2013 (6) TMI 904 - HC - Indian Laws

Summary

Issues involved: Application u/s 482 seeking to quash criminal proceedings against A-3 in C.C. No. 570 of 2008 on the file of Judicial First Class Magistrate (Excise), Guntur.

Issue 1: Allegations against the petitioner and contention of the petitioner's counsel
The petitioner, A-3, was accused in a private complaint along with others for involvement in issuing dishonored cheques on behalf of a firm. The petitioner's counsel argued that even if the allegations are true, no offense is made out against the petitioner as he was only a director of the company, and continuing proceedings against him would be an abuse of process of law.

Issue 2: Arguments by the Public Prosecutor and service of notice
The Public Prosecutor opposed the petition, stating that the court should not quash the proceedings based on the allegations against the petitioner. Notice was served on the counsel for the 1st respondent in the trial Court as the original notice could not be served.

Issue 3: Interpretation of Section 141 of the Negotiable Instruments Act
Section 141 of the Act holds individuals in charge of a company responsible for offenses committed by the company. The Act does not automatically make a Director vicariously liable, requiring specific averments to show their involvement. The involvement of Directors, Managers, or other officers must be proven for liability. Previous court decisions emphasized the need for clear allegations against Directors to prevent abuse of the legal process.

Issue 4: Precedents and legal principles
Court references cases where complaints failed to specify the role of Directors in the company's affairs, leading to quashing of proceedings. The absence of specific allegations against the petitioner in managing the company's day-to-day affairs led to the decision that continuing proceedings against him would be an abuse of process of law.

Conclusion:
The court allowed the Criminal Petition, quashing the proceedings against the petitioner/A-3 in C.C. No. 570 of 2008. The decision was based on the lack of specific allegations attributing a role to the petitioner in the company's affairs, aligning with legal precedents and statutory requirements under Section 141 of the Act.