2007 (8) TMI 792 - HC - Companies Law

Summary

Issues involved:
The issues involved in the judgment are the applicability of Section 138 read with Section 141 of the Negotiable Instruments Act, 1938, regarding the liability of the first and second petitioners in a case of dishonored cheque.

Summary:

Issue 1: Limitation of Complaint
The respondent's complaint under Section 138 read with Section 141 of the NI Act was found to be barred by limitation in relation to the first petitioner, who was a company registered under the Companies Act. However, it was argued that the complaint was within limitation and maintainable against the second petitioner.

Issue 2: Vicarious Liability
The petitioners contended that since the cheque was issued by the first petitioner, the primary responsibility and liability rested with them, making the second petitioner's liability vicarious. It was argued that in the absence of the main accused, a co-accused with vicarious liability could not be prosecuted.

Judgment Details:
In the case law of Anil Handi Vs. Indian Acrylic Ltd., it was established that a complaint under Section 138 read with Section 141 of the NI Act was maintainable if only the Director of the Company was impleaded as an accused, without the necessity of the company being a co-accused.

Regarding the first petitioner, it was noted that no complaint was filed within the prescribed period of limitation after the notice of dishonour of the cheque. The complaint against the company was conceded to be barred by limitation. However, in the case of the second petitioner, the complaint was found to be within limitation as only one notice was served after the cheque bounced on the second presentation.

The complaint described the second petitioner as the Managing Director of the first petitioner company, with specific allegations of being in charge and responsible for the business conduct. The judgment disposed of the petition by quashing the summoning order concerning the first petitioner but affirmed it for the second petitioner.

In conclusion, the judgment highlighted the importance of researching and citing relevant case laws by members of the bar to ensure a fair and just legal process.