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2021 (8) TMI 378 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - criminal proceedings as well as order questioned on the ground that once the account was maintained by the company, the complaint could not have been filed against the Director without arraying the company as a party/accused - HELD THAT - A perusal of the cheques in question reveals that the said cheques have been issued from account maintained by company namely DSKT Infrastructure Pvt. Ltd. Further, the perusal of the complaint reveals that the company has not been arrayed as an accused. It is evident that whenever a cheque has been issued by the company and the same stands dishonoured, the company is required to be arrayed as an accused and in absence thereof, the proceedings cannot be continued - A perusal of order impugned reveals that the trial court too has taken cognizance and issued process in a mechanical manner in utter disregard of the law laid down by Hon'ble the Apex Court in M/S. PEPSI FOODS LTD. ANR VERSUS SPECIAL JUDICIAL MAGISTRATE ORS 1997 (11) TMI 518 - SUPREME COURT . The criminal proceedings as well as order impugned are quashed - petition dismissed.
Issues:
Challenge to complaint under section 138 of Negotiable Instruments Act for dishonored cheques without company being arrayed as accused. Analysis: The petitioner filed a petition seeking to quash a complaint under section 138 of the Negotiable Instruments Act against him for dishonored cheques. The complaint alleged that the petitioner issued two cheques to the respondent for rent payment, drawn on a company's account, which were dishonored due to insufficient funds. The respondent served statutory notices, but the petitioner did not respond, leading to the complaint being filed. The petitioner contended that since the account was maintained by the company, the complaint should have included the company as an accused. The respondent argued that as the petitioner was the Director of the company and in charge of its affairs, he was rightfully included as a party in the complaint. The court examined the cheques and noted that they were issued from the company's account, yet the company was not named as an accused in the complaint. Citing the Supreme Court ruling in "Anita Hada Vs. Godfather Travels & Tours Pvt. Ltd.," the court emphasized that for a prosecution under Section 141 of the Act, the company must be arraigned as an accused when a cheque issued by the company is dishonored. The court further observed that the trial court had mechanically taken cognizance and issued process without following the legal requirements established by precedents, such as the decision in M/s. Pepsi Foods Ltd. case. Consequently, the court quashed the criminal proceedings and the impugned order. The respondent was advised to seek appropriate legal remedies if desired. Ultimately, the petition was dismissed, upholding the quashing of the complaint due to the absence of the company as an accused in the proceedings.
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