1998 (12) TMI 557 - HC - Companies Law

Summary

Issues involved:
Petitions involving a common question arising from different orders of issue of process under section 138 of the Negotiable Instruments Act, 1881 and under section 34 of the Indian Penal Code, 1860.

Analysis:

1. Resignation of Directors:
The petitioners contended that the directors of the accused-company had resigned before the issuance of the cheque. However, the complainant relied on the agreement of lease under which post-dated cheques were issued when the petitioners were directors. The court noted that the liability of the accused arose pursuant to the agreement, and the complainant could produce evidence regarding the terms of the agreement during trial. The resignation of directors before the dishonored cheques were issued was not considered a valid defense.

2. Compliance with Section 141 of the Act:
The complainant alleged that the petitioners were in charge of the day-to-day affairs of the accused-company, as required under section 141 of the Act. The court found that specific averments in the complaint and the verification statement supported this claim. The court held that there was sufficient material for the Magistrate to order the issue of process based on these allegations.

3. Legal Defects and Quashing of Process:
The petitioners relied on legal judgments to argue for quashing the process. The court referred to guidelines laid down by the Supreme Court in previous cases. It was noted that the allegations in the complaint and the statement made by the complainant on oath disclosed essential ingredients of the offense. The court found that a prima facie case was made out for the issuance of process, and there were no grounds to quash the process based on legal defects.

Conclusion:
The court dismissed all the petitions, discharged the rule in all the petitions, and vacated any stay. The petitioners were advised to apply for exemption from personal appearance on the ground of their residence, which the Magistrate was directed to consider sympathetically. The court emphasized that the resignation of directors before the issuance of the cheques did not absolve them from liability, and the allegations in the complaint regarding the petitioners' roles in the company were deemed sufficient for the issuance of process.