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2021 (3) TMI 446 - HC - Indian LawsDishonor of Cheque - vicarious liability on Director - Petitioner is a Director, however, he did not sign the cheques in question nor he ever participated in the transactions in question - case of petitioner is that merely because he was Director of the company at the relevant time does not make him vicariously responsible for the acts and omissions on the part of the remaining Directors or the accused company itself and hence has no role in the offence - HELD THAT - The offence under Section 138 of the N.I. Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defense and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defense, he is still to be considered innocent. If an accused has a defense against dishonor of the cheque in question, it is he alone who knows the defense and responsibility of spelling out this defense to the Court and then proving this defense is on the accused. In view of the procedure prescribed under the Cr.P.C, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.PC and enter his plea of defence and fix the case for defence evidence, unless an application is made under Section 145(2) of N.I. Act for recalling a witness for crossexamination on by an accused of defence - Once the summoning orders in all these cases have been issued, it is now the obligation of the accused to take notice under Section 251 of Cr.P.C., if not already taken, and enter his/her plea of defence before the concerned Metropolitan Magistrate's Court and make an application, if they want to recall any witness. If they intend to prove their defence without recalling any complainant witness or any other witnesses, they should do so before the Court of Metropolitan Magistrate. The prosecution under section 138 of the Act can be launched for vicarious liability against any person, who at the time of commission of offence was in charge and responsible for the conduct of the business of the accused company. Merely because the petitioner did not sign the cheques in question, is not decisive for launching prosecution against him - Further, prima facie it appears that even in the reply by the accused persons dated 27.08.2019, there was no specific denial about the role attributed to the accused Sumit Bhasin in the negotiations and transactions that were effected with the complainant. The deal with the complainant was not a trivial or a routine case of marketing, sale or purchase of goods or services. At the cost of repetition, when such a huge investment was being sought from the complainant and applied for the running of the affairs of the company, it is not fathomable that the accused persons were unaware of the financial implications for themselves and for the accused company. Jurisdiction - HELD THAT - In exercise of its jurisdiction under Section 482 Cr.P.C. cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts. The issues involving facts raised by the petitioner by way of defence can be canvassed only by way of evidence before the Trial Court and the same will have to be adjudicated on merits of the case and not by way of invoking jurisdiction under Section 482 Cr.P.C. at this stage. The parameters of the jurisdiction of the High Court in exercising jurisdiction under Section 482 Cr.P.C, are now almost well-settled. Although it has wide amplitude, but a great deal of caution is also required in its exercise. The requirement is the application of well-known legal principles involved in each and every matter Adverting back the facts of the present case, this Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.P.C. at this stage - In the instant case, all these issues mentioned hereinabove involves disputed question of facts and law and cannot be decided unless and until the parties go to trial and lead their respective evidence. Though invariably the initial phase of a litigation under Section 138 of the N.I. Act depends on how well the pleadings or the allegations are laid down or articulated, by the complaint, in the ultimate analysis it is the trial that alone can bring out the truth so as to arrive at a just and fair decision for the parties concerned. There are no flaw or infirmity in the proceedings pending before the Trial Court - petition dismissed.
Issues Involved:
1. Quashing of complaint under Section 138 of the Negotiable Instruments Act (N.I. Act) 2. Vicarious liability of the petitioner as a Director 3. Jurisdiction under Section 482 Cr.P.C. Issue-wise Detailed Analysis: 1. Quashing of Complaint under Section 138 of the N.I. Act: The petitioner sought to quash the complaint filed under Section 138 of the N.I. Act, arguing that he did not sign the cheques and was not responsible for the transactions. The court noted that the cheques issued by the accused were dishonored, and despite legal notices, no payment was made. The complaint was filed following the dishonor of the cheques. The court emphasized that the N.I. Act provides sufficient opportunity for the issuer of the cheque to make the payment before facing criminal trial. The court observed that the petitioner’s defense that he did not sign the cheques or participate in the transactions could not be considered at this preliminary stage and must be examined during the trial. 2. Vicarious Liability of the Petitioner as a Director: The petitioner argued that merely being a Director does not make him vicariously liable for the company’s actions. The court highlighted that the petitioner was an executive/whole-time director, holding approximately 50% shareholding, attending board meetings, and drawing a salary, indicating his involvement in the company's day-to-day affairs. The court referred to previous judgments, emphasizing that the role played by a Director is a question of fact and must be determined during the trial. The court found that the complainant had made specific averments about the petitioner’s involvement in the transactions, and these allegations could not be dismissed at the preliminary stage. 3. Jurisdiction under Section 482 Cr.P.C.: The court reiterated that the jurisdiction under Section 482 Cr.P.C. should be exercised with caution and cannot be used to delve into disputed questions of fact. The court stated that the issues raised by the petitioner require evidence and cannot be adjudicated in proceedings under Section 482 Cr.P.C. The court emphasized that the trial alone could bring out the truth and ensure a fair decision. The court found no material of "sterling and impeccable quality" to warrant the invocation of its jurisdiction under Section 482 Cr.P.C. at this stage. Conclusion: The court dismissed the petition, finding no flaw or infirmity in the proceedings pending before the Trial Court. The Trial Court was directed to consider and deal with the contentions and defense of the petitioner in accordance with the law. The prayers for quashing the complaint were deemed untenable in law, and the petition was dismissed accordingly.
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