2021 (6) TMI 548 - HC - Indian Laws

Dishonor of Cheque - necessary ingredients for offence against company present or not - Section 138 read with Section 141 of the NI Act - HELD THAT - The Managing Director and Director who issued the cheque would be accused for offence under Section 138 of the N.I. Act in case offence committed by the company. It is not necessary to make specific averments in the complaint and by virtue of Section 141 of the N.I. Act they are liable to be proceeded in accordance with law. It is not in dispute that petitioner No. 2 has issued cheque on behalf of the company as Managing Director to the respondent/complainant as stated in para 4 of the complaint. It is for the petitioners to establish the said plea before the trial Court during the course of trial as the issue cannot be adjudicated in this petition at this stage. As such, learned JMFC is absolutely justified in issuing process after taking cognizance of offence under Section 138 of the N.I. Act. I do not find any perversity or illegality in order taking cognizance for the aforesaid offence. Petitioners are at liberty to raise all the grounds before the trial Court during the course of trial. It is made clear that this Court has not expressed any opinion on the merits of the matter. Petition dismissed.

Issues Involved:
1. Registration of criminal complaint under Section 138 of the Negotiable Instruments Act (N.I. Act).
2. Liability of the Managing Director and Director under Section 141 of the N.I. Act.
3. Specific averments required in a complaint under Section 138 read with Section 141 of the N.I. Act.
4. Consideration of the petitioners' defense that the amount in question has already been paid.

Issue-wise Detailed Analysis:

1. Registration of criminal complaint under Section 138 of the N.I. Act:
The petitioners, including the company, its Managing Director, and a Director, challenged the registration of a criminal complaint under Section 138 of the N.I. Act. They contended that there was no outstanding amount as the amount in question had already been paid to the complainant. The petitioners also filed a complaint against the complainant for an offense under Section 420 of the IPC. The court noted that the jurisdictional court had taken cognizance of the offense and issued summons based on the dishonored cheques issued by the Managing Director on behalf of the company.

2. Liability of the Managing Director and Director under Section 141 of the N.I. Act:
The court examined whether the averments in the complaint constituted the necessary ingredients for an offense against the company and its officials under Section 138 read with Section 141 of the N.I. Act. Section 141 stipulates that if a company commits an offense, every person in charge of and responsible for the conduct of its business at the time of the offense is deemed guilty. The court referred to several Supreme Court judgments, including S.M.S. Pharmaceuticals Ltd., National Small Industries Corporation Limited, and Standard Chartered Bank, which clarified that Managing Directors and signatories of dishonored cheques are liable under Section 141.

3. Specific averments required in a complaint under Section 138 read with Section 141 of the N.I. Act:
The court emphasized that specific averments must be made in the complaint to hold the accused vicariously liable. It is not necessary to make specific averments if the accused is a Managing Director or signatory of the cheque, as their roles inherently imply responsibility for the conduct of the company's business. The court found that the complaint contained sufficient averments that the Director was responsible for the company's business and that the Managing Director issued the dishonored cheques.

4. Consideration of the petitioners' defense that the amount in question has already been paid:
The petitioners argued that the amount in question had been paid and submitted documents to support their claim. However, the court held that this defense could not be considered at this stage and must be established during the trial. The court found no perversity or illegality in the order taking cognizance of the offense under Section 138 of the N.I. Act and upheld the issuance of the process by the learned JMFC.

Conclusion:
The court dismissed the petitions, stating that the Managing Director and Director could be proceeded against under Section 138 read with Section 141 of the N.I. Act. The court clarified that the petitioners could raise their defenses during the trial and directed the trial court to expedite the proceedings.

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