2022 (6) TMI 698 - HC - Indian Laws

Dishonor of Cheque - vicarious liability of authorized signatory/signatory of the cheque on bouncing of the cheque - HELD THAT - This court finds that the cheque was issued on 06.07.2019 by the Company amounting to Rs.5 lakh. It was presented on 09.07.2019. But it was not encashed and returned with endorsement stop payment . In the complaint it has specifically been pleaded in paragraph 7 that the accused were responsible for conduct of the business at the relevant point of time. This fact has not been denied by the applicants in this petition. Section 141 of the Negotiable Instruments Act provides offences by companies. It provides that if the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. The Hon'ble Supreme Court considered Section 141 in the judgment relied by learned counsel for the applicants in the case of SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA 2005 (9) TMI 304 - SUPREME COURT and held that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable. There is no denial that stop payment was made. A plea has also been taken that Gurucharan Singh, who has signed the Cheque was neither Director nor authorized signatory of the Company on the date of issuance of Cheque. But nothing has been placed before this court in support of this plea and disclosed as to who was the authorized signatory and as to how and why the applicants were not responsible to the Company for conduct of the business of Company, whereas the applicant no.1 is the Company and applicants no.2 to 4 are the Directors of the Company. Therefore, it can not be said that they are not responsible. Application dismissed.

Summary

Issues:
Challenge to summoning order under Section 482 Cr.P.C. for a complaint case under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
1. The main argument presented was that only the authorized signatory of the cheque is responsible for its bouncing, not the company or other directors. The applicants relied on a judgment of the Hon'ble Supreme Court in a similar case.

2. The opposition argued that under Section 141 of the Negotiable Instruments Act, every person responsible for the conduct of the company's business at the time of the offense is deemed guilty. The company and individuals in charge can be held liable, and the summoning was justified as the applicants did not prove they were not responsible.

3. The court noted that the cheque was issued by the company, bounced, and the accused were responsible for the business's conduct at that time. The applicants did not deny these facts. Section 141 of the Act imposes liability on those in charge of the company's business at the time of the offense.

4. Referring to the judgment in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, the court emphasized that liability under Section 141 arises from the person's conduct, act, or omission, not merely holding a position in the company. The complaint must disclose facts making a person liable, based on their role in the company's affairs at the relevant time.

5. The court found that the complainant's allegations against the applicants were not denied, and no evidence was provided to show they were not responsible for the company's business conduct. The court rejected the argument that the applicants were not liable, as they were the company and its directors.

6. The court concluded that the application challenging the summoning order was misconceived and lacked merit. Therefore, the application was dismissed.

This detailed analysis of the judgment highlights the arguments presented, legal provisions applied, and the court's reasoning in dismissing the application challenging the summoning order under Section 482 Cr.P.C.