9911796707
TMI Blog2025 (2) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case is that the petitioner had handed over the cheque admittedly issued by DRTPL to the complainant. However, merely because the subject cheque was handed over by the petitioner, the same does not shift the onus from the drawer in terms of Section 138 of the NI Act.
From a plain reading of Section 138 of the NI Act, it materialises that liability is imputed on the person who draws the cheque on an account maintained by them. In the present case, even though the cheque was handed over by the petitioner who is the director of M/s. Kwality Limited, the same was not drawn by the M/s. Kwality Limited. The subject cheque was duly executed and issued by DRTPL. Considering that the petitioner is not the director of the accused company who is the drawer of the subject cheque, he cannot be made liable for the offence under Section 138 of the NI Act.
Conclusion - The petitioner, as the Managing Director of M/s. Kwality Limited, cannot be held liable under Section 138 of the NI Act for the dishonored cheque issued by DRTPL.
Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that the complainant could encash the same in discharge of the obligations of M/s. Kwality Limited towards the complainant. 6. It is alleged that thereafter the subject cheque was deposited for the purpose of encashment and the same was returned unpaid by the bank on 03.10.2018 with the remarks "funds insufficient." Subsequently, a legal notice dated 08.10.2018 was sent to the accused persons being - DRTPL, Makardhwaj Kumar (director of DRTPL), Gyanesh Chand (director of DRTPL), M/s. Kwality Limited, and the petitioner (Managing Director of M/s. Kwality Limited). It is alleged that since the accused persons failed to make the payment despite the receipt of statutory notice, the subject complaint was filed under Section 138 of NI Act. 7. By the impugned order, the learned MM issued summons to the petitioner for the offence under Section 138 of the NI Act. 8. The learned counsel for the petitioner submitted that the learned MM erred in issuing summons upon the petitioner. He submitted that the petitioner was neither the director of DRTPL nor a signatory to the impugned cheque. He submitted that the summons to the petitioner have been issued in a mechanical manner. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason "funds insufficient." It is consequently submitted that the petitioner was rightly summoned given his role in the fraudulent transaction. Analysis 14. At the outset, it is relevant to note that this Court can quash complaints under the NI Act at the pre-trial stage in the exercise of its inherent jurisdiction under Section 482 of the CrPC if such unimpeachable material is brought forth by the accused persons which indicates that they were not concerned with the issuance of the cheques or that no offence is made out from the admitted facts. The Hon'ble Apex Court in the case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) : 2022 SCC OnLine SC 513 had discussed the scope of interference by the High Court against the issuance of process under the NI Act as under: "8. The issue to be answered here is whether summons and trial notice should have been quashed on the basis of factual defences. The corollary therefrom is what should be the responsibility of the quashing Court and whether it must weigh the evidence presented by the parties, at a pre-trial stage. xxxx xxxx xxxx 16. The proposition of law as set out above makes it abundantly clear that the Court sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. Provided further that where a person is nominated as a Director 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, manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company may be liable if he satisfies the main requirement of being in charge of and responsible for the conduct of business of a company at the relevant time. Liability depends on the role one plays in the affairs of a company and not on designation or status. If being a Director or manager or secretary was enough to cast criminal liability, the section would have said so. Instead of "every person" the section would have said 'every Director, manager or secretary in a company is liable'..., etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action." (emphasis supplied) 19. It must be borne in mind that Section 141 of the NI Act is a penal provision that aims to create vicarious liability on the accused. For this reason, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to 68[two] years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-- (a) the cheque has been presented to the bank within a period of six months* from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
