2008 (5) TMI 613 - SC - Companies Law

What would be the effect of a post dated cheque vis- a -vis prosecution in terms of Section 141 of the Negotiable Instruments Act, 1881 ? Held that - When post dated cheques are issued and the same are accepted, although it may be presumed that the money will be made available in the bank when the same is presented for encashment, but for that purpose, the harsh provision of constructive liability may not be available except when an appropriate case in that behalf is made out. Section 140 of the Act cannot be said to have any application whatsoever. Reason to believe on the part of a drawer that the cheque would not be dishonoured cannot be a defence. But, then one must issue the cheque with full knowledge as to when the same would be presented. It appears to be a case where the appellant has taken undue advantage of the post dated cheques given on behalf of the company. The statute does not envisage misuse of a privilege conferred upon a party to the contract. Having found that the prosecution of the respondents being mala fide despite the fact that on technical grounds it may be lawful to set aside the order of the High Court, it, in our opinion, should not be done. Jurisdiction of this Court in terms of Article 136 of the Constitution of India need not be exercised only because it would be lawful to do so. Various factors including the conduct of the appellant will be relevant therefor. Having regard to the facts and circumstances of this case, it is not a fit case where we should allow the appellants to raise additional contentions which have not been raised before the courts below. Appeal dismissed.

Summary

Issues Involved:
1. Effect of a post-dated cheque vis-`a-vis prosecution under Section 141 of the Negotiable Instruments Act, 1881.
2. Liability of a director who resigned before the cheque was dishonored.
3. Requirements of specific averments in the complaint petition under Section 141 of the Act.

Detailed Analysis:

1. Effect of a Post-Dated Cheque vis-`a-vis Prosecution under Section 141 of the Negotiable Instruments Act, 1881
The court examined whether a post-dated cheque can lead to prosecution under Section 141 of the Negotiable Instruments Act, 1881. The cheque in question was issued in April 1995 but was dated January 28, 1998, and was dishonored upon presentation in June 1998. The court noted that the appellant took undue advantage of the post-dated cheques given on behalf of the company. The statute does not envisage the misuse of a privilege conferred upon a party to the contract.

2. Liability of a Director Who Resigned Before the Cheque was Dishonored
The court found that the First Respondent resigned from the directorship on May 25, 1996, and his resignation was accepted and informed to the Registrar of Companies. The cheque was dishonored in 1998, and the complaint was filed on August 20, 1998. The court held that a person who had resigned with the knowledge of the complainant in 1996 could not be held responsible for the dishonor of the cheque in 1998. The First Respondent had no control over the company's affairs at the time of the dishonor and could not be made responsible for ensuring the cheque's payment.

3. Requirements of Specific Averments in the Complaint Petition under Section 141 of the Act
The court emphasized the necessity of specific averments in the complaint petition to satisfy the requirements of Section 141 of the Act. The complaint did not disclose who signed the cheque on behalf of the company, nor did it establish the involvement of the First Respondent in the commission of the offense. The complaint petition proceeded on the basis that the averments were sufficient for summoning the accused, which the court found inadequate. The court reiterated that strict compliance with the provision is required, and mere allegations without specific details are insufficient to attract constructive liability under Section 141 of the Act.

Conclusion
The court concluded that the First Respondent, having resigned from the directorship in 1996, could not be held liable for the dishonor of a cheque in 1998. The complaint petition lacked specific averments necessary to establish constructive liability under Section 141 of the Negotiable Instruments Act, 1881. The appeal was dismissed, and no interference with the impugned judgment was warranted.