2018 (1) TMI 745 - HC - Indian Laws

Maintainability of petition - Designation to issue cheque - applicability of Section 141(ii) of the Negotiable Instrument Act - Held that - The present case would not fall under Section 141 (ii) of the Act, since there is no designation is mentioned in the complaint for the petitioner/2nd accused. In the complaint it is stated that the petitioner herein is an Authorized signatory of M/s. Chaya Knitting Ltd., Company. Therefore, Section 141 (ii) is not come into play - the mere averment in the complaint that the accused No.2 and 3 are Authorized Signatories and are responsible persons for the conduct and day to day affairs of the company alone is not sufficient in the absence of specific averment with regard to the position and duties of the petitioner/2nd Accused in the company and his role in regard to the issuance of cheque. Petition allowed.

Summary

Issues:
1. Criminal liability of the petitioner under Section 138 of the Negotiable Instrument Act, 1881.
2. Application of Section 141 of the Negotiable Instrument Act regarding liability of individuals in a company.
3. Validity of the complaint and sufficiency of evidence against the petitioner.

Issue 1: Criminal liability of the petitioner under Section 138 of the Negotiable Instrument Act, 1881:
The petitioner, an employee of the accused company, was implicated in a private complaint under Section 138 of the Negotiable Instrument Act for dishonor of cheques. The petitioner contended that he had resigned from the company before the issuance of the cheques and therefore should not be held criminally liable. Additionally, the petitioner argued that the signatures on the cheques were fabricated after his resignation, thus challenging the basis of the complaint against him.

Issue 2: Application of Section 141 of the Negotiable Instrument Act regarding liability of individuals in a company:
The petitioner's defense relied on Section 141 of the Negotiable Instrument Act, specifically the second proviso clause, which exempts individuals nominated as directors of a company from prosecution under the Act. The petitioner claimed that as an authorized signatory, he should not be held liable under this chapter, as he was merely an employee authorized to sign cheques.

Issue 3: Validity of the complaint and sufficiency of evidence against the petitioner:
The respondent argued that the complaint against the petitioner was valid and that the petitioner's claims regarding fabricated signatures and lack of involvement in the company's affairs should be decided during trial. However, the court found that the complaint did not specify the petitioner's designation or responsibilities within the company, crucial for establishing liability under Section 141 of the Act. The court referenced a judgment emphasizing the importance of specific averments regarding an individual's role in the company for prosecution.

In conclusion, the High Court of Madras allowed the quash petition filed by the petitioner, ruling in favor of quashing the private complaint against the petitioner in C.C.No.482 of 2006. The court found that the complaint failed to establish the necessary elements to attract Section 141(ii) of the Negotiable Instrument Act, as it did not specify the petitioner's role and responsibilities within the company. This decision was supported by a judgment highlighting the importance of specific averments regarding an individual's involvement in the company for criminal prosecution.