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2023 Supreme(P&H) 1996
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
HARKESH MANUJA, J.
Amit Jain – Petitioner
Versus
Hare Ram Sharma & Ors. – Respondents
CRM-M-48762 of 2021 (O&M)
Decided On : 28-04-2023
Mr. Johan Kumar, Advocate; For the Petitioner in all cases.
None for Respondents No.1 to 3
Mr. Rajesh Lamba, Advocate for Respondent No. 4.
Headnote:(A) Code of Criminal Procedure, 1973 - Section 482 - Negotiable Instruments Act, 1881 - Section 138 and Section 141 - Quashing of complaints, summoning orders, and consequential proceedings - Petitioner ceased to be a Director before the presentation of the cheque; thus, cannot be prosecuted for dishonor - Proceedings were initiated without proper service of notice and hence quashed. (Paras 2, 8, 12, 14)
(B) Vicarious liability in corporate criminal matters - A Director cannot be held liable under Section 138 if not in charge of the business of the company at the time of the commission of the offense; specific averments are required to establish liability. (Paras 7, 10, 12)
Facts of the case:
The petitioner was a Director of a company from January 7, 2017, to July 31, 2017, and was summoned under the Negotiable Instruments Act for a post-dated cheque issued after his resignation. Complaints initiated against him alleged failure to honor a promotional scheme.
Findings of Court:
The court found no basis for prosecution due to the absence of specific averments regarding the petitioner’s liability and noted the improper initiation of declared proclaimed person proceedings.
Issues: The main issues were the petitioner’s liability after resignation and procedural deficiencies in the declaration as a proclaimed offender.
Ratio Decidendi: The court concluded that resignation before a cheque's dishonor absolves him of criminal liability under Section 138, emphasizing the need for specific allegations to establish vicarious responsibility.
Result: Petition allowed; complaints and proceedings quashed.
| Table of Content |
|---|
| 1. summary of petitions and relevant facts. (Para 1 , 2) |
| 2. arguments regarding post-dated cheque and resignation. (Para 3 , 4) |
| 3. court's analysis of director liability under ni act. (Para 6 , 7 , 8) |
| 4. issues regarding the proclamation of person and service of summons. (Para 9 , 10 , 11) |
| 5. conclusion to quash complaints and proceedings. (Para 12 , 13 , 14 , 15) |
JUDGMENT
Harkesh Manuja, J.
This order of mine shall dispose of 17 petitions filed under Section 482 of Cr.P.C. for quashing of complaints, summoning order as well as all consequential proceedings arising therefrom. In four of these petitions (CRM-M-48762-2021, CRM-M-52110-2021, CRM-M- 52321-2021 & CRM-M-52715-2021), additional prayer has also been made to quash orders vide which petitioner was declared as proclaimed person. A table showing brief summary of these cases and date of summoning orders is tabulated below:-
| Sr. No. | Case No. | Complaint No. & Date | Summoning Order Date | Date of Appointment as Director |
| 1. | CRM-M-48762-2021 | NACT 1891 of 2018, 09.03.2018 | 24.04.2018 | 07.01.2017 |
| 2. | CRM-M-52110-2021 | NACT 1890 of 2018, 09.03.2018 | 09.03.2018 | 07.01.2017 |
| 3. | CRM-M-52321-2021 | NACT 1894 of 2018, 09.03.2018 | 09.03.2018 | 07.01.2017 |
| 4. | CRM-M-52715-2021 | NACT 1893 of 2018, 09.03.2018 | 09.03.2018 | 07.01.2017 |
| 5. | CRM-M 53874 of 2021 | NACT 3001 of 2018, 26.04.2018 | 26.04.2018 | 29.09.2016 |
| 6. | CRM-M 53878 of 2021 | NACT 476 of 2018, 18.01.2018 | 18.01.2018 | 29.09.2016 |
| 7. | CRM-M 53879 of 2021 | NACT 3003 of 2018, 26.04.2018 | 26.04.2018 | 29.09.2016 |
| 8. | CRM-M 53920 of 2021 | NACT 2578 of 2018, 05.04.2018 | 05.04.2018 | 29.09.2016 |
| 9. | CRM-M 53922 of 2021 | NACT 2299 of 2018, 27.03.2018 | 27.04.2018 | 07.01.2017 |
| 10. | CRM-M 53944 of 2021 | NACT 3036 of 2018, 27.04.2018 | 31.10.2018 | 07.01.2017 |
| 11. | CRM-M 53949 of 2021 | NACT 2670 of 2018, 11.04.2018 | 11.05.2018 | 07.01.2017 |
| 12. | CRM-M 53952 of 2021 | NACT 3000 of 2018, 26.04.2018 | 26.04.2018 | 29.09.2016 |
| 13. | CRM-M 53953 of 2021 | NACT 2029 of 2018, 15.03.2018 | 15.03.2018 | 07.01.2017 |
| 14. | CRM-M 53980 of 2021 | NACT 2621 of 2018, 09.04.2018 | 22.05.2018 | 29.09.2016 |
| 15. | CRM-M 53985 of 2021 | NACT 2026 of 2018, 15.03.2018 | 15.03.2018 | 07.01.2017 |
| 16. | CRM-M-7736-2022 | NACT 2313 of 2018, 27.03.2018 | 27.03.2018 | 29.09.2016 |
| 17. | CRM-M-7752-2022 | NACT 2021 of 2018, 15.03.2018 | 15.03.2018 | 07.01.2017 |
It may be noted here that cases mentioned at Sr. No.5, 6, 7, 8, 12, 14 and 16 which are in bold (i.e. cases bearing nos. CRM-M 53874 of 2021, CRM-M 53878 of 2021, CRM-M 53879 of 2021, CRM- M 53920 of 2021, CRM-M 53952 of 2021, CRM-M 53980 of 2021 & CRM-M-7736 of 2022) relates to company Try Web Private Limited while others relate to Try Fashion Private Limited. Further, in all the cases, the petitioner applied for resignation on 05.07.2017 and the same was accepted on 31.07.2017. As factual matrix and application of law in all these cases is similar, they are being discussed together. For the sake of convenience facts are being taken from CRM-M-48762- 2021 titled as " Amit Jain v. Hare Ram Sharma and others".
2. Brief facts of this case as stated in the petition are that petitioner was erstwhile Director of M/s Try Fashion Pvt. Ltd./respondent No 2 from 07.01.2017 to 31.07.2017. A complaint under Section 138 of the Negotiable Instrument Act (hereinafter referred as NI Act) came to be filed against him besides above said company and other Directors. It was alleged in the complaint that the company is running an online promotion scheme for which the alleged accused have taken Rs. 1,19,600/- from the complainant on 02.06.2017, but the above said scheme floated by accused failed. Out of above said amount of Rs. 1,19,600/-, an amount of Rs. 26,894/- was paid back and for the balance amount accused gave PDC cheque bearing no. 000225 dated 08.11.2017 of Rs. 92,706/- drawn on HDFC Bank Sector
