The judgment establishes the legal principle that the complainant has a duty to make specific averments to establish the accused's liability, emphasizes vicarious liability, and highlights the limitations of the High Court's power to interfere with the investigation and pass interim orders.

ORDER :

1. This application is 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 No.29338 of 2017 qua the applicant, pending before the learned Metropolitan Magistrate, Court No.29, Ahmedabad filed under Section 25 of The Payment and Settlement Systems Act, 2007 (`the Act of 2007’ for short).

2. The facts as stated in the application are such that it is alleged by respondent no.1 in the complaint that one M/s V.S. Texmills Pvt. Ltd. had availed finance/loan from it and had opted for Electronic Clearing Service (ECS) for repayment of finance/loan. As the ECS initiated by M/s V.S. Texmills Pvt. Ltd., got dishonoured, the complaint is filed.

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4. Heard learned advocate Mr.Gupta for the applicant and learned APP Mr.Joshi for respondent no.2-state. Learned advocate for the respondent no.1-complainant was not present.

4.1. Learned advocate for the applicant submitted that the applicant is a proprietorship firm and the proprietor is one Umashankar Agarwal; that the applicant-M/s V.S.Synthetics has neither initiated ECS from an account maintained by it nor is the signatory of ECS mandate and is merely a co-borrower; that the account is not maintained by the applicant with the bank but it is maintained by the company M/s V.S.Texmills Pvt.Ltd., with the bank; that the ECS was initiated by the company M/s V.S.Texmills Pvt.Ltd. And the signatory of the ECS mandate was Ashit Agarwal and therefore the necessary ingredients of Section 25 of the Act of 2007 are not made out; that the applicant is neither partner nor has any relation as set out in Section 27 of the Act of 2007 with the accused namely M/s V.S. Texmills Pvt.Ltd.

4.6 In support of his submissions, learned advocate Mr.Gupta has relied on the decision of the Hon’ble Apex Court in the case of Jugesh Sehgal V/s Shamsher Singh Goga reported in (2009) 14 SCC 683.

5. Though the learned advocate Mr.Shah for respondent no.1-complainant has not appeared and argued, there is an affidavit-in-reply of respondent no.1-complainant on the record, in which it is stated that the applicant has admitted that he is a co-borrower but deliberately suppressed the fact that out of the two directors who were looking after the day-to-day affairs of the accused no.1-company, he is also one of the directors of the accused no.1-company and at the time of issuance of ECS mandate the applicant was a director or person incharge of and responsible to the affairs and conduct of the business of accused no.1 company and therefore is he guilty of the contravention; that over all reading of the complaint shows that specific allegations had been levelled against the applicant that at the request of the accused and upon agreeing to various written terms, conditions and covenants and execution of the agreement, the complainant had granted the loan and therefore, it cannot be denied that the applicant was party to the agreement and he was aware about the loan transaction and contravention took place with his knowledge; that the same is a matter of evidence to be proved in trial as to whether the applicant is vicariously liable as one of the director of the accused no.1 company and co-borrower as well. It is, therefore, prayed that this application be dismissed.

6. Learned APP for respondent no.2-state has objected these applications and submitted that this Court should not exercise its powers by interfering with the proceedings of recovery of amount and the proceedings initiated under Section 138 of the Act are perfectly justified.

7. I have considered the rival submissions and perused the material on record.

8. At the outset, the provisions of Sections 25 and 27 of the Act of 2007 read as under:

“25. Dishonour of electronic funds transfer for insufficiency, etc., of funds in the account.—

(1) Where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that