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2019 (4) TMI 577 - SC - Indian Laws


Issues:
Appeal against quashing of proceedings under Sections 138 & 141 of the Negotiable Instruments Act, 1881 by High Court.

Analysis:
The Supreme Court heard an appeal against the High Court's order quashing proceedings under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The case involved an investment agreement where the appellant invested in a project based on representations by respondent directors. The appellant claimed an outstanding amount, which was to be repaid but cheques issued were dishonored. Consequently, the appellant initiated proceedings under Sections 138 & 141. The respondent directors filed a petition to quash the proceedings, which the High Court allowed. The appellant appealed to the Supreme Court.

The appellant argued that the High Court erred in quashing the proceedings as a prima facie case existed against the respondent directors. The appellant contended that the trial court had taken cognizance of the case based on the material on record. The appellant alleged that the accused directors intentionally issued cheques and later stopped payment. On the other hand, the respondents claimed they were non-executory directors not involved in the day-to-day business operations and offered to pay the balance amount to the appellant.

The Supreme Court held that the High Court was not justified in quashing the proceedings under Section 482 of the Cr.P.C. In cases under Sections 138 and 141 of the Act, the complaint must specify that the Director was in charge of the company's business when the offense occurred. The Court emphasized that the High Court should intervene under Section 482 only if convinced that allowing the proceedings to continue would be an abuse of court process. The appellant had averred that the respondent directors were actively involved in the company's affairs, and no evidence disproving this was presented.

Consequently, the Supreme Court allowed the appeal, setting aside the High Court's order and restoring that of the trial court. The Court clarified that it did not express any opinion on the case's merits but directed the trial court to expedite the trial and decide the matter impartially. The judgment highlighted the importance of specific averments in complaints and the need for evidence to support claims when invoking Section 482 of the Cr.P.C.

 

 

 

 

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