Active participation in the affairs of a trust, including authorization of a trustee to interact with a bank for a loan, can make non-executive trustees liable under Section 141 of the Negotiable Instruments Act.

JUDGMENT

(Prayer: Criminal Original Petition has been filed under Section 482 of Criminal Procedure Code to call for the records and quash the complaint filed under Section 138 of Negotiable Instruments Act, 1881 in C.C.No.78/2019, pending on the file of the Fast Track Court Magistrate Level, Ambattur.)

1. This Criminal Original Petition is filed to quash the private complaint initiated under Section 138 of Negotiable Instruments Act.

2. The specific ground raised in this petition is that the petitioners, who were arrayed as A3 to A5, are not concerned with the day to day affairs of the Trust and by resolution of the Trust dated 13.12.1991 and 21.01.2011. The Managing Trustee of the “Tamil Thai Charitable Trust”, Dr.S.Ramaiah was authorized to deal with the finance of the Trust properties, particularly regarding the loan availed with ICICI bank. While so, the cheque drawn by the Palanivelammal, one of the Trustees for a sum of Rs.1,70,00,000/- was bounced for “Insufficient Funds”. Instead of prosecuting the Trust and the signatory of the cheque, the complainant bank has arrayed the other non executive Trustees also as accused and therefore, the case against them has to be quashed.

3 The learned counsel for the petitioners would submit that pending quash petition, the 3rd accused, Dr.S.Ramaiah died.

4 The learned counsel for the complainant / respondent submitted that the loan was availed by the Trust for a tune of Rs.3 crores with specific undertaking that they will repay the quarterly installment of Rs.16,00,000/- for a period of 7 years, after 18 months moratorium, but has failed to pay the installment regularly and for the due payable, subject cheques dated 30.09.2018 for Rs.70,00,000/- and 31.10.2018 for Rs.1,00,00,000/- issued duly signed by the Chairman Palanivelammal. When these cheques were presented for collection on 06.12.2018, the cheques were returned with memo dated 07.12.2018 stating “Insufficient Funds”. After causing statutory notice to the 1st accused Trust and its Trustees, accused 2 to 5. The complaint was filed before the Fast Track Court, Ambattur and same was taken on file in C.C.No.78 of 2019.

5 In response to the submission made by the learned counsel for the petitioners, this Court perused the complaint and finds that at paragraph 2 of the complaint had specifically stated that during the course of business, the 1st accused represented the accused 2 to 5 approached the complainant for seeking financial assistance for the construction of college building, hospital facilities and purchase of equipment and machinery. The role of these petitioners in the 1st accused Trust is narrated in the 1st paragraph of the complaint and furthermore, this Court finds that when the statutory notice was issued and received by these petitioners, they have not sent any reply disputing their claim or their role in the management of the affairs of the Trust.

6 The learned counsel for the petitioners submitted that some of the accused are not even the residents of Tirunelveli where the Trust is located.

7 It is immaterial that the accused must be the resident of the place of operation.

Section 141 of N.I. Act, which reads as below:-

Section 141 of Negotiable Instruments Act, 1881.

“141 Offences by companies. —

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or