The necessity of specific averments to fasten vicarious liability on a director under Section 141 of the N.I. Act, and the inability to quash the prosecution based on lack of specific averments in the complaint.

JUDGMENT

(Prayer: Criminal Original Petition filed under Section 482 of Cr.P.C., seeking to call for the records in S.T.C.No.2 of 2022 on the file of the Learned Judicial Magistrate, FTC-II, Erode and to quash the same.

Prayer: Criminal Original Petition filed under Section 482 of Cr.P.C., seeking to call for the records in S.T.C.No.2 of 2022 on the file of the learned Judicial Magistrate, FTC-II, Erode and to quash the same.)

Common Order

1. The petitioners, who are arrayed as A1 to A3, have filed the above criminal original petitions seeking to quash the proceedings in S.T.C.No.2 of 2022, on the file of the learned Judicial Magistrate, FTC-II, Erode, for the offence punishable under Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the N.I. Act").

2. Since the issues involved in both the criminal original petitions are one and the same and between the same parties, both the Criminal Original Petitions are heard together and disposed of by means of this Common Order.

3. The brief facts leading to the filing of these quash petitions, are as follows:

(i) The petitioners in Crl.O.P.No.14301 of 2022 are the accused 1 and 2 and the petitioner in Crl.O.P.No.8399 of 2022 is the third accused in the above proceedings.

(ii) The respondent/complainant has initiated the above proceedings under Section 138 of the N.I. Act. The first accused is a company. A2 and A3 are the Managing Director and Director respectively of A1 company.

(iii) The accused have borrowed yarn from the respondent/complainant to the tune of Rs.3,16,49,179/- and the accused have issued two post-dated cheques dated 05.09.2018 and 05.10.2018, for a sum of Rs.25,00,000/- and Rs.50,00,000/- respectively towards part payment. The said two post-dated cheques were drawn on State Bank of India, SME Branch, P.N.Road, Tirupur and both the cheques were signed by A2.

(iv) It is the contention of the respondent/complainant that all the directors are actively in charge of the affairs of the company and that the cheque dated 05.09.2018, was presented for encashment and the same was rejected on the ground that 'payment stopped by drawer' and when the same was intimated to the petitioners, they requested the complainant to re-present the cheque and accordingly the cheque was once again re-presented on 15.09.2018, but the same was again dishonoured as stop payment instruction was given by the drawer. According to the respondent/complainant even for the third time when the cheque was presented for encashment, the same was dishonoured for the very same reason. Likewise, the cheque dated 05.10.2018, was also dishonoured for the very same reason.

(v) After issuing Statutory Notice to the petitioners, the respondent has initiated a complaint under Section 138 of the N.I. Act. The accused 1 and 2 have filed separate quash petition in Crl.O.P.No.14301 of 2022 on the ground that on the date of dishonor of the cheque they had sufficient funds in the first petitioner company's account. The return of cheque was because of a dispute over the accounts and with regard to the same a civil suit is also pending between the parties and therefore on that ground sought to quash the criminal proceedings.

(vi) The third accused sought to quash the above criminal proceedings mainly on the ground that there is no averments in the complaint to attract the offence under Section 141 of the N.I. Act, except in the cause title of the complaint, there is no averment made against the third accused and that the cheques were signed only by the second accused and therefore on that ground also A3 seeks to quash the above criminal proceedings against her.

4. The learned senior counsel Mr.S.Ashok Kumar appearing for the petitioners vehemently contended that on the date of dishonor of the cheques, there was sufficient funds available in their account and stop payment was made since there was a dispute over the accounts and in that regard a civ