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2023 (9) TMI 442 - HC - Indian LawsDishonour of Cheque - insufficient funds - notice not served upon to the applicants / Directors of the company - HELD THAT - It appears that complainant issued demand notice and the same was served to the accused no.1 Company on 29/11/2018. However, in spite of the notices issued to accused No. 2 to 5 addressed on same postal address of accused No. 1 Company, returned unserved to the accused No. 2 to accused no.5 by the postal department with an endorsement Not Delivered Unclaimed on 29/11/2018, hence the legal demand notice to accused No. 2 to 5 may be considered as deemed service under Section 22 of General Clauses Act. All the accused failed to clear their cheque value and neglected to make the payments to the Complainant. It appears from the record that the cheque has been dishonoured with remarks of Funds Insufficient and the accused have not complied with the legal demand notice. At this stage, in a recent decision of the Hon ble Supreme Court in case of Neeharika Infrastructure Pvt. Ltd. Vs. State of Maharashtra and Ors., 2021 (4) TMI 1244 - SUPREME COURT , is required to be referred to. After taking into consideration the earlier decision on exercising the powers under Section 482 of the Code of Criminal Procedure including the decision of State of Haryana V. Bhanaj Lal, 1990 (11) TMI 386 - SUPREME COURT - In view of the finding given by the Apex Court in case of Neeharika Infrastructure Pvt. Ltd., it transpires that the power of quashing of criminal proceedings should be exercised very sparingly and with circumspection and that too in rarest of the rare cases and it was not justified for the Court in embarking upon an inquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the inherent powers do not confer any arbitrary jurisdiction on the Court to act according to its whims and fancies. It appears from the order of issuance of summons passed by learned trial court on 04.09.2019 that under the court inquiry under Section 202 of the Code of Criminal Procedure, the complainant has been heard wherein he has stated that when the offence was committed by the accused no.2 to 5, at that time time they were responsible Directors and involved in the day to day affairs of the company, therefore, offence is made out against them and requested to issue process against them under Section 141 of the NI Act and while considering the complaint as well as documentary evidences produced during the inquiry under Section 202 of the Code, the learned trial court has passed order of issuing process against the accused no.1 to 5. Thus, no case is made out to quash the criminal proceedings at this stage while exercising the powers under Section 482 of the Code of Criminal Procedure. No interference is required in the order passed by learned trial court vide order dated 04.09.2019 regarding issuance of process against the accused no.1 to 5 and accordingly, present application stands rejected.
Issues:
The judgment involves the quashing of a complaint under Section 138 of the NI Act, the issuance of process, and subsequent proceedings. Issue 1: Quashing of Complaint and Process The applicants sought to quash a complaint filed by the respondent under Section 138 of the NI Act, along with the issuance of process and subsequent proceedings. The applicants argued that they were falsely implicated in the complaint, emphasizing that the disputed cheque was issued by a different entity, "VKS Projects," not by the present petitioners, "VKS Projects Limited." They contended that the present petitioners were under liquidation, and none of the directors were associated with "VKS Projects." The court noted the complaint culminated in Criminal Case No. 4321 of 2018 pending before the court. After considering the submissions, the court found that no grounds existed to quash the criminal proceedings at that stage under Section 482 of the Code of Criminal Procedure. Issue 2: Background of the Case The petitioner company, formerly known as "VKS Projects Limited," was under liquidation, as per an order passed by the Bombay High Court. The complainant had engaged "VKS Project" for services related to the Anaven Project and made an ad-hoc payment via a cheque issued by "VKS Project." This cheque was dishonored due to insufficient funds, leading to the initiation of legal proceedings under Section 138 of the NI Act. Despite the legal demand notice, the accused failed to clear the dues, resulting in the complaint and subsequent court proceedings. Issue 3: Legal Analysis and Precedents The court referred to a recent Supreme Court decision emphasizing that the power to quash criminal proceedings should be exercised sparingly and in rare cases. The court highlighted the circumstances under which a complaint can be quashed, including when the allegations do not constitute an offense or when there is a legal bar to the proceedings. The court underscored that the allegations in the FIR must be considered as they stand, and interference should be minimal. Based on this legal analysis and the facts of the case, the court concluded that there was no justification to quash the criminal proceedings at that stage. Separate Judgment: No separate judgment was delivered by the judges in this case.
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