2002 (2) TMI 1276 - HC - Companies Law

Summary

Issues:
1. Dismissal of petition to discharge the petitioner under section 138 of the Negotiable Instruments Act.
2. Contention regarding the liability of the petitioner in connection with the bouncing of a cheque.
3. Validity of statutory notice served on the petitioner.
4. Jurisdiction of the criminal court in processing proceedings against the drawer of a dishonored cheque.

Issue 1: Dismissal of Petition to Discharge the Petitioner:
The petitioner filed a petition seeking discharge under section 138 of the Negotiable Instruments Act, which was dismissed by the magistrate and confirmed by the sessions judge. The petitioner argued that as he was not a director or person-in-charge of the company, did not operate its bank account, and did not issue the bounced cheque, he should not be held liable under section 138. Various case laws were cited in support of this contention.

Issue 2: Liability of the Petitioner in Cheque Bouncing:
The first respondent alleged that the petitioner received a loan of Rs. 25,00,000 on behalf of the company and issued a cheque in repayment of the loan, which bounced. The first respondent contended that the petitioner, as the owner of Aashiana Investments, was liable under section 138 of the Act for the dishonored cheque issued by the company. The first respondent's case was supported by a letter mentioning the issuance of the cheque by the company.

Issue 3: Validity of Statutory Notice:
The first respondent served a statutory notice on both accused after the cheque was dishonored twice. The petitioner argued that since he did not receive notice of dishonor, the proceedings against him should be quashed. Case laws were cited to establish the importance of proper service of statutory notice for maintaining a complaint under section 138.

Issue 4: Jurisdiction of the Criminal Court:
The court examined the legal requirements under section 138 of the Act, emphasizing that the drawer of a dishonored cheque is liable only if the cheque is drawn on an account maintained by them in the bank. The court clarified that even if the petitioner had a legal liability to repay the loan, he could not be held liable under section 138 as he did not draw the bounced cheque on his bank account. The court highlighted that the petitioner's lack of involvement in the company's affairs further supported his non-liability under section 138.

Conclusion:
The High Court allowed the petition and quashed the proceedings against the petitioner in the case. The court emphasized that the petitioner, despite any financial liability, could not be held criminally liable under section 138 of the Act as he did not meet the legal requirements for such liability. The court also highlighted the importance of proper legal procedures and jurisdiction in cases involving dishonored cheques.