2017 (2) TMI 812 - HC - Indian Laws

Dishonour of cheques - cause of action to file complaint on non-payment despite issue of notice - Held that - Section 141 NI Act provides that if the person committing an offence under Section 138 NI Act is a company, every person who, at the time when the offence was committed, was in-charge of and responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence. Thus besides the company, the person in-charge and responsible to the company for the conduct of the business of the company are also vicariously held liable. However, it has not been provided in the Act that a person though in-charge of the affairs of the company, if signs the cheque in his individual capacity, the company will be vicariously liable. Thus if the cheque is issued by an individual not acting on behalf of the company, the vicarious liability on the company cannot be fastened in the absence of any specific provision permitting the same. If dishonor of a cheque has once snowballed into a cause of action it is not permissible for a payee to create another cause of action with the same cheque. The cheque in question was re-presented and on each occasion of dishonor, notice was issued by the complainant. Thus the cause of action to file the complaint under Section 138 read with Section 142 NI Act arose but once when no payment was made despite fifteen days of the receipt of notice elapsing. In view of the discussion aforesaid, the proceedings in Complaint Case No.3967/1 titled as Shri Gopal Dass vs. Unicon Real Estates Pvt. Ltd. & Anr. pending in the Court learned Metropolitan Magistrate, Patiala House Courts, New Delhi under Sections 138 and 142 of the Negotiable Instruments Act, 1881 and the summoning order dated 24th June, 2011 qua the petitioner Unicon are set aside.

Summary

Issues:
1. Quashing of Criminal Complaint Case No.3967/1 under Sections 138 and 142 of the Negotiable Instruments Act, 1881.
2. Liability of a company for a cheque signed by an individual in his personal capacity.
3. Bar of limitation for filing a complaint under Section 138 of the Act.

Analysis:
Issue 1: The petitioner sought quashing of Criminal Complaint Case No.3967/1 under Sections 138 and 142 of the NI Act. The respondent issued a legal notice regarding a bounced cheque, leading to the complaint. The court analyzed the facts and legal provisions to determine the validity of the complaint and summoning order. It was established that the cause of action to file the complaint arose only once, and subsequent dishonors did not create fresh causes of action. Citing relevant case laws, the court set aside the proceedings and summoning order.

Issue 2: The contention was whether a company could be held liable for a cheque signed by an individual in his personal capacity. Section 141 of the NI Act imposes liability on persons in charge of the company's affairs. However, the court clarified that if a cheque is signed by an individual not representing the company, vicarious liability cannot be imposed on the company in the absence of specific provisions. The court emphasized the distinction between individual and company liability in such cases.

Issue 3: The argument raised was regarding the bar of limitation for filing a complaint under Section 138 of the Act. The court referred to the Supreme Court judgments to explain the concept of cause of action under the Act. It was held that the cause of action arises only once, and subsequent dishonors do not create fresh causes of action. The court highlighted the importance of timely complaints and the limitations on creating multiple causes of action from the same incident. Consequently, the court set aside the proceedings based on the bar of limitation and the interpretation of cause of action under the Act.

In conclusion, the judgment addressed the issues of quashing a criminal complaint, company liability for individual actions, and the bar of limitation for filing complaints under the NI Act. The court's detailed analysis of the legal provisions and relevant case laws provided clarity on the matters at hand, leading to the disposal of the petition and application.