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IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBRAMONIUM PRASAD, J.
In The Matter OF: Gopala Krishna Mootha – Appellant
Versus
The State Govt Of NCT Of Delhi & Anr – Respondents
Crl.M.C. 2082 of 2021 & Crl.M.A. 14016 of 2021
Decided on : 21-02-2022
Negotiable Instruments Act, 1881 - Section 138, 142 - Quashing of Criminal Complaint – Petitioner is over 80 years of age having several physical ailments and is no longer looking into day-to-day affairs of company - That complainant/respondent No.2 being ex-CFO of company was well aware of affairs of company and he knew who was responsible for conduct of business of company - That averments in complaint do not reflect role of each of directors in company and summons could not have been issued to Petitioner - Respondent No.2 states that petitioner and his son i.e. accused No.2 are together running company - She states that there are only two directors and both directors are responsible for conduct of affairs of company - She submits that question as to whether company was being only run by Accused No.2 i.e. son of petitioner or whether Petitioner is also involved in affairs of the company, is a matter of trial and complaint cannot be quashed at this stage - She further states that offence under Section 138 of NI Act is made out and no interference is warranted from this Court at this stage.
Finding of the Court :
Complaint read as a whole indicates that at time of cheques being issued by company and returned by bank, son of petitioner and petitioner were only directors of company and were responsible for conduct of business of company - It is for petitioner to establish in trial that he was not responsible for conduct of business of company owing to his age and mere ipse dixit of petitioner that he is 80 years of age and is unable to manage affairs of company cannot be accepted at this stage and complaint cannot be quashed on that basis - Observations made by this Court is limited to issue as to whether the complaint should be quashed or not because of fact that complaint does not state exact role of petitioner in conduct of business of company - It is always open for petitioner to substantiate his assertion that he was not responsible for conduct of business of company by leading evidence which should be considered on its own merits without being influenced by observations made in this order
Result: Petition dismissed
JUDGMENT :
SUBRAMONIUM PRASAD, J.
1. The petitioner seeks quashing of Criminal Complaint No.5799/2020 titled as Chetan Sharma v. India Ahead News Pvt. Ltd. & Ors. which is a complaint filed under Section 138 of the Negotiable Instruments Act (in short 'NI Act'). The petitioner also seeks to quash order dated 03.02.2021 passed by the learned Trial Court issuing summons to the petitioner herein.
2. The respondent No.2 herein filed a complaint under Section 138 read with Section 142 of the NI Act before the Court of learned Metropolitan Magistrate, Saket Court with the following averments.
ii. It is alleged in the complaint that the petitioner herein and the accused No.2 - Goutham Mootha, who is the son of the petitioner herein, are the directors of India Ahead News Pvt. Ltd. and they are responsible for the day to day affairs of the company and they are running the TV channel and actively controlling all the operations of the company.
iii. It is stated in the complaint that the complainant was taken in service by the respondent No.1 at a fixed salary of Rs.10,00,000/- per month plus GST less TDS (to be deposited by the company under the Income Tax Act) along with monthly expenditure and reimbursement of Rs.1,50,000/- per month. It is stated that a stake of 10 per cent was also assured to the complainant herein.
iv. It is stated that in the year 2019, the salaries of staff including the complainant started getting delayed and even the statutory obligations like the PF, ESI etc. were not being fulfilled by the company. It is stated that since the dues and the arrears of salary were mounting up, at the request of Goutham Mootha (son of the petitioner herein), the complainant herein offered to take a salary cut.
v. It is stated that it was decided that the company would be paying a sum of Rs.32,00,000/- plus GST from 01.01.2020 to 31.05.2020 and reimbursement of Rs.5,00,000/-.
vi. It is stated that the complainant herein was given the following cheques of a total amount of Rs.39,56,000/-:-
Cheque No.63 dated 25.08.2020 for a sum of Rs.17,28,000/- drawn on Andhra Bank, Sector 18, Noida.
Cheques No.64 dated 26.08.2020 for a sum of Rs.17,28,000/- drawn on Andhra Bank, Sector 18, Noida.
Cheque No.65 dated 26.08.2020 for a sum of Rs.5,00,000/- drawn on Andhra Bank, Sector 18, Noida.
vii. It is stated that the cheques were for payment of arrears of salary.
viii. It is stated that the cheques were presented for encashment through Andhra Bank, Sector B, Pkt 1, DAV Public School Campus, Vasant Kunj, New Delhi, which is the bank of the complainant and the cheques were returned with remark "insufficient fund".
ix. It is stated that the cheque No.63/2020 dated 25.08.2020, cheque No.65/2020 dated 26.08.2020 drawn on Andhra Bank, Sector-18, G B Nagar, Noida-201301 were returned on 28.8.2020 and cheque No. 64/2020 dated 26.08.2020 drawn on Andhra Bank, Sector-18, G B Nagar, Noida-201301 was returned on 29.08.2020 due to insufficient funds.
x. It is stated that legal notice dated 02.09.2020 was issued in compliance to the mandate of Section 138 of the NI Act demanding payment. However, instead of making the payment, a reply dated 17.09.2020 was received by the complainant. Since, the money was not paid, the instant complaint was filed on 03.02.2021.
xi. The complaint came up for hearing on 23.01.2021. Since there was nothing on record to show that the accused No.2 & 3 are the directors of the company, the complainant was directed to place on record the Master Data of the company. The Master Data of the company was filed. The evidence by way of affidavit was filed by the complainant. After the pre-summoning evidence, summons were issued on 03.02.20221. The said order and the complaint has been challenged before this Court.
3. When the matter came up for hearing, this Court felt that an attempt can be made to
Point of law: It is for the petitioner to establish in trial that he was not responsible for the conduct of the business of the company owing to his age and the mere ipse dixit of the petitioner that....
Point of law: It is for the petitioner to establish in trial that he was not responsible for the conduct of the business of the company owing to his age and the mere ipse dixit of the petitioner that....
The main legal point established in the judgment is the requirement for specific averments and unimpeachable evidence to establish vicarious liability of directors in cases of cheque bounce under Sec....
Vicarious liability of Directors under Section 138 NI Act depends on their actual role in the company's affairs, and strict interpretation of the provision is necessary.
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....
Vicarious liability under the Negotiable Instruments Act requires proof of a director's active involvement and responsibility in the company's operations, not merely their title.
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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