2019 (7) TMI 449 - HC - Indian Laws

Dishonor of cheque - insufficiency of funds - Section 138 of Negotiable Instrument Act - HELD THAT - Upon careful perusal of the averments in the complaint and in particular para no. 22 there of, there are specific averments wherein it is stated that at the time the offence was committed accused no. 2 to 9 i.e. present petitioners were Directors and were in charge of and responsible for day to day affairs and management of accused no. 1 and therefore, they are liable for prosecution. The petitioners have no where stated in the petition that they were not Directors of Respondent No. 1 on the date of commission of an alleged offence nor they brought on record unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the petitioners though Director s could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court. In the present case, as already observed the petitioners were directors on the date of commission of alleged offence and were responsible for the business of the said company as averred in the complaint. The petitioners have not brought on record unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the petitioners could not have been concerned with the issuance of cheques and asking them to stand the trial would be abuse of process of Court. Therefore, prayer of the petitioners to cause interference in the impugned order deserves no consideration. Petition dismissed.

Issues Involved:
1. Legality of the issuance of process by the Metropolitan Magistrate.
2. Responsibility of the petitioners for the alleged offence under Section 138 of the Negotiable Instruments Act.
3. Compliance with the procedural requirements under Sections 138 and 141 of the Negotiable Instruments Act.
4. Adequacy of the averments in the complaint regarding the petitioners' involvement in the alleged offence.

Detailed Analysis:

1. Legality of the issuance of process by the Metropolitan Magistrate:
The petitioners challenged the issuance of process by the Metropolitan Magistrate, arguing that the complaint and the verification statement did not allege how the petitioners were responsible for the day-to-day affairs of the company. The court noted that the Magistrate had perused the complaint, the verification statement, and the documents on record, and after hearing the complainant's counsel, observed that a prima facie case was made out against the accused, including the petitioners. Therefore, the issuance of process was deemed legally justified.

2. Responsibility of the petitioners for the alleged offence under Section 138 of the Negotiable Instruments Act:
The petitioners contended that there were no allegations or evidence showing their responsibility for the company's day-to-day affairs or their involvement in the alleged offence. The court referred to the Supreme Court's judgment in Gunmala Sales Pvt. Ltd. v. Anu Mehta & Ors., which stated that a basic averment that the Director was in charge of and responsible for the conduct of the business at the relevant time is sufficient for the Magistrate to issue process. The court found that the complaint contained such basic averments, making out a case against the petitioners.

3. Compliance with the procedural requirements under Sections 138 and 141 of the Negotiable Instruments Act:
The petitioners argued that the complaint did not comply with the procedural requirements under Sections 138 and 141 of the Act. The court observed that the complaint and the legal notice were sent to the accused within the stipulated period, and the complaint contained specific averments that the petitioners were in charge of and responsible for the company's business at the time of the alleged offence. Thus, the procedural requirements were deemed to have been met.

4. Adequacy of the averments in the complaint regarding the petitioners' involvement in the alleged offence:
The court examined the averments in the complaint, particularly paragraph 22, which stated that the petitioners were directors and responsible for the day-to-day affairs of the company at the time of the alleged offence. The court referred to the Supreme Court's judgment in K.K. Ahuja v. V.K. Vora & Anr., which outlined the requirements for making directors liable under Section 141 of the Act. The court found that the complaint contained the necessary averments, and the petitioners had not provided any unimpeachable evidence to refute their involvement. Therefore, the averments in the complaint were deemed adequate.

Conclusion:
The court concluded that the petitioners had not provided sufficient grounds to interfere with the Magistrate's order issuing process against them. The writ petition was found to be devoid of merit and was accordingly rejected. The rule was discharged.

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