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TMI Blog2025 (1) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... cases. The Court can exercise its inherent powers under Section 482 of the Code to quash complaints and criminal proceedings emanating therefrom, if it does not constitute a prima facie offence against the accused and the same was elaborately dealt with by the Hon ble Supreme Court in the case of INDIAN OIL CORPORATION VERSUS NEPC INDIA LTD ORS [ 2006 (7) TMI 575 - SUPREME COURT ]. Considering the peculiar factual situation, the demand notice dated 1st September, 2020 issued under Section 138 of the NI Act is within the prescribed time and despite the service of the same on the petitioners, no amount was paid by the petitioners. Therefore, an offence under Section 138 of the NI Act has been made out against the petitioners - Now coming to Section 141 of the NI Act, it is observed that when a company commits an offence under Section 138 of the NI Act, any person who is in charge of or responsible for the conduct of the affairs of the company shall be held guilty of the offence. However, if it is proved that the said offence is committed without the knowledge, the said person cannot be made liable. Therefore, the burden of proving the same lies on such person claiming such defence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship firm namely, M/s PJH Enterprises, petitioner no. 1, petitioner no. 2 and one Mr. Harkaran Singh are the accused in the aforesaid complaint. b. The respondent/complainant is the owner of the property bearing no. 6, Sant Nagar, East of Kailash, New Delhi, which consists of a basement, first, second and third floors. In November, 2018, the complainant was approached by the accused persons seeking the lease of the Ground Floor of property bearing no. 6, Sant Nagar, East of Kailash, New Delhi admeasuring 2050 square feet (hereinafter as the subject property ) for a period of 5 years for commercial purposes. c. Accordingly, the Lease Deed with respect to the subject property was executed on 18th December, 2018, wherein it was agreed that the accused will have to pay a sum of Rs. 2,16,000/- (inclusive of GST) as monthly rent. d. Thereafter, M/s PJH Enterprises was registered as a partnership firm with the petitioner no. 1 and 2 as partners and Mr. Harkaran Singh as the Authorised Representative/Signatory of the firm. e. As per the Lease Deed, the parties therein agreed to have an 18-month lock-in period and the date of paying the rent commenced from 14th January, 2019. The possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he daily affairs of the accused-firm. 6. It is submitted that it is a settled position of law that the Directors/partners who are in charge and responsible for the conduct of company s/firm s affairs at the relevant time of commission of offence shall be held liable under Sections 138/141 of the NI Act. However, the petitioners were not involved in issuing the said cheques to the complainant and in maintaining the affairs of the company. Therefore, no offence under Section 138 and 141 of the NI Act is made out against the petitioners. 7. It is submitted that the complainant did not satisfy the criteria laid down under Section 138 of the NI Act as a single demand notice was sent for the dishonour of 9 cheques, which were presented on different dates, thereby, arising different cause of actions. 8. In view of the foregoing submissions, it is prayed that the instant petition may be allowed. 9. Per contra, learned counsel for the respondent vehemently opposed the instant petition and submitted that the instant complaint cannot be quashed by exercising the powers under Section 482 of the Code as prima facie material is available against the petitioners for being liable under Sections 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established principles of law. Moreover, under this provision, the Court must exercise its powers sparingly, cautiously and in exigent cases. 19. However, the Court can exercise its inherent powers under Section 482 of the Code to quash complaints and criminal proceedings emanating therefrom, if it does not constitute a prima facie offence against the accused and the same was elaborately dealt with by the Hon ble Supreme Court in the case of Indian Oil Corporation v. NEPC India Limited and Others, (2006) 6 SCC 736. 20. Now adverting to the instant case. 21. It is the case of the petitioners that the offence under Sections 138 and 141 of the NI Act are not made out as they were unaware of the issuance of cheques in favour of the complainant and had no knowledge about the said transaction. 22. Therefore, this Court will examine whether the instant case satisfies the ingredients of Section 138 and 141 of the NI Act, wherein, the former deals with the dishonour of cheque and the latter deals with the company s/firm s liability in dishonour of cheque. For the purpose of convenience, the said provisions are reproduced hereinunder: 138. Dishonour of cheque for insufficiency, etc., of fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation . For the purposes of this section, (a) company means any body corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 23. Upon perusal of Section 138 of the NI Act, it is observed that the said provision deals with the offence of dishonour of cheque and lays down certain criteria to be satisfied in order to make out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ICICI Bank, Punjabi Bagh, New Delhi, which were signed by Mr. Harkaran Singh in his name. However, cheques (c) and (f) were drawn on YES Bank, East of Kailash, which were signed by Mr. Harkaran Singh on behalf of the accused-firm as an Authorised Signatory. 26. At this juncture, it pertinent to mention the contention of the petitioners that the offence under Section 138 of the NI Act is not made out as a single demand notice was sent for the dishonour of all the cheques collectively, which were presented on different dates, thereby, giving rise to different cause of actions. 27. This Court has perused the Possession Letter dated 27th February, 2020, which is part of the Lower Court Record. It is observed that the aforementioned cheques, (a) to (i), are part of the same transaction, i.e., the possession of the subject property. It is a settled principle of law that the cheques arising out of the same transaction can be tried together as one subject matter, especially with respect to the offences under Section 138 of the NI Act. This was observed by the Hon ble Supreme Court in the case of In Re: Expeditious Trial of Cases Under Section 138 of N.I. Act 1881, AIR 2021 SC 1957. 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orately in a catena of judgments. 33. It is the contention of the petitioners that the petitioners had no knowledge of issuance of the said cheques to the complainant as they were not in charge and responsible for the affairs of the firm. Moreover, it was contended that no specific averments were made in the complaint, which is a prerequisite for invoking Section 141 of the NI Act. 34. The principle of making the officers of the company vicariously liable for the offences committed by the company and their extent of liability is discussed by the Hon ble Supreme Court in the case of Susela Padmavathy Amma v. Bharti Airtel Limited, 2024 SCC OnLine SC 311 . The relevant paragraphs of the same are as follows: 20. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was considering the question as to whether it was sufficient to make the person liable for being a director of a company under Section 141 of the Negotiable Instruments Act, 1881. This Court considered the definition of the word director as defined in Section 2 (13) of the Companies Act, 1956. This Court observed thus: 8 There is nothing which suggests that simply by being a director in a company, one is supposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action. A Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the NI Act. In National Small Industries Corpn. [ National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] this Court observed : (SCC p. 336, paras 13-14) 13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. 37. However, the Hon ble Supreme Court in the case of Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581 observed that it is not necessary for the wordings of Section 141 of the NI Act to be reproduced in order to make out an offence under the said provision, however, a clear statement indicating the involvement of the said person is sufficient for the Court to arrive at a prima facie opinion that the accused is vicariously liable. 38. At this stage, this Court has perused the contents of the impugned compla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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