2022 (3) TMI 926 - HC - Indian Laws

Dishonor of Cheque - stand of the petitioner is that although, he was a Director of the said partnership firm, he has since retired from the Firm at the time the alleged cheques were issued and dishonoured - vicarious criminal liability - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT - The respondent No. 1 has failed to make any material averment under Section 141 of the N.I. Act that the petitioner herein was in-charge of and was responsible to the respondent No. 2 Firm at the time the alleged offence was committed and only a bald or mechanical averment made in the complaint is not sufficient, but the specific role of the petitioner herein was required to be averred because a complaint under Section 138 N.I. Act seek to place vicarious criminal liability on individuals. What can be understood is that Section 482 Cr.P.C can be resorted to, to ensure that orders under the code of criminal procedure are given effect to, secondly, to prevent abuse of the process of any Court and thirdly, to secure ends of justice, Court can always take note of any miscarriage of justice and prevent the same by exercising its powers under Section 482 of Cr.P.C. These powers are neither limited nor curtailed by any other provisions of the Code. To fasten a liability under Section 141 of the N.I. Act, a clear case should be spelled out in the complaint against the person sought to be made liable is what the Hon ble Supreme Court has held in the case of SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA 2005 (9) TMI 304 - SUPREME COURT . A bald and vague averment made in the complaint would not suffice to compel a person to subject him or herself to criminal prosecution particularly, in cases under Sections 138, 141 142 N.I. Act - Even if the fact is admitted that the petitioner Mr. Mark Alexander Davidson is a partner in the said Firm and also even if the so called Retirement Deed is not taken into account, that is, that the legal provisions of Section 72 of the Partnership Act was not complied with, as far as the issue of notice is concerned, yet the fact remains that his role in the partnership firm has not been specifically spelt out and saying that he was also incharge of and responsible for the affairs of the said Firm is indeed only a bald averment. This Court hereby finds that the petitioners herein in all these set of related similar and identical petitions have been able to made out a case for exercise of inherent powers under Section 482 Cr.P.C as there has been an abuse of the process of the Court and ends of justice has to be meted out, as far as the impugned proceedings are concerned - Petition disposed off.

Issues Involved:
1. Applicability of Section 138 of the Negotiable Instruments Act, 1881.
2. Vicarious liability under Section 141 of the Negotiable Instruments Act.
3. Validity of proceedings under Section 482 Cr.P.C.
4. Specificity of allegations in the complaint.
5. Applicability of the Indian Penal Code (IPC) provisions.

Detailed Analysis:

1. Applicability of Section 138 of the Negotiable Instruments Act, 1881:
The complaints were made under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881, concerning the dishonour of cheques drawn by the respondent No. 2 Firm. The petitioners contended that no demand was made from them in writing as required by Section 138, and the notice was addressed only to the respondent No. 2 Firm. The court noted that Section 138(b) mandates notice to the drawer of the cheque only, and in this case, the cheques were drawn by the respondent No. 2 Firm, thus notice was duly issued to the Firm in compliance with the provision.

2. Vicarious Liability under Section 141 of the Negotiable Instruments Act:
The petitioners argued that they were not involved in the partnership firm at the time the cheques were issued and dishonoured. The court emphasized that a clear case must be spelled out in the complaint against the person sought to be made liable. The complaint must specifically aver that at the time the offence was committed, the person accused was in charge of and responsible for the conduct of the business of the company. The court found that the allegations against the petitioners were vague and did not satisfy the requirements of Section 141, thus no vicarious liability could be fastened upon them.

3. Validity of Proceedings under Section 482 Cr.P.C:
The petitioners sought relief under Section 482 Cr.P.C to quash the summons and proceedings against them. The court noted that Section 482 Cr.P.C can be resorted to prevent abuse of the process of any court and to secure the ends of justice. The court found that the proceedings against the petitioners were an abuse of the process of the court and thus exercised its inherent powers under Section 482 Cr.P.C to quash the proceedings.

4. Specificity of Allegations in the Complaint:
The court observed that the complaint must contain specific allegations detailing how and in what manner the accused was responsible for the offence. In this case, the court found that the complaint contained only bald and vague averments without specific details about the petitioners' roles in the alleged offence. The court emphasized that summoning an accused in a criminal case is a serious matter and requires careful scrutiny of the evidence brought on record.

5. Applicability of the Indian Penal Code (IPC) Provisions:
The petitioners contended that the allegations under the IPC were not applicable as there was no evidence or specific averments to attract the provisions of Sections 420, 418, 417, 403, 406, and 409 IPC. The court noted that the IPC does not provide for vicarious liability and found that the allegations against the petitioners under the IPC were baseless and not supported by evidence.

Conclusion:
The court concluded that the petitioners were able to make out a case for the exercise of inherent powers under Section 482 Cr.P.C as there was an abuse of the process of the court. Consequently, the proceedings in the related complaint cases were quashed and the summons recalled to the extent the petitioners were concerned. The petitions were disposed of with no cost.

← Previous Next →