2022 (11) TMI 1085 - HC - Indian Laws

Dishonor of Cheque - existence of legally enforceable debt or not - vicarious liability of Directors - rebuttal of presumption or not - directors were incharge of or responsible for the conduct of business of the accused company in the year 2020 or not - Section 138 and 141 of NI Act, 1881 - HELD THAT - The settled position of law is that the signatory of a cheque which is dishonoured, is responsible for the act and will be covered under sub-section (2) of Section 141. Therefore, no special averments would be necessary to make him liable. A perusal of the complaint in the present case, however, reveals that specific averments have even been made against the petitioners i.e. accused no. 4 and 5 and their specific role has been highlighted by the complainant bank/respondent. In the case at hand, firstly, neither the signatures of the petitioners on the cheques nor the liability for which the cheques were issued has been denied. In such a case, the presumption under Section 139 of NI Act, 1881 would certainly arise in favour of the holder of the cheque i.e., the respondent bank/complainant - Three-judge bench of Hon ble Supreme Court in M/S. KALAMANI TEX ANR VERSUS P. BALASUBRAMANIAN 2021 (2) TMI 505 - SUPREME COURT held that if the signatures on the cheque are admitted, presumption under Section 139 NI Act, 1881 would be attracted. The primary dispute in the present case pertains to the question as to whether the cheques issued by the petitioners on behalf of the accused company on 23.12.2016 were undated or not, and whether the signatories to the cheques i.e. the petitioners were a part of the accused company at the time of commission of offence or not - this Court is of the opinion that the issue as to whether the petitioners had resigned before the presentation of cheques or not is a disputed question of facts and has to be decided on the basis of relevant documents and evidence to be produced at the stage of trial. This is not a case involving a resignation of a director which can be simply verified by this Court by perusing Form 32 issued by Registrar of Companies. The petitioners herein were admittedly the employees in the holding company of accused no. 1 and were its authorised signatories at the time when the credit facility was obtained from the respondent bank. It is also not the case of petitioners that they had informed the respondent about their resignations, rather, they had merely asked the accused company to do the same. Nothing is placed on record to show that the respondent bank was informed by the accused company about the resignations of the authorised signatories to cheques issued to it, before the same were presented for encashment - if the plea of petitioners is accepted that since they were not a part of the accused company at the time when cheques signed by them were dishonoured, it would in fact, amount to snatching away the right of respondent bank to examine the signatories of the cheques before the learned Trial Court. In such a situation, it would be prudent and appropriate to permit the respondent bank to lead evidence in support of its claim, and dropping the proceedings against both the signatories of the cheques, at the very initial stage, would amount to throttling the trial. Petition dismissed.

Summary

Issues Involved:
1. Quashing of Criminal Complaint No. 4162/2020.
2. Quashing of Summoning Order dated 24.12.2020.
3. Liability under Section 138 of the Negotiable Instruments Act, 1881.
4. Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881.
5. Validity of undated cheques and declarations.
6. Resignation of petitioners and its impact on liability.

Detailed Analysis:

1. Quashing of Criminal Complaint No. 4162/2020:
The petitioners sought the quashing of the complaint filed under Sections 138/141/142 of the Negotiable Instruments Act, 1881, arguing that they had resigned from their positions before the cheques were dishonored. The court noted that specific allegations were made against the petitioners in the complaint, highlighting their roles and responsibilities. The court emphasized that these contentions are triable issues and should be addressed during the trial.

2. Quashing of Summoning Order dated 24.12.2020:
The petitioners also sought to quash the summoning order issued by the learned Metropolitan Magistrate. The court observed that the trial court had applied its mind and considered all the material before summoning the accused persons. Therefore, the summoning order was upheld, and the petitioners were required to answer the charges under Section 138 of the NI Act.

3. Liability under Section 138 of the Negotiable Instruments Act, 1881:
The court referred to Section 138, which deals with the dishonor of cheques for insufficiency of funds. The court noted that the petitioners had signed the cheques as authorized signatories of the accused company. The presumption under Section 139 of the NI Act, 1881, which favors the holder of the cheque, was applicable. The court cited precedents, including Kalamani Tex & Anr. v. P. Balasubramanian and Rajeshbhai Muljibhai Patel v. State Of Gujarat, to support its findings.

4. Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881:
The court examined the provisions of Section 141, which deals with offenses by companies. It highlighted that the signatory of a cheque is responsible for the act and will be covered under sub-section (2) of Section 141. The court referred to judgments such as S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and K.K. Ahuja v. V.K. Vohra to elucidate the principles of vicarious liability. The court concluded that the specific averments against the petitioners in the complaint were sufficient to proceed with the trial.

5. Validity of undated cheques and declarations:
The petitioners contended that the cheques were undated when issued and that the details were filled by the respondent bank in 2020. The court referred to the declaration submitted by the petitioners, which authorized the bank to present the cheques towards payment of outstanding debt obligations. The court cited Bir Singh v. Mukesh Kumar and Oriental Bank of Commerce v. Prabodh Kumar Tiwari, emphasizing that even a blank cheque signed voluntarily attracts the presumption under Section 139 of the NI Act.

6. Resignation of petitioners and its impact on liability:
The petitioners argued that they had resigned from their positions before the cheques were dishonored and could not be held liable. The court noted that the petitioners were authorized signatories when the credit facility was obtained and that their resignations were not communicated to the respondent bank before the cheques were presented for encashment. The court held that whether the petitioners had resigned before the presentation of cheques is a disputed fact to be decided during the trial. The court emphasized that accepting the petitioners' plea at this stage would deprive the respondent bank of its right to examine the signatories of the cheques.

Conclusion:
The court dismissed the petitions, allowing the trial to proceed. It clarified that the observations made were solely for deciding the petitions and would not affect the merits of the case during the trial.