2021 (11) TMI 279 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds or not - authorised signatory to the cheque was in control of the day to-day affairs of the said company at the time of issuance of the cheques or not - HELD THAT - A perusal of the complaint filed by the respondent herein reveals that the said complaint has been made u/s. 138 and 142 of the Negotiable Instruments Act only against the petitioner herein. The companies have not been made as party to the complaint, though the cheques have been issued by the authorised signatory on behalf of the companies. In the case on hand, a perusal of the complaint reveals that the petitioner alone is shown as party to the said complaint and it is the clear averment in the complaint that he is the authorised signatory. Therefore, it is crystal clear that the petitioner, in his capacity as authorised signatory of the company, had issued the cheques, which, in turn, got dishonoured, resulting in the present proceeding. However, without making the respective companies from which the cheques have been issued, the complaint against the petitioner alone cannot be proceeded with. Without arraigning the company as an accused, which is imperative, no prosecution could be maintained against the petitioner. Once this Court has unambiguously arrived at a conclusion that the present proceeding initiated against the petitioner has no legs to stand in view of the companies not having been arrayed as a party, the ancillary contentions raised by the petitioner does not require any consideration as the whole prosecution initiated against the petitioner falls down like a pack of cards in the absence of the companies being arrayed as accused. Petition allowed.

Summary

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act without arraying the companies as parties.
2. Personal liability of the petitioner as an authorized signatory of the companies.
3. Requirement of establishing the petitioner's control over the day-to-day affairs of the companies.

Issue-wise Detailed Analysis:

1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act without arraying the companies as parties:

The pivotal contention in this case was whether the complaint under Section 138 of the Negotiable Instruments Act is maintainable without the companies being made parties. The court observed that the cheques were issued on behalf of the companies by the petitioner in his capacity as an authorized signatory. The complaint was filed solely against the petitioner without including the companies as parties. Referring to the Supreme Court's decision in Aneeta Hada Vs. Godfather Travels & Tours Pvt. Ltd., the court emphasized that for maintaining prosecution under Section 141 of the Act, arraigning the company as an accused is imperative. The court concluded that without the companies being made parties, the complaint against the petitioner is not maintainable.

2. Personal liability of the petitioner as an authorized signatory of the companies:

The petitioner argued that the complaint lacked particulars regarding his role in the companies and his involvement in their day-to-day affairs. The court noted that the cheques were signed by the petitioner as an authorized signatory of the companies, and the complaint did not establish his direct control over the companies' affairs. The court reiterated that without establishing the petitioner's control and involvement in the companies, making him personally liable is unsustainable. The court cited the requirement under Section 142 of the Negotiable Instruments Act to prove the authorized signatory's control over the company's affairs at the time of issuing the cheques.

3. Requirement of establishing the petitioner's control over the day-to-day affairs of the companies:

The petitioner contended that the complaint should be dismissed for non-joinder of parties as the companies were not made parties to the complaint. The court agreed, highlighting that the complaint did not provide any material evidence of the petitioner's involvement in the companies' day-to-day administration. The court emphasized that without the companies being made parties, the complaint against the petitioner in his individual capacity is unsustainable. The court concluded that the prosecution against the petitioner falls apart in the absence of the companies being arrayed as accused.

Conclusion:

The court allowed the petition, quashing the proceedings in S.T.C. No. 1564 of 2017 on the file of the District Munsif-cum-Judicial Magistrate, Sriperumbudur. The court noted that this order would not prevent the respondent from proceeding with the civil suit for recovery of the amount from the petitioner. The court directed the lower court to independently decide the civil suit without being influenced by the observations made in this judgment.