IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SANDEEP N. BHATT, J.
Anilkumar Ramniklal Patel – Appellant
Versus
K G S Tyres Distributors Proprietor Rajeshkumar Kantilal Samani Thropoa Lalitkumar Kantilala Samani – Respondents
R/CRIMINAL MISC.APPLICATION NO. 9121 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9124 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9125 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9128 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9129 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9131 of 2019 With R/CRIMINAL MISC.APPLICATION NO. 9137 of 2019
Decided on : 10-07-2023
Code of Criminal Procedure, 1973 - Section 482 - Negotiable Instruments Act, 1881 - Sections 138 and 141 - Quash complaints - Dishonour of cheque for insufficiency, etc., of funds in account - Applications are filed for quashing and setting aside complaints – Held, Applicants cannot be arraigned as accused as they have already resigned as director much prior to alleged transaction, therefore, ingredients of Sections 138 and 141 of NI Act are not satisfied against applicants and this is a fit case to exercise inherent powers under Section 482 of Code - It is open for complainant to avail remedies whichever is permissible under criminal as well as civil laws against applicants - Continuation of further proceedings pursuant to complaint under Section 138 of NI Act will cause greater hardships to applicants and no fruitful purpose would be served if such further proceedings are allowed to be continued - Court must ensure that criminal prosecution is not used as instrument of harassment or for seeking private vendetta or with ulterior motive to pressurise accused or to settle score - Criminal Case are hereby quashed and set aside - Applications are allowed.
JUDGMENT :
1. All these applications are filed under Section 482 of the Code of Criminal Procedure, 1973 (`the Code’ for short) for quashing and setting aside the complaints being Criminal Case Nos.2613 of 2016, 2615 of 2016, 2622 of 2016, 2611 of 2016, 2614 of 2016, 2618 of 2016 and 2621 of 2016 respectively filed under the provisions of the Negotiable Instruments Act (`NI Act’ for short).
2. As the common question of facts and law are involved in all these applications, at the request of learned advocates for the parties, they are heard together and disposed of by this common oral judgment.
3. Rule returnable forthwith. Learned advocate Mr.Vimal Purohit waives service of notice of rule for respondent no.1.
4. Heard learned advocates for the parties.
4.1 Learned advocate Mr.Ratanpara for the applicants submitted that the impugned complaint is not maintainable against the applicants as no specific averments, much less any averment as per the requirement of Section 141 of the NI Act has been made against the applicants. He further submitted that the applicant nos. 1 and 2 resigned as director in the year 2006 and the applicant no.3 resigned in the year 1996, and the resolution is passed to that effect. Form No.32 also came to be filed with the Registrar of Companies, while the cheques in question were issued on 3.3.2007 and deposited and dishonoured on 30.3.2007. He, therefore, submitted that vicarious liability of the accused company cannot be extended to the applicants, who have already resigned much prior to the issuance of cheques.
4.2 He has further submitted that even from the reading of the complaint, there is no specific averment or allegation about the liability of the director of the company; that in any case, the complainant can certainly recover the dues as the company is still in existence; that there is no specific averment about the cheques being given for security or post-dated cheques for any specific purpose; that the averments regarding the change of affairs is missing in the complaint. Learned advocate for the applicants has submitted that the applicants have no connection with the business of the company after they resigned in the year 2006 and 1996 respectively.
4.3 Learned advocate for the applicant has relied on the decisions in the case of Anil Khadkiwala V/s State (Government of NCT of Delhi) and another, reported in (2019)17 SCC 294, more particularly, paragraphs 1 to 3, 7 and 11 and in the case of Gunmala Sales Private Ltd. V/s Anu Mehta & Ors., Navkar Infra Projects Pvt. Ltd. & Etc. Reported in (2015) 1 SCC 103, more particularly, paragraphs 29 to 31.
4.4 Learned advocate for the applicants further submitted that it is not sufficient to make a bald cursory statement in a complaint that the Director is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. He submitted that from the bare reading of the complaint, all the allegations are levelled against the accused no.1- and no averments are made against the present applicants except that the applicants were directors of the accused no.1-company and they were responsible for the conduct of the business. He, therefore, the ingredients of Sections 138 and 141 of the NI Act are not made out.
4.5 Learned advocate for the applicant, therefore, submitted that this is a fit case where the Court should exercise inherent powers under Section 482 of the Code by quashing the impugned complaints qua the applicants, especially, when the company is available to the present complainant to recover the dues, if any.
5. Per contra, learned advocate Mr.Abhishek Sharma appearing for learned advocate Mr.Vimal Purohit for the respondent no.2-complainant has opposed these applications and submitted that the applicants were directors at the relevant point of time and the accused in the said complaint filed by the complainant is managing the affairs of the accused no.1-company; he has purchased t
Aneeta Hada V/s Godfather Travels & Tours Pvt. Ltd.
Anil Khadkiwala V/s State (Government of NCT of Delhi) and another
Gunmala Sales Private Ltd. V/s Anu Mehta & Ors.
Harshendra Kumar D. v. Rebatilata Koley Etc.
Inder Mohan Goswami and Another versus State of Uttaranchal reported in (2007) 12 SCC 1
S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan reported in 2022 SCC Online SC 1238
The court quashed proceedings against a former director for cheque dishonor, ruling that allegations did not establish an offense post-resignation, emphasizing the need to prevent abuse of legal proc....
A director who resigns before the cheque issuance cannot be held liable under Sections 138 and 141 of the NI Act, evidenced by credible documents demonstrating resignation.
The main legal point established in the judgment is that a former director of a company cannot be held liable for a dishonoured cheque issued after their resignation from the directorship, and the im....
Vicarious liability under Section 141(1) of the NI Act must be strictly construed, and the complaint should provide specific averments to establish the accused's responsibility for the company's cond....
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