2018 (6) TMI 1368 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - The present cheque is alleged to have been issued on 31.05.2012 and so on the date of issuance of the cheque, the present petitioner was not a director in the first accused Company - Held that - The cheque in question was issued on 30.05.2012 and admittedly, the cheque was not issued by the present petitioner. Though, it is contended by the respondent/complainant that the petitioner/4th accused is one of the directors of the first accused Company, he has not made specific averments as to the role played by him. Time and again, it has been asserted by the Hon ble Supreme Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of Commission of an offence, will be liable for criminal action. A director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the Negotiable Instruments Act. The complaint filed against the present petitioner cannot be sustained and therefore, is liable to be quashed under Section 482 of Cr.P.C. However, the trial should go as far as the other accused are concerned. Since the complaint has been filed during the year 2012, the learned Judicial Magistrate No.VI, Coimbatore, is directed to dispose of the complaint within a period of three months from the date of receipt of a copy of this order - petition allowed.

Summary

Issues:
1. Liability of the petitioner as the 4th accused in a complaint under Sections 138, 141, and 142 of the Negotiable Instruments Act.
2. Interpretation of Section 141 of the Negotiable Instruments Act regarding the liability of individuals in charge of a company.
3. Averments required in a criminal complaint to establish liability under Section 141.

Analysis:

Issue 1:
The petitioner, as the 4th accused, was involved in a complaint under Sections 138, 141, and 142 of the Negotiable Instruments Act. The complainant alleged that the accused borrowed money and issued a bounced cheque, leading to legal proceedings. However, the petitioner raised defenses regarding his resignation from the company and lack of involvement in the transaction at the time of the offense.

Issue 2:
Section 141 of the Negotiable Instruments Act imposes liability on individuals in charge of a company when an offense is committed by the company. The provision states that those responsible for the conduct of the company's business at the time of the offense shall be deemed guilty. The court emphasized that mere directorship does not automatically establish liability; the individual must be actively involved in the company's operations at the relevant time.

Issue 3:
The court highlighted the importance of specific averments in a criminal complaint to establish liability under Section 141. Referring to judicial precedents, it was noted that necessary details must be included in the complaint to subject an individual to criminal proceedings vicariously linked to the company's offense. The complaint should clearly outline how the accused was involved in the company's affairs at the time of the offense to justify criminal action.

In the judgment, it was concluded that the complaint against the petitioner could not be sustained as he had resigned from the company before the alleged offense, and there were no averments establishing his involvement in the transaction. The court ordered the quashing of the complaint against the petitioner but directed the trial to proceed against the other accused. Additionally, the court instructed the expeditious disposal of the case within three months.