IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VAIBHAVI D. NANAVATI, J.
Chintan Pranlal Soni & 1 Others - Applicants
Versus
State Of Gujarat & 1 Others – Respondents
R/Special Criminal Application No. 3564 of 2016
Decided On : 02-12-2022
Negotiable Instruments Act, 1881 – Section 138, 141 – Quashing the Criminal Case – Payment Stopped by drawer – By way of present writ-application writ-applicants herein have prayed for quashing of order of issuance of process qua present writ-applicants (original accused Nos.1 and 2) and for quashing and setting aside Criminal Case pending before learned 3rd Additional Senior Civil Judge and Additional Chief Judicial Magistrate – Held, Court has perused cheque in question, same is taken on record, learned advocate appearing for respondent No.2 – Complainant has also not disputed fact that cheque was issued by writ-applicant for and on behalf of Company i.e. ECOLIBRIUM ENERGY PVT. LTD. Considering ratio as laid down by Hon’ble Supreme Court as referred to above and facts of present case impugned complaint being Criminal Case pending before learned 3rd Additional Senior Civil Judge and Additional Chief Judicial Magistrate, is held to be not maintainable without arraigning Company i.e. ECOLIBRIUM ENERGY PVT. LTD as accused in impugned complaint – It was imcumbent for respondent No.2 – complainant to arraign Company as an accused and only if the Company is joined as accused, Directors can be held to be vicariously liable for act which was undertaken by respondent No.2 for and on behalf of Company – Writ-application allowed.
ORDER :
1. Rule returnable forthwith. Ms. Maithili Mehta, he learned APP waives service of notice of rule for and on behalf of the respondent No.1-State and Mr. Aditya Pandya, the learned advocate waives service of notice of rule for and on behalf of the respondent No.2 – Complainant.
2. By way of present writ-application the writ-applicants herein have prayed for quashing of order of issuance of process qua the present writ-applicants (original accused Nos.1 and 2) and for quashing and setting aside the Criminal Case No.1522 of 2016 pending before the learned 3rd Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Gandhinagar.
3. The brief facts germane for adjudication of the present writ-application read thus :-
3.1 The writ-applicant No.1 is the Director of the ECOLIBRIUM ENERGY PVT. LTD., and accused No.1 in Criminal Case No.1522 of 2016 and the writ-applicant No.2 is the authorized signatory of the said Company and accused No.2 in the said criminal case. The Company is not joined as an accused in the proceedings nor has been issued any notice as contemplated under Section 138 of the Negotiable Instruments Act read with Section 141 of the Negotiable Instruments Act.
3.2 The Company in which the writ-applicant No.1 holds the aforesaid post have a working relationship with the complainant for more than 2 (two) years and during that tenure the Company had placed various orders with the Complainant Company valuing more than Rs.1 (one) crore. During the said tenure the Company was facing many quality issues and issues relating to after sales services provided by the Complainant. The details relating to the said Complaints regarding the quality of the product and the quality of services were stated in the reply dated 25.03.2016, sent by the writ-applicants herein to the second notice issued by the Complainant dated 03.03.2016. In the said reply to the second notice issued by the Complainant dated 03.03.2016 the writ- applicant had given sufficient bonafide reasons for the action of the Company to stop the payment of the said cheque. On the date when the cheque in question was deposited the Company had sufficient funds to discharge its debts. It is stated that the writ-applicant would rely on the Statement of Account of the Bank of the Company from which the cheque was issued for the period starting from 25.11.2015 to 22.3.2016.
3.3 The respondent No.2 is the original complainant. It is alleged in the complaint that pursuant to the order placed by the writ-applicant Company the complainant had supplied and delivered the goods and that the writ-applicant had issued cheque bearing No.001419 dated 30.11.2015 for an amount of Rs.7,03,339/- drawn on HDFC Bank, Prahladnagar, Ahmedabad Branch (for short the "Cheque") towards fulfillment of the alleged outstanding amount. The respondent No.2 – original complainant on 04.12.2015 for clearing in the Complainant's bank i.e. State Bank of (INDIA) India, GIDC Branch, Gandhinagar deposited the said cheque and the same was alleged to be dishonored on 05.12.2015 on the grounds of "Stop Payment".
3.4 The Complainant thereafter issued notice dated 01.01.2016 against the writ-applicant no.2 herein which was replied by the writ-applicant no.2 vide its reply dated 07.01.2016. The limitation for filing of the Complaint for return of cheque ended on or about 15.02.2016, however the complainant on 16.2.2016 redeposited the cheque without instructions. The said cheque came to be returned on 17.02.2016 on the ground "Stop Payment". The Complainant thereafter issued statutory notice dated 03.03.2016. The writ-applicant replied to the said notice by reply dated 25.03.2016. No notice, in both the notices i.e. 1.1.2016 and 3.3.2013, was issued to the Company, who allegedly had placed the order or was in default of payment. Both the notices were issued to the writ-applicants herein in their personal capacity for payment of the alleged dues to the Complainant. The Complainant thereafter file
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Directors cannot be prosecuted under Section 138 of the NI Act without the company being joined as an accused, as vicarious liability requires the company to be a party to the proceedings.
(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....
Maintaining prosecution under section 138 of the NI Act requires arraigning the company as an accused, and the vicarious liability of individuals associated with the company is contingent upon the co....
Dishonour of cheque – Company is a juristic person and Company can have criminal liability—In case of commission of offence by company, express condition of company being joined is imperative to attr....
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....
Vicarious liability under Section 141 of the N.I. Act arises only when the company or firm commits the offense as the primary offender, and the accused must be the drawer of the cheque to be held lia....
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