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Issues Involved:
1. Quashing of the criminal complaint u/s 138 of the Negotiable Instruments Act. 2. Vicarious liability of directors u/s 141 of the Act. 3. Validity of the summoning order and proceedings arising therefrom. Summary: Issue 1: Quashing of the Criminal Complaint u/s 138 of the Negotiable Instruments Act The petitioner sought quashing of the criminal complaint bearing CC No. 3864/11 u/s 138 of the Negotiable Instruments Act, the summoning order dated 01.03.2011, and all proceedings arising therefrom. The accused company had issued post-dated cheques to the complainant company, which were dishonoured due to "payment stopped by the Drawer." The complainant sent a demand notice, and upon non-payment, filed a complaint u/s 138 of the Act. The petitioners, who were directors of the accused company, invoked the power of the court u/s 482 CrPC to quash the complaint and related proceedings. Issue 2: Vicarious Liability of Directors u/s 141 of the Act The petitioners argued that they had ceased to be directors at the time of the alleged offence and thus could not be held vicariously liable. They contended that the dishonoured cheques were issued as security and not against any existing debt or liability. The court examined the requirements for vicarious liability u/s 141 of the Act, referencing the judgments in S.M.S Pharmaceuticals Ltd., N.K. Wahi, and N. Rangachari. It was held that a person can be held liable if they were in charge of and responsible for the conduct of the business of the company at the relevant time. The court found that petitioner no. 2 and 3 were directors at the time of the cheque issuance and had knowledge of the stop payment instructions, thus could be held vicariously liable. However, petitioner no. 1 had ceased to be a director well before the cheques were issued and thus could not be held liable. Issue 3: Validity of the Summoning Order and Proceedings Arising Therefrom The court noted that the complaint and demand notice contained specific averments that the petitioners were responsible for the conduct and affairs of the accused company. The court emphasized that at the summoning stage, it should not interfere unless there is gross irregularity causing miscarriage of justice. The summoning order against petitioner no. 1 was quashed due to lack of knowledge of the offence, while petitioner no. 2 and 3 were directed to present their defense before the Magistrate. Conclusion: The petition was partly allowed. The summoning order against petitioner no. 1 was quashed, while petitioner no. 2 and 3 were given the liberty to lead their defense evidence before the Magistrate.
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