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2020 (12) TMI 412 - HC - Indian LawsDishonor of Cheque - existence of debt or not - discharge of vicarious liability - suppression of notice - legally enforceable debt or not - restraint from presenting the cheques for collection - Sections 138, 141 and 142 of NI Act - HELD THAT - On perusal of the complaint, there are totally four accused, in which the first accused is the company and the accused 2 to 4 are its Directors. Admittedly, the first accused is not represented by its Managing Director and represented by all of its Directors. All the cheques were issued by all the Directors separately. There is no averment to the effect that who is the signatory of the cheque and who issued cheque on behalf of the first accused. There is no specific averment as against the accused 2 to 4 to the effect that they are in charge of and responsible for the conduct of the business of the first accused company. In the absence of specific allegation in the complaint in respect of the role played by the Directors and their responsibility in the conduct of the first accused business at the relevant point of time and that the offence was committed by their consent or connivance. Receipt of the statutory notice - HELD THAT - It is seen from the notice dated 15.10.2018, the petitioners called upon the respondent to refrain from presenting the alleged cheques for payment and return those cheques. On receipt of the same, the respondent did not send any rejoinder to the reply notice dated 26.12.2018. They also failed to deny the averments made in the notice dated 15.10.2018 in the complaint. It amounts to suppression of fact - In fact, in the complaint the respondent averred that the said cheques were fraudulently issued to cheat the respondent and instructed the respondent to present the same for collection. When the petitioners categorically called upon the respondent to refrain from presenting the cheques and also return the same, the petitioners would not have instructed the respondent to present those cheques for collection. That apart, those cheques admittedly are post-dated one. When there is a dispute in respect of quality of the garments, the petitioners stopped the payment of those cheques. All the impugned complaints filed as against the petitioners are liable to be quashed - Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Specific Averments Against Directors 2. Suppression of Notice 3. Legally Enforceable Debt 4. Instructions to Refrain from Presenting Cheques Detailed Analysis: 1. Specific Averments Against Directors: The petitioners argued that the complaints lacked specific averments indicating that the Directors (petitioners 2 to 4) were in charge of and responsible for the conduct of the business of the first accused company. The court noted that the complaint did not specify who signed the cheques or who issued them on behalf of the company. It emphasized that merely stating that the Directors were responsible without detailing their roles and responsibilities was insufficient. The court cited the Supreme Court judgment in *Aneeta Hada vs. Godfather Travels and Tours Private Limited*, which mandates that for vicarious liability under Section 141 of the NI Act, the company must be arraigned as an accused, and specific averments must be made against the Directors. The lack of such specific allegations rendered the complaints unsustainable. 2. Suppression of Notice: The petitioners contended that the respondent suppressed a notice dated 15.10.2018, which was part of the reply notice dated 26.12.2018. This notice requested the respondent to refrain from presenting the cheques and to return them. The court found that the respondent did not deny the averments made in the notice dated 15.10.2018, which amounted to suppression of facts. The court held that this suppression indicated that the respondent did not approach the court with clean hands. 3. Legally Enforceable Debt: The petitioners argued that there was no legally enforceable debt as the cheques were issued as security and not for any due payment. They highlighted that there were disputes regarding the quality of the garments supplied, leading to the issuance of stop payment instructions. The court observed that the petitioners had filed a suit for damages and a private complaint for cheating against the respondent, indicating ongoing disputes. The court concluded that the cheques were not issued for any legally enforceable debt, referencing the Supreme Court judgment in *National Small Industries Corporation Limited vs. Harmeet Singh Paintal*, which states that mere directorship does not make one liable under Section 141 of the NI Act without specific averments of responsibility. 4. Instructions to Refrain from Presenting Cheques: The petitioners had instructed the respondent not to present the cheques for collection due to quality defects in the supplied garments. The court noted that the cheques were post-dated and that the petitioners had issued stop payment instructions. This was corroborated by the notice dated 15.10.2018, which indicated that the cheques were stopped due to quality issues and that the respondent had adjusted payments against a security cheque amount. The court found that this supported the petitioners' claim that the cheques were not issued for any legally enforceable debt. Conclusion: The court concluded that the complaints lacked specific averments against the Directors, involved suppression of material facts, and did not pertain to any legally enforceable debt. Consequently, the proceedings against the petitioners in CC.Nos.375, 376, 368, 62, 51, and 37 of 2019 were quashed, and the criminal original petitions were allowed.
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