2008 (1) TMI 989 - HC - Indian Laws

Summary

Issues Involved:
1. Quashing of criminal complaint cases under Sections 138 and 141 of the Negotiable Instrument Act.
2. Summoning order issued by the Metropolitan Magistrate.
3. Applicability of Section 482 Cr.P.C. for quashing the complaint.
4. Responsibility and liability of the Director under Section 141 of the Negotiable Instrument Act.

Issue-wise Detailed Analysis:

1. Quashing of Criminal Complaint Cases under Sections 138 and 141 of the Negotiable Instrument Act:

The petitions were filed to quash the criminal complaints under Sections 138 and 141 of the Negotiable Instrument Act. The complaints alleged that the accused company, represented by its director, approached the respondent to avail credit facilities and issued post-dated cheques worth Rs. 180 crores. One cheque for Rs. 5 crores was dishonoured due to insufficient funds. Despite legal notice, the accused failed to make the payment. The complaint specifically alleged that the petitioner, a director, was in charge of and responsible for the company's conduct. The court emphasized that a director's liability under Section 141 requires specific allegations that they were in charge of and responsible for the company's business at the time the offence was committed.

2. Summoning Order Issued by the Metropolitan Magistrate:

The learned Magistrate summoned the accused to face trial under Section 138 of the Act. The petitioner contended that the complaint lacked allegations that he was in charge of or responsible for the company's conduct. The court noted that the complaint did contain specific allegations against the petitioner, and the issuance of the summons was based on these averments. The court held that the Magistrate had applied his mind to the material allegations in the complaint, and the issuance of summons was justified.

3. Applicability of Section 482 Cr.P.C. for Quashing the Complaint:

Section 482 Cr.P.C. allows the High Court to exercise its inherent powers to prevent abuse of the process of any court or to secure the ends of justice. The court noted that for interference under this section, the injustice must be grave and palpable, and there should be no other provision of law for relief. The court referred to precedents, emphasizing that a complaint must contain specific averments against the accused director. In this case, the complaint met the requirements, and the court found no abuse of the process of law.

4. Responsibility and Liability of the Director under Section 141 of the Negotiable Instrument Act:

Section 141 of the Act holds every person in charge of and responsible for the company's conduct liable for the offence committed by the company. The court reiterated that merely being a director does not make one liable; there must be specific allegations of responsibility and charge of the company's business. The court referred to several judgments, including S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, which emphasized the need for clear averments in the complaint. The court found that the complaint against the petitioner contained specific allegations, and his role as a whole-time director was admitted in his reply to the legal notice. The court concluded that the question of the petitioner's liability could only be adjudicated during the trial.

Conclusion:

The court dismissed the petitions, holding that the specific averments in the complaint and the petitioner's admitted role as a whole-time director justified the issuance of summons. The court emphasized that the determination of the petitioner's liability under Section 141 could only be made during the trial, and the petitions under Section 482 Cr.P.C. were not maintainable.