2006 (1) TMI 652 - HC - Indian Laws

Summary

Issues Involved:
1. Quashing of summoning order dated 27.7.1999 under Section 138 of the Negotiable Instruments Act.
2. Declining to recall the summoning order dated 10.2.2005.
3. Role and responsibility of the petitioner as a Director.
4. Non-service of individual notice to the petitioner.
5. Dismissal of proceedings against the Company Secretary.
6. Amendments in the Negotiable Instruments Act to curb delays.
7. Exercise of powers under Section 482 of the Code of Criminal Procedure.

Detailed Analysis:

1. Quashing of Summoning Order Dated 27.7.1999:
The petition was filed under Section 482 of the Code of Criminal Procedure to quash the summoning order dated 27.7.1999 under Section 138 of the Negotiable Instruments Act. The Metropolitan Magistrate, after hearing and perusing the record, opined that a prima facie case was made out and accordingly summoned the accused persons. The petitioner moved an application to recall the summoning order after more than four years, which was dismissed by the Metropolitan Magistrate on 10.2.2005.

2. Declining to Recall the Summoning Order Dated 10.2.2005:
The prayer for recall of the summoning order was declined based on the Supreme Court ruling in Adalat Prasad v. Roop Lal Jindal and Ors., which stated that the Magistrate cannot recall his own order and the only remedy is to approach the High Court under Section 482 of the Cr.P.C. The inherent jurisdiction of the High Court is to be exercised sparingly and in extraordinary situations.

3. Role and Responsibility of the Petitioner as a Director:
The petitioner, a Director at the time the financial assistance was taken and the cheque issued, was argued to be attending company meetings as required by company law. The complaint mentioned that the accused persons were in charge and responsible for the conduct of the business and played an active role in the management and day-to-day affairs. This satisfied the requirements of Sections 141(1) and 141(2) of the Negotiable Instruments Act.

4. Non-Service of Individual Notice to the Petitioner:
The petitioner contended that no individual notice was sent to him. However, it was established that under Section 141 of the Negotiable Instruments Act, notice sent to one partner or director operates as notice to the firm and other partners or directors. This view was supported by various judgments, including Jain Associates and Ors. v. Dipak Chaudhary and Co.

5. Dismissal of Proceedings Against the Company Secretary:
Proceedings against the Company Secretary were dropped as he was neither a Director nor a signatory to the cheque. The Company Secretary, being a mere employee acting upon the policy and resolutions of the company, had no active role in the demand for financial assistance or the issue of the cheque.

6. Amendments in the Negotiable Instruments Act to Curb Delays:
The Act has been repeatedly amended to curb delays in the disposal of cases under the Negotiable Instruments Act. The amendments aimed at early disposal of cases, enhancing punishment for offenders, and introducing electronic forms of cheques. The amendments also mandated that the Trial Court make efforts to conclude the trial within six months.

7. Exercise of Powers Under Section 482 of the Code of Criminal Procedure:
The inherent power of the High Court under Section 482 should not be exercised to stifle a legitimate prosecution. The High Court should refrain from making prima facie decisions where the facts are incomplete and evidence has not been fully presented. The Supreme Court in Raj Lakshmi Mills v. Shakti Bhakoo held that at the summoning stage, the High Court could not assume facts to find that the respondent was not responsible for the conduct of the business.

Conclusion:
The petition was dismissed with costs of Rs. 10,000 in favor of the respondent. The Trial Court was directed to dispose of the matter preferably within four months. The judgment emphasized that attempts to challenge every order without sufficient material would negate the purpose of the amendments in the Negotiable Instruments Act and delay justice.