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.

JUDGMENT :

J. C. DOSHI, J.

1. By this application under Section 482 of the Code of Criminal Procedure (for short “the Code”), the applicant seeks to quash and set aside complaint and order dated 20.01.2018 passed by learned Additional Chief Judicial Magistrate, Ahmedabad in Criminal Case No.1132 of 2018 and further proceedings arising thereof.

2. Facts of the case are as under :-

2.1. That petitioner No.1 is Director of the Company namely M/ s ALF Construction Pvt. Ltd and petitioner No.2 is also Director and wife of petitioner no.1. The petitioner no.1 had sent email to the respondents on 6/11/2017 wherein it is specifically stated that the amount of Rs.4 lakhs has not been transferred by the respondent as agreed by the respondents therefore, the questioned cheque of the complaint was to be returned back to the petitioner. That the respondents is involved in construction business and the respondents had signed sub contract agreement which has been obtained by the respondents from Indian Railway at site Sanawad - Khandwa section of Ratlam Mhow Khandwa GC Project. The said agreement has been entered between the petitioner no.1 and respondent no.2 on 6/5/2015 which has been executed in writing on 12/5/2017. After executing agreement the work had been started by the petitioner no.1 and his company and due to technical reasons and negligence on the part of the respondent No. 1 to 3 the work was not carried forward and dispute had been started between the respondent No. 1 to 3 and petitioner no.1 and his company. Therefore petitioner no.1 have done number of communications to the respondent No. 1 to 3 and but respondent No. 1 to 3 failed to perform his part of duty and thereby the sub contract had been come to end in between the project. There is huge outstanding of Rs.80.66 lakhs against the respondent No. 1 to 3 and the legal notice was given to the respondent No. 1 to 3 on 22/11/2017 the same has been served to the respondent No. 1 to 3 wherein it is specifically stated that as per the sub contract between the parties, Arbitrator is required to be appointed in subject to the amount not paid to the petitioners Company. That inspite of the email dated 6/11/2017 send to the respondent No. 1 to 3 the respondent have deposited the disputed cheque in the bank on 13/11/2017 and the date has been written by the respondent No. 1 to 3 on the cheque was 10/11/2017. The respondent No. 1 to 3 has intentionally deposited the cheque in the Bank just to pressurize the petitioner no.1 that the petitioner no.1 may not claim for the outstanding amount which is on the head of the respondent No. 1 to 3. Petitioner no.2 is not an active Director nor the petitioner no.2 have entered into any agreement with the respondent No. 1 to 3 and the disputed cheque was also not signed and handed over by the petitioner no.2 to the respondent No. 1 to 3. That the petitioner no.1 when came to know about mischievous act on the part of the respondent No. 1 to 3 by depositing the disputed cheque in bank, petitioner's No.1 Company has given legal notice through his Advocate on 27/11/2017 with regard to the questioned cheque in the complaint immediately informing the respondent No. 1 to 3 not to misusing the cheque in question which was given for security purpose against demand loan which has not been paid by respondent No. 1 to 3. Thereafter, the petitioners have approached the Hon'ble High Court by filing Arbitration petition No.91/2018 for appointment of Arbitrator. The Hon'ble Gujarat High Court has passed an order dated 13/07/2018 appointing sole Arbitrator. That the respondent No. 1 to 3 have send reply to the notice for appointment of the Arbitrator and also the respondent No. 1 to 3 have sent notice under N.I. Act on 5/12/2017. After receiving the notice of respondents the petitioners send reply on 13.12.2017. It is alleged in the complaint that accused persons have failed to make payment towards loan amount and amount has been taken from complainant.

3. Learned adv