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2014 (2) TMI 1368 - HC - Companies Law


Issues Involved:
1. Quashing of the summoning order dated 15.11.2011.
2. Vicarious liability of the Petitioners as Directors of the company.
3. Applicability of Section 482 of the Code of Criminal Procedure for quashing complaints or FIRs.

Detailed Analysis:

Issue 1: Quashing of the Summoning Order
The Petitioners sought to quash the summoning order dated 15.11.2011 issued by the Metropolitan Magistrate. They invoked the inherent powers of the Court under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) to achieve this. The High Court emphasized that for quashing a complaint or FIR, it cannot delve into the defense of the accused but must only consider if the complainant's averments and evidence provide grounds for proceeding against the accused.

Issue 2: Vicarious Liability of the Petitioners as Directors
The Petitioners were prosecuted as Directors responsible for the conduct of business of M/s. Pragati Hitech Products Pvt. Ltd. (Pragati) due to dishonored cheques issued by the company. They argued that they had resigned from their positions before the cheques were issued, thus should not be held vicariously liable. The Petitioners relied on the Supreme Court ruling in Harshendra Kumar D. v. Rebatilata Koley, which states that if a Director resigns before the issuance of a cheque, they cannot be held liable for the offense. However, the High Court noted that there were specific averments in the complaint that the Petitioners had negotiated for the purchase of goods and were responsible for the company's day-to-day affairs during the relevant period. The complaint also stated that the post-dated cheques were sent in the first week of June 2011, before the Petitioners' resignation was effective.

Issue 3: Applicability of Section 482 Cr.P.C.
The High Court reiterated that the inherent powers under Section 482 Cr.P.C. should be exercised sparingly and only in extraordinary cases where the allegations in the complaint or FIR, taken at face value, do not constitute the offense alleged. The Court referred to the Supreme Court's decisions in State of Orissa v. Ujjal Kumar Burdhan and State of West Bengal v. Swapan Kumar Guha, which emphasize that the Court should not interfere with an investigation unless there is a gross abuse of power. The Court also cited State of Haryana v. Bhajan Lal, which enumerates specific instances where FIRs could be quashed, such as when allegations do not constitute an offense or are absurd and improbable.

Conclusion:
The High Court concluded that the Petitioners had not made a sufficient case for quashing the summoning orders. The Court highlighted that the allegations in the complaint indicated that the Petitioners were involved in the transactions and responsible for the company's affairs during the relevant period. The Court dismissed the petitions but allowed the Petitioners to rebut the complainant's averments during the trial. The judgment underscores the principle that Directors cannot evade liability by resigning after issuing post-dated cheques.

Disposition:
The petitions were dismissed, and pending applications were disposed of.

 

 

 

 

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