2011 (5) TMI 1071 - SC - Indian Laws

Summary

Issues Involved:
1. Quashing of summoning order and consequent criminal proceedings.
2. Liability under Section 138 read with Sections 141/142 of the NI Act.
3. Role and responsibility of directors and officers in the issuance and dishonor of cheques.
4. Legal principles regarding vicarious liability and specific averments in complaints.
5. Compounding of offences under Section 138 of the NI Act.

Issue-wise Detailed Analysis:

1. Quashing of Summoning Order and Consequent Criminal Proceedings:
The petition was filed to quash the summoning order dated 31.10.2009 and the consequent criminal proceedings initiated under Section 200 Cr. P.C. 1973 read with Section 138 and Sections 141/142 of the NI Act. The petitioner argued that the complaint did not make specific allegations regarding his involvement or responsibility in the issuance and dishonor of the cheques.

2. Liability Under Section 138 Read with Sections 141/142 of the NI Act:
The cheques in question, issued by M/s. Nitishree Infrastructure Limited, were dishonored with the remarks "Exceeds arrangement." The complainant filed a legal notice demanding payment, and upon non-payment, initiated criminal proceedings. The court emphasized that for vicarious liability under Section 141 of the NI Act, it is necessary to make specific allegations indicating how and in what manner the directors or officers were responsible for the conduct of the company's business.

3. Role and Responsibility of Directors and Officers in the Issuance and Dishonor of Cheques:
The court referred to the judgments in K.K. Ahuja vs. V.K. Vora and Anr. and Satyapal Talwar vs. State, emphasizing that mere reproduction of the wording of Section 141(1) in the complaint is insufficient to make a person liable. Specific allegations must be made regarding the role and responsibilities of the directors or officers in the issuance and dishonor of the cheques. The court noted that the petitioner was not a signatory of the cheque and no specific averments were made regarding his role.

4. Legal Principles Regarding Vicarious Liability and Specific Averments in Complaints:
The court reiterated that for vicarious liability under Section 141 of the NI Act, clear allegations must be made indicating the involvement of the directors or officers in the conduct of the company's business. The court cited the case of N. Rangachari vs. Bharat Sanchar Nigam Ltd., stating that a person dealing with a company is entitled to presume that the directors are in charge of the company's affairs. However, specific allegations are necessary to establish their liability.

5. Compounding of Offences Under Section 138 of the NI Act:
The court discussed the application moved by the accused for disposal of the complaint on account of tendering the payment of the bounced cheque by DD. The complainant refused to accept the payment, demanding interest and other expenses. The court referred to the judgment in Rajesh Aggarwal vs. State, stating that the consent of the complainant is required for compounding the offence. The court cannot force the complainant to compromise on the deposit of the cheque amount or penalty by the accused.

Conclusion:
The court dismissed the petition, finding no merit in the arguments presented by the petitioner. It emphasized the necessity of specific allegations to establish vicarious liability under Section 141 of the NI Act and upheld the legal principles regarding the role and responsibility of directors and officers in the conduct of the company's business. The court also reiterated that compounding of offences under Section 138 of the NI Act requires the complainant's consent.