9911796707
TMI Blog2004 (2) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... ades. In this petition, the petitioner has inter alia prayed that the proceedings arising out of Criminal Case No. 206/S of 1998 pending before the Metropolitan Magistrate, 40th Court at Girgaum, Mumbai, be quashed and set aside in so far as they relate to the petitioner herein. 3. The firm of Messrs Crawford Bayley Co. used to act as Solicitors and Advocates for the REPL Engineering Limited, a company incorporated under the Companies Act, 1956 ( the said Company for short). The petitioner has appointed as one of the Non-Executive Directors of the said Company. The petitioner was taken on the Board of Directors of the said Company as a qualified Advocate and Solicitor. It is the case of the petitioner that he has ceased to be a director of the said Company from 28/8/1997. 4. Respondent 2 is the original complainant in rise. Complaint No. 681/M of 1997, which is subsequently converted into Case No. 206/S of 1998. Respondent 2 filed a complaint through one Banwari Lal Poddar as her Constituted Attorney in the Metropolitan Magistrate with Court at Girgaum, Mumbai, under Section 138 of the Negotiable Instruments Act in which the said Company is arraigned as accused 1. The peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice is not sent to the petitioner as required under the proviso to Sub-section (b) of Section 133 of the Negotiable Instruments Act, the entire proceedings would get vitiated. In this connection, he relied upon the decision of the learned single judge of this court in Bipin J. Shah v. Smt. Niru B. Mehta and Anr., 2001 (2) M.L.J. 632 7. Mr. Chitnis then contended that the present petitioner was merely a Non-Executive Director of the said Company. Besides, he has resigned from the Board of Directors of the said Company on 28/8/1997 and the cheque in question was drawn on 1/10/1997 much after the petitioner resigned from the Board of Directors of the said Company. He submitted that the petitioner was not concerned with the management of the said Company. He was not in charge of the day-to-day affairs of the said Company. In this connection) he drew my attention to the notice dated 17/11/1997 addressed to the said Company and the Managing Director of the said Company. In this notice, in paragraph 1, it is categorically stated that the said cheque is signed by accused 2 as the director of the said Company and accused 2 is in sole management and charge of the day-to-day affairs of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayee or, as the case may be, to the holder in due course of the cheque, within 15 days of the receipt of the said notice, the liability under Section 138 will be attracted. It is clear from the complaint itself that no notice is given to the petitioner. There is no clear statement that notice was sent to the petitioner. It is only stated that the petitioner had knowledge of the said cheque and receipt of the notice. A copy of the notice annexed to the petition also makes it clear that it was not addressed to the petitioner. Besides the petitioner has not drawn the said cheque. It is not signed by him. This case, therefore, would be covered by the judgment of this court in Bipin Shah's case (supra.) Therefore, in my opinion, on this ground alone, the process issued against the petitioner deserves to be quashed. 9. I also find substance in Mr. Chitnis's contention that in the facts of this case, the petitioner being merely a Non-Executive Director of the said Company cannot be proceeded against under Section 138 of the Negotiable Instruments Act. It must in fact the shown that he was in charge of the affairs of the said Company. 10. In K.P.G. Nair's case (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t make him answerable. If a cheque issued by the company is dishonoured, Section 138 of the Negotiable Instruments Act would not be attracted if the person concerned is not shown to be either in charge of the affairs of the company or responsible for its day-to-day affairs. It was observed that in the absence of any indication as to how he can be said to be responsible for the day-to-day affairs of the company, it will not be possible to proceed for an offence under Section 138 of the Negotiable Instruments Act against him. In the facts of that case, the Court found that the averments made in the complaint against the petitioner therein were insufficient to attract the proviso to Section 138 of the Negotiable Instruments Act. The proceedings were therefore quashed. 12. Reference may also be made to Nucor Wires Ltd.'s case (supra) where the learned single judge of the Karnataka High Court has considered a similar question. The relevant portion of the judgment of the Karnataka High Court may be quoted. To launch a prosecution against the directors or partners of a company or firm, there must be specific allegation in the complaint as to the part played by them in the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation in the complaint of actual participation of the director in the affairs of the company, he is roped in, that would be disastrous. For the acts of some unscrupulous persons, the directors who are not even remotely concerned with the issuance of cheque, who are not concerned with the day-to-day functioning of the company cannot be held responsible unless the active participation of the director is substantiated in the complaint itself by concrete material or instances or particulars. Not only that there must be specific averments but there must be description and particulars of the role played by such non-executive directors. The court issuing process must take care and issue process after examining this aspect because issuance of process is not a light matter. For the reasons which I have noted above, I am of the considered opinion that issuance of process on the instant complaint indicates non-application of mind. 14. In view of the above, the proceedings of Criminal Case No. 206/S of 1998 pending before the learner Metropolitan Magistrate 40th Court at Girgaum, Mumbai, need to be quashed as against the petitioner. For the same reasons, the proceedings of Criminal Case No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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