2000 (11) TMI 1242 - HC - Companies Law

Summary

Issues Involved:
The issue involves quashing of proceedings under Section 138 of the Negotiable Instruments Act, 1881 against the petitioner who is a director of a company, based on the lack of specific averments regarding his role in the alleged offense.

Judgment Details:

Issue 1: Lack of Specific Averments Against the Petitioner
The petitioner, a director of the company, sought to quash proceedings under Section 138 of the Negotiable Instruments Act, contending that the complaint did not specify his involvement in the issuance of the cheques. The complaint alleged that the petitioner was "in charge of the day-to-day affairs" of the company, but did not detail his role in the offense. The petitioner argued that the essential element required to prosecute a director under Section 141(2) was lacking due to the vague averments.

Analysis:
The court analyzed Section 141 of the Negotiable Instruments Act, which imposes liability on persons in charge of the company's affairs. It was noted that the petitioner, being a director, was deemed to be guilty of the offense if he was responsible for the conduct of the company's business. The court deliberated on the vicarious liability imposed on directors and other officers of the company under the Act.

Precedents and Legal Interpretation:
The court referred to precedents and legal interpretations to determine the sufficiency of averments in the complaint. It was highlighted that specific allegations regarding the role and responsibility of the accused directors were crucial to establish liability under Section 141(2) of the Act. The court emphasized the distinction between Sub-sections (1) and (2) of Section 141 in determining liability.

Conclusion:
The court held that the averment that the petitioner was in charge of the day-to-day affairs of the company was adequate to satisfy the requirements of Section 141(1) of the Act. It was deemed unnecessary for the petitioner to specify the overt act committed, as his position as a director implied responsibility for the company's affairs. The petition to quash the proceedings was dismissed, affirming the petitioner's liability under the Act.