2018 (4) TMI 1924 - HC - Indian Laws

Seeking quashment of the Criminal Complaint case by invoking extra ordinary jurisdiction of this Court - Dishonor of Cheque - Vicarious liability of director of the firm - non-availability of specific averments against the present petitioner as required under the law - HELD THAT - Since the complaint dated 30.8.2013 in the present case does not contain specific averments against the present petitioner as required under the law, therefore, the trial Court could not have taken cognizance against the present petitioner No.2 Sagufta Shahin. The vicarious liabilities on the petitioner has not been clearly pleaded in the memo of complaint. There is no allegation also that the petitioner was in charge and responsible for conduct of petitioner No.1/company at the relevant time. The order impugned taking cognizance of the offence is not proper - the complaint case is not maintainable and exercising the powers under Section 482 of Cr.P.C. the same is quashed.

Summary

Issues:
Quashing of Criminal Complaint under Section 138 of Negotiable Instruments Act based on lack of specific averments against the petitioner and failure to establish vicarious liability.

Analysis:
The petition under Section 482 was filed to quash the Criminal Complaint case under Section 138 of the Negotiable Instruments Act pending before the JMFC, Bhopal. The respondent alleged that a cheque of Rs.8 lakhs, executed by petitioner No.2, was dishonored. The complainant, a construction company, claimed that the cheque was signed by petitioner No.2 on behalf of petitioner No.1, without clarifying petitioner No.2's role in the company's affairs or day-to-day business operations.

The petitioner contended that the company was actually a partnership firm, and specific allegations against the accused partner responsible for running the firm's business were necessary. Citing legal precedents, the petitioner argued that vicarious liability cannot be presumed, and specific averments are required to establish the accused's responsibility for the company's conduct at the time of the offense.

Referring to relevant case laws, the Court emphasized the need for specific averments in the complaint to establish vicarious liability, especially for directors or officers of a company. The Court highlighted that vicarious liability must be pleaded and proved, not inferred, and that mere designation as a director or officer is insufficient to establish liability without specific allegations of involvement in the company's business affairs.

The Court found that the complaint in the present case lacked specific averments against the petitioner as required by law, failing to establish vicarious liability or the petitioner's responsibility for the company's conduct at the relevant time. Consequently, the Court quashed the complaint case RCT No.3005097/2014 under Section 482 of the Cr.P.C., ruling that the order taking cognizance of the offense was improper due to the absence of necessary allegations against the petitioner.

In conclusion, the judgment focused on the importance of specific averments to establish vicarious liability in cases involving offenses under the Negotiable Instruments Act. It clarified that directors or officers can only be held criminally liable if they were in charge of and responsible for the company's business conduct at the time of the offense, emphasizing the need for clear allegations to support such liability.