The legal principle established is that a director's liability under Section 138 of the Negotiable Instruments Act is contingent upon being in charge of and responsible for the conduct of the company's business.

ORDER :

(Prayer: Criminal Original Petition filed under Section 482 Cr.P.C. praying to quash the criminal proceedings against the petitioner/3rd accused in C.C.No.787/2019, pending on the file of Fast Track III, Metropolitan Magistrate, Saidapet, Chennai - 600015.)

This Criminal Original Petition has been filed to quash the criminal proceedings against the petitioner/3rd accused in C.C.No.787 of 2019, pending on the file of the Fast Track III, Metropolitan Magistrate, Saidapet, Chennai - 600015.

2. Respondent filed a case under section 138 of Negotiable Instruments Act against the petitioner and two others for dishonour of cheques. The case of the respondent is that respondent is doing the business of printing and publishing newspapers, periodicals, FM radio stations, Mathrubhumi News Channel, Kappa TV, digital business etc. Claiming that the petitioner as the Managing Director of the first accused Adgear Media Private Limited and one S.Krishnan as Chairman, respondent stated that the accused approached the respondent/complainant and placed order for the publication of advertisements in their newspapers. For the said transaction, they are liable to pay a sum of Rs.93,98,838.95. The accused issued a cheque bearing No.004845 dated 15.12.2017 for Rs.35,70,308/- and another cheque bearing No.004846 dated 04.12.2017 for Rs.35,70,308/-, both drawn on M/s.Karur Vysya Bank, Teynampet branch, Chennai. These cheques were presented on 06.12.2017 and 15.12.2017 respectively, through M/s. Canara Bank, Royapettah branch, Chennai. The said cheques were returned as "funds insufficient" vide return memos, dated 08.12.2017 and 19.12.2017. When it was informed to the accused, they requested respondents to present the cheques again on 29.01.2018. Accordingly, cheques were presented again on 29.01.2018 and they were again returned on 30.01.2018 stating that “funds insufficient”. The accused issued a cheque knowing fully well that they have no funds in the account. Therefore, statutory notice was given on 27.02.2018. The accused received the notice and paid a sum of Rs.8,86,129/- towards part transaction, but did not pay the balance amount. Therefore the case was filed.

3. Petitioner is the third accused in this case. After entering appearance, he filed this quash petition challenging the proceedings against him on the following grounds.

(i) Petitioner was not the Managing Director of the first accused company, but he was only a Non Executive Director with effect from 21.03.2016. In support of his submission that he is not a Managing Director, but only a Non Executive Director, copy of form DIR - 12 submitted by the first accused company to the Registrar of Companies is produced. Therefore, as on 23.01.2016 petitioner was only a Non Executive Director and not the Managing Director of the first accused company.

(ii) When a complaint is filed against the company under the Negotiable Instrument Act, complaint should have been filed under section 138 r/w 141 of Negotiable Instruments Act, however, this complaint was not filed under section 141 of Negotiable Instruments Act. There is no specific allegations/averments made in the complaint as to the role of petitioner in the day to day administration of the first accused company and as to whether the petitioner was the person in charge of the business operations and issuance of cheque. In the absence of specific pleadings in this regard, petitioner cannot be prosecuted merely for the reason that he is a Director.

(iii) The impugned cheque was not signed by the petitioner. Thus, it is the submission of the learned counsel for the petitioner that petitioner cannot be prosecuted and prayed for quashing the proceedings.

4. In support of his submissions, the learned counsel for the petitioner relied on the judgment reported in (2005) 8 SCC 89 in S.M.S.Pharmaceuticals Ltd., Vs. Neeta Bhalla and another.

5. In response, the learned counsel for the respondents submitted that though the statutory notice was served o