The main legal point established in the judgment is the requirement for specific averments in the complaint to establish vicarious liability and the need for such liability to be pleaded and proved, not inferred.

JUDGMENT :

Instant petition has been filed for quashing the entire criminal proceeding in connection with Complaint Case No.8521 of 2020 whereby and whereunder the cognizance has been taken under Section 138 of Negotiable Instrument Act.

2. This petition has been preferred on behalf of petitioner No.1- Priyanka Ojha, who is arrayed as accused No.8 and petitioner No.2 (accused No.9). The main plea for quashing the cognizance proceeds on the ground that as per the averments made in the complaint, this petitioner was not Director of the Company as stated in para 2 & 3 of the complaint petition. She had resigned from the Directorship of the Company in September, 2019 and she did not hold any post. The cheque was issued on 28.10.2020 and petitioner No.1 had already resigned on 17.09.2019 as per averment made in complaint petition. Only allegation against her, is that it was on the basis of her direction that the payments were made.

3. It is submitted that she has been roped into this case as she happens to be the wife of petitioner/accused No.9, who was Chief Executive Officer of the Company. She not holding any post in the said Company, it will gross abuse of process of Court to array her as accused in the facts and circumstances of the case.

4. With regard to petitioner No.2, it is submitted that as per the case of the complainant, he was Chief Executive Officer and on this basis alone, cognizance under Section 138 of the N.I. Act, cannot be taken against him. Reliance in this regard has been placed in the case of National Small Industries Corporation Limited Versus Harmeet Singh Paintal & Another reported in (2010) 3 SCC 330.

5. It is submitted by learned counsel on behalf of complainant that there is specific averment in para 3 of the complaint petition that the cheques were issued and payments were released under the direction of petitioner No.1 although she did not hold any post in the Company but was in active participation. In this view of the matter, prima facie case will be made out in view of ratio decided in the case of S.P. Mani & Mohan Dairy Versus Dr. Snehalatha Elangovan reported in 2022 SCC OnLine SC 1238 wherein the following principles were reiterated:

“41. In Gunmala Sales Private Limited (supra), this Court after an exhaustive review of its earlier decisions on Section 141 of the N.I. Act, summarized its conclusion as under:—

“a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director;

b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director;

c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director.

d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be