2021 (2) TMI 385 - HC - Indian Laws

Dishonor of Cheque - Condonation of delay in filing appeal - Time Limitation - Liability of Directors who has resigned from the company - impugned orders dated 16.3.2017 and 25.06.2018 simply noted that the complaints filed are within the limitation period, petitioner claims that the Demand Notices were served upon him on 26.05.2016 and the complaints in question were filed on 14.07.2016 and so, there is a delay of 04 days in filing the complaints - HELD THAT - The respondent/complainant was right in affecting service of Demand Notice upon the accused company and its erstwhile and current Directors as well. The accused company has been served on 30.05.2016, therefore, complaints having been filed on 14.07.2016, are well within the limitation period. It is a matter of record that at the time when Builder Buyer Agreement and Agreement to Sell, dated 27.03.2015 were entered into between the parties, petitioner was the Director of the company. In terms of Buy Back Option, as spelt out in the aforesaid Agreements, petitioner handed over four post dated cheques dated 27.03.2016, out of which two cheques of higher value were signed by him in the capacity of Director. It is not the case of petitioner that the two cheques in question did not bear his signatures or that at the time of issuance of cheque, he was not the Director of the accused company. The stand taken by petitioner is that at the time of presentation of cheques in bank, he was not on the role of Board of Directors and has placed on record copy of Form DIR 12 in support of his claim, which shows that he had resigned on 11.09.2015. However, this Court cannot lose sight of the fact that he was the Director/Promoter of the accused company at the time of issuance of cheques and was also signatory on two cheques. In the present case, there are specific allegations in the complaint against the petitioner that he was the Director of the accused company, who had acted as a Promoter to induce petitioner to invest his money in the project and allured him of higher returns if money is paid in one instalment and issued the post dated cheques under his signatures, which shows that petitioner was authorised to make financial transaction of the accused company and was therefore, responsible for business of the accused company - It is pertinent to mention here that the four cheques in question, which were handed over to respondent/complainant on 27.03.2015, were bearing dates of 27.03.2016 and could be presented in the bank only thereafter, and in between petitioner had resigned from the Board of Directors. But, this by itself would not dilute the responsibility of petitioner or accused company to fulfil their responsibility to honour the cheques. It is settled law that a Magistrate at the stage of taking cognizance and summoning is required to only consider whether a prima facie case has been made out for summoning the accused persons or not and is not required to go into the merits of the case or material placed on record. However, since petitioner has also sought dismissal of the complaints on merits, this Court while exercising its extra ordinary inherent jurisdiction under Section 482 Cr.P.C. heard the parties at length on the merits of the case as well - What has shocked the conscience of this Court is that for purchase of one residential unit, respondent/complainant had paid a sum of ₹ 45,25,331/- to the accused company through RTGS, whereas the total sum value of four post dated cheques in question is ₹ 11,4,74,703/- which were given to respondent by the petitioner s company. It appears that the accused company guaranteed significant returns to the customers/ investors who paid the entire amount in one instalment for the properties which were yet to be developed. Attention of this Court has been drawn to copy of charge sheet filed in FIR No. 114/2016, registered at police station Sarita Vihar, Delhi, in which petitioner herein is also an accused. Whether petitioner who had issued the post dated cheques in the capacity of Director of the accused company, had already resigned on the date of presentation of cheque or whether there was sufficient balance in the account to honour the legally enforceable debt or what shall be petitioner s liabilities after being re-appointed as the Director of the Company, are the questions which cannot be gone into at this stage - the correctness of allegations levelled by the parties, have to be tested at trial and therefore, in my opinion Metropolitan Magistrate while framing notices under Section 251 Cr.P.C. has rightly rejected petitioner s prayer for discharge while observing that the points raised by the parties are triable issues which can be agitated during trial. Petition dismissed.

Summary

Issues Involved:
1. Quashing of orders dated 16.3.2017, 25.06.2018, and 25.06.2020 by the Metropolitan Magistrate.
2. Summoning and framing of Notices under Section 251 Cr.P.C.
3. Allegations against the petitioner regarding inducement to invest.
4. Presentation and dishonor of post-dated cheques.
5. Resignation of the petitioner from the Board of Directors.
6. Limitation period for filing complaints under Section 138 of the NI Act.
7. Liability of Directors under Section 138 and 141 of the NI Act.
8. Revival and reappointment of the petitioner as Director.
9. Maintainability of complaints under Section 138 of the NI Act during liquidation proceedings.

Detailed Analysis:

1. Quashing of Orders:
The petitioner sought quashing of orders dated 16.3.2017, 25.06.2018, and 25.06.2020, passed by the Metropolitan Magistrate, which summoned the petitioner to face trial and framed Notices under Section 251 Cr.P.C while dismissing the petitioner’s plea for discharge. The court held that the orders were well merited and there was no error calling for interference.

2. Summoning and Framing of Notices:
The court noted that at the stage of taking cognizance and summoning, the Magistrate is required to only consider whether a prima facie case has been made out. The court found that the Metropolitan Magistrate rightly framed Notices under Section 251 Cr.P.C. and rejected the petitioner’s plea for discharge.

3. Allegations of Inducement:
The respondent alleged that the petitioner induced him to invest in a residential real estate project and issued post-dated cheques under the Buy Back Option. The court observed that the petitioner was the Director of the accused company at the time of the investment and issuance of cheques, making him responsible for the business of the company.

4. Presentation and Dishonor of Cheques:
The respondent presented the cheques for payment, which were dishonored. The court noted that the respondent acted prudently to safeguard his interests upon learning about the company’s financial troubles and the resignation of its Directors.

5. Resignation from Board of Directors:
The petitioner claimed to have resigned from the Board of Directors before the presentation of the cheques. The court acknowledged the resignation but emphasized that the petitioner was a Director at the time of issuance of the cheques and was responsible for the company’s financial transactions.

6. Limitation Period:
The petitioner argued that the complaints were barred by limitation. The court found that the complaints were filed within the stipulated period as prescribed under Section 138 of the NI Act, as the Demand Notices were served on 30.05.2016 and the complaints were instituted on 14.07.2016.

7. Liability of Directors:
The court referred to the Supreme Court’s observations in N. Rangachari Vs. BSNL and S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla, which established that Directors responsible for the conduct of business at the time of issuance of cheques are liable under Section 138 and 141 of the NI Act. The court concluded that the petitioner, being a signatory on the cheques, was responsible for the incriminating act.

8. Revival and Reappointment:
The court noted that the petitioner was reappointed as Director of the company after its revival, which raised questions about the petitioner’s liabilities. However, these questions were deemed triable issues to be determined during the trial.

9. Maintainability during Liquidation:
The petitioner argued that the complaints were not maintainable as the company was in liquidation. The court found this argument misplaced, as only a provisional Official Liquidator was appointed, and the company had not gone into liquidation. The court emphasized that the revival of the company was approved, and the petitioner was reappointed as Director.

Conclusion:
The court dismissed the petitions, affirming the summoning and framing of Notices under Section 251 Cr.P.C., and held that the issues raised by the petitioner were triable and should be addressed during the trial. The court refrained from commenting on the merits of the case and allowed the parties to raise their pleas before the trial court.