2002 (12) TMI 495 - HC - Companies Law

Summary

Issues:
1. Maintainability of complaints under section 138 read with section 142 of the Negotiable Instruments Act against the petitioner-accused No. 14.
2. Interpretation of section 141 of the Negotiable Instruments Act regarding the liability of individuals in a company for offenses committed by the company.

Analysis:
Issue 1: The petitioner, accused No. 14, filed Criminal Petitions under section 482 of the Criminal Procedure Code challenging the complaints against him under section 138 read with section 142 of the Negotiable Instruments Act. The petitioner argued that the complaints did not specifically allege his involvement in the day-to-day affairs of the company or his liability to discharge the impugned cheques. The petitioner's counsel relied on various legal precedents to support the contention that the complaints were not maintainable due to the lack of essential ingredients. The respondent contended that all directors are liable as per a Board resolution and that the petitioner's failure to respond to a notice indicated his responsibility in the matter. The court noted that the complaints contained general allegations without specific averments against the petitioner. Relying on legal precedents, the court quashed the complaints against the petitioner as they did not satisfy the necessary ingredients for establishing the offense under the Act.

Issue 2: The court delved into the interpretation of section 141 of the Negotiable Instruments Act, which imposes liability on individuals in a company for offenses committed by the company. The section holds individuals responsible if they were in charge of and responsible for the conduct of the company's business at the time of the offense. The court emphasized the importance of specific allegations in complaints to establish liability under the Act. Despite the existence of a Board resolution and a notice to the petitioner, the court found that without explicit averments in the complaints, the charges against the petitioner could not be upheld. Citing legal precedents, the court highlighted the necessity of fulfilling the statutory requirements to maintain complaints under the Act. Consequently, the court quashed the complaints against the petitioner-accused No. 14 in both cases, emphasizing the importance of specific allegations to establish liability under the Act.

The judgment serves as a significant precedent regarding the interpretation of liability under the Negotiable Instruments Act and the necessity of specific averments in complaints to maintain charges against individuals in a company.