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2024 (6) TMI 36 - HC - Indian LawsDishonour of cheque - Seeking to Quash Complaint u/s 482 CrPC - Liability of the petitioner u/s 138 and 141 of the NI Act - Applicability of Section 28 of the NI Act - HELD THAT - In the present case, the petitioner is the Chief Financial Officer, who, in terms of Section 2 (51) (iv) of the Companies Act, is a Key Managerial Personnel of the Accused No. 1 company. The petitioner is also the signatory to the cheque in question. In the complaint, it is also stated that the petitioner was in charge and responsible for the conduct of the business of the company at the relevant time. In my view, therefore, the complaint satisfies the test of Section 141 of the NI Act for arraying the petitioner as an accused. Signing of Cheque in the capacity of agent - Applicability of section 28 - HELD THAT - The complaint does not lay its foundation u/s 28 of the NI Act to make the petitioner liable, but instead makes him liable u/s 141 of the NI Act. The petitioner is not to be impleaded as an Accused in the Complaint only in his position as an agent or signatory of the cheque. Therefore, the provision of Section 28 of the NI Act would not have any application to the facts of the present case. Since the complaint satisfies the test of Section 141 of the NI Act and does not lay its foundation u/s 28 of the NI Act, the judgement of Sivagurunatha Pillai 1940 (12) TMI 33 - MADRAS HIGH COURT , as referred to by the counsel for the petitioner, does not apply to the present case. The court found no merit in the petition and dismissed it, along with the application, as infructuous. The order clarified that it does not affect any defense the petitioner may present before the Trial Court.
Issues Involved:
1. Quashing of complaint under Section 138 of the Negotiable Instruments Act, 1881. 2. Applicability of Section 28 of the Negotiable Instruments Act. 3. Liability of Key Managerial Personnel under Section 141 of the Negotiable Instruments Act. 4. Interpretation of Section 2(51) and Section 2(60) of the Companies Act, 2013. Issue-wise Detailed Analysis: 1. Quashing of complaint under Section 138 of the Negotiable Instruments Act, 1881: The petitioner sought quashing of the complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), which was initiated due to the dishonor of a cheque issued by the company, Uniply Decor Ltd. The complaint alleged that the petitioner, as the Chief Financial Officer (CFO) of the company, was responsible for the conduct of the business and had issued the dishonored cheque. 2. Applicability of Section 28 of the Negotiable Instruments Act: The petitioner argued that he could not be held liable merely because he signed the cheque, invoking Section 28 of the NI Act. He contended that personal liability arises only when an agent signs a cheque without indicating their agency status. However, the court found no merit in this submission, emphasizing that the petitioner was not being held liable as an agent but under Section 141 of the NI Act, which pertains to the liability of persons in charge of the company at the time of the offence. 3. Liability of Key Managerial Personnel under Section 141 of the Negotiable Instruments Act: The court highlighted that under Section 141 of the NI Act, every person in charge of and responsible for the conduct of the business of the company at the time of the offence is deemed guilty. The petitioner, as the CFO and signatory of the cheque, was considered to be in charge and responsible for the company's business. The court referred to the Supreme Court's judgment in S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan, which stated that a person who signs the cheque or has the authority to sign it can prima facie be assumed to be in charge of the company's conduct. 4. Interpretation of Section 2(51) and Section 2(60) of the Companies Act, 2013: The court noted that the petitioner, as the CFO, falls under the definition of 'Key Managerial Personnel' as per Section 2(51)(iv) of the Companies Act, 2013. This designation also makes him an 'officer who is in default' under Section 2(60) of the Companies Act, thereby liable for any penalty or punishment. The court emphasized that the complaint sufficiently alleged that the petitioner was in charge and responsible for the conduct of the business, satisfying the requirements of Section 141 of the NI Act. Conclusion: The court dismissed the petition, finding that the complaint met the criteria under Section 141 of the NI Act and did not rely on Section 28 of the NI Act. The petitioner's role as CFO and signatory to the cheque made him liable under the provisions of the NI Act. The court clarified that this order would not affect any defense the petitioner may present before the Trial Court.
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