleged offences were committed he had ceased to be a director of the company evidenced by Form No.32 submitted to the Registrar of Companies which shows that the petitioner ceased to be a director of the company with effect from November 12, 2009.

5. It is the further case of the petitioner that the complaint contains bald allegations against the petitioner that he had interacted and participated in various negotiations between the parties in regard to the land development project. Relying upon the decision reported as 2007 (9) SCALE 371 K. Srikanth Singh Vs. North East Securities, it is the case of the petitioner that mere participation in the transaction does not infer that the director was responsible for the day-to-day affairs of the company. Vicarious liability has to be pleaded and proved and cannot be inferred. It is further the case of the petitioner that since there is no specific allegations qua the petitioner as to the role played by him in the subject matter the requirements of Section 141 of the Act are not satisfied. The petitioner relies