2024 (2) TMI 365 - HC - Indian Laws

Dishonour of Cheque - post dated cheque - Vicarious Liability - Offences by companies u/s 141 of NI Act - failure to appreciate that the petitioners had resigned from the accused Company - cheque handed over to the respondent no. 2 and returned unpaid much later and after the resignation of the petitioners - HELD THAT - While Sub-section (1) of Section 141 makes every person who, at the time the offence was committed, was in charge of and responsible for the day-to-day affairs and conduct of the business of the company, to be deemed to be guilty of the offence , unless he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such an offence, Sub-section (2) of Section 141 makes any director, manager, secretary, or other officer of the Company, with whose consent or connivance of or due to whose neglect the offence has been committed by the company to be deemed to be liable to be proceeded against and punished under Section 138 of the NI Act. In the present case, it is the case of the respondent no. 2 that even the cheque, on the basis of which the complaints have been made, were given by the company and taken by the respondent no. 2 on the assurance of the petitioners herein that the said cheques would be duly honoured at the time of their presentation. These cheques are stated to be given post the date of the alleged resignation of the petitioners. It is also important to note that there were other Directors arrayed as accused in the complaint(s), however, against them such averment is not specifically made. The averments made in the paragraphs 5 and 7 are specifically made against the petitioners herein. In any case, whether this averment of the respondent no. 2 is correct or not, has to be tested during the trial. There are no merit in the challenge made by the petitioners in the present petitions - petition dismissed.

Summary

Issues Involved:
1. Validity of the summoning orders.
2. Liability of petitioners under Section 138 of the NI Act post-resignation.
3. Scope of High Court's powers under Section 482 Cr.P.C.
4. Applicability of Section 141 of the NI Act.

Summary:

Issue 1: Validity of the Summoning Orders
The petitions challenge the summoning orders dated 07.03.2019 and 23.08.2019 issued by the Trial Court in various complaint cases. The petitioners argue that the Trial Court failed to appreciate their resignation from the accused company, M/s AM Vinyl Pvt. Ltd., before the cheques were dishonored.

Issue 2: Liability of Petitioners Under Section 138 of the NI Act Post-Resignation
The petitioners contend that the offence under Section 138 of the NI Act was committed after their resignation from the company. They rely on various judgments to support their claim that they cannot be held liable for the dishonored cheques issued post-resignation. The respondent, however, argues that specific allegations were made against the petitioners, asserting their involvement and assurances in the transactions leading to the issuance of the cheques.

Issue 3: Scope of High Court's Powers Under Section 482 Cr.P.C.
The Court emphasizes that at the stage of issuing process, the Trial Court is only required to be prima facie satisfied that there are sufficient grounds for proceeding against the accused. The High Court's power under Section 482 Cr.P.C. is limited and can only be exercised when the material produced irrefutably rules out the charge, warranting the quashing of criminal proceedings.

Issue 4: Applicability of Section 141 of the NI Act
Section 141 of the NI Act holds every person in charge of and responsible for the conduct of the business of the company at the time the offence was committed, vicariously liable. The complainant must make specific averments in the complaint to this effect. The Supreme Court's decision in S.P. Mani & Mohan Diary underscores that the burden is on the accused to prove they were not responsible for the conduct of the business at the relevant time.

Analysis & Findings:
The Court notes that the complaints contain specific allegations against the petitioners, asserting their involvement in the company's affairs and their assurances regarding the cheques. These averments must be tested during the trial, and this stage is not appropriate for a detailed analysis of the merits.

Conclusion:
The Court finds no merit in the petitions and dismisses them, along with the pending applications. It clarifies that the observations made in the judgment do not affect the merits of the complaint cases, which the Trial Court must adjudicate independently. No orders as to costs are made.