TMI Blog2021 (2) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of law laid down in case of N. Rangachari [ 2007 (4) TMI 621 - Supreme Court ] it is equally clear that if from reading the complaint as a whole, it appears that the allegations in the complaint are that at the time at which the dishonoured cheque was issued by the company, the persons were the Directors of the company and were in-charge of the affairs of the company, it is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons in-charge of the affairs of the company. In such facts and circumstances on the other elements of an offence under Section 138 of Negotiable Instrument Act being satisfied, the burden is on the Board of Directors or the Officers in-charge of the affairs of the company to show that they are not liable to be convicted. Thus, it is not the mere terminology but the substance of complaint, which matters for consideration whether the Directors were in charge and responsible for conduct of business of the company or not. In the instant case it may be observed that there are allegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not approached it with clean hands. The inherent power should not be exercised to stifle a legitimate prosecution. In the instant case considering material on record and from the aforesaid discussion, it cannot be said that a prima facie case is not made out. This Court is of the considered view that matter required adjudication by trial court and that no case for quashing of the impugned proceedings or the impugned summoning order is made out - The instant application under Section 482 Cr.P.C lacks merit and is accordingly dismissed. - Application U/S 482 No. - 12189 of 2017 - - - Dated:- 4-2-2021 - Hon'ble Raj Beer Singh, J. For the Applicant : Deepak Kumar Jaiswal,Satya Prakas For the Opposite Party : G.A.,Akhilesh Kumar,V.K. Baranwal ORDER Hon'ble Raj Beer Singh, J. 1. This application under Section 482 Cr.P.C. has been preferred for quashing of entire proceedings of Complaint Case No. 52 of 2017, Sanjay Goel Vs. Radikal Foods Ltd. and others, pending in the Court of Judicial Magistrate, Khair, Aligarh, under Section 138 of Negotiable Instruments Act, 1881, P.S. Khair as well to quash the summoning order dated 23.03.2017 passed in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licants, the impugned complaint is not maintainable against the Directors of company and no criminal liability can be fastened upon them. There were vague allegations against applicants and thus, in the absence of any specific averment, the impugned summoning order is not sustainable. Learned counsel submitted that it is well settled that liability for offence under Section 138 read with Section 141 of Negotiable Instrument Act will not arise by merely stating that accused persons hold some designation in the accused company. The complainant has to make specific averments in the complaint as to how and in what manner the persons, sought to be summoned as accused, were responsible for conduct of business. Learned counsel submitted that mere fact that accused was director or holding some office in the company would not make such persons vicariously liable to face the prosecution under Section 138 of Negotiable Instrument Act. The vicarious liability on the part of such persons has to be pleaded and proved. Further the complainant has not produced the Form-32, issued by Registrar of companies under the Company Act to show any liability of applicant nos. 2 and 3 as directors and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gations made in impugned complaint and material on record, a prima facie case is made out against applicants and that there is no illegality or perversity in the impugned order. In support of his contentions, learned counsel has relied upon in cases of (i) Laxmi Dyechem Vs. State of Gujarat and ors., 2012 LawSuit(SC) 782 (ii) Rohit Chunubhai Mehta Vs. Gujarat State Fertilizer Company Limited, 2004 LawSuit(Guj)14 (iii) N. Rangachari Vs. Bharat Sanchar Nigam Limited, 2007 LawSuit(SC) 470. 6. I have considered the rival arguments and perused the record. 7. The case of respondent no.2/complainant is that he has supplied the paddy to the applicant's company and that the applicant No. 2 and 3 were its Directors and in consideration of said supply of paddy, applicant No. 2 and 3 have issued the cheque in question, which was dishonoured as the applicants have closed the account. One of the main argument from the side of applicants is that there are no specific averments in the complaint that applicants were responsible for conduct of business of the company. In this connection it may be mentioned that it is well settled position of law that to fix the liability of a Director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and unearth material against the Director concerned. 15. In this case, save and except for the statement that the Respondents, Mr. Rajiv Jain and Sarla Jainand some of the other accused, were Directors of the accused Companies and were responsible and liable for the acts of the said Companies, no specific allegation has been made against any of them. The question of proving a fact which had not been mentioned in the complaint did not, therefore, arise in the facts of this case. This has prompted the High Court to observe that the Bank had relied on the mistaken presumption that as Directors, Rajiv Jain, Sarla Jain and the other Directors were vicariously liable for the acts of the Company. Admittedly, except for the aforesaid statement, no other material has been disclosed in the complaint to make out a case against the respondents that they had been in charge of the affairs of the Company and were responsible for its action. The High Court, therefore, rightly held that in the absence of any specific charge against the Respondents, the complaint was liable to be quashed and the respondents were liable to be discharged. 8. In case of Rohit Chunubhai Mehta (supra), relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction had been issued to the bank for other valid causes including the reason that there was no existing debt or liability in view of bonafide dispute between the drawer and drawee of the cheque. If that be so, then offence under Section 138 although would be made out, the same will attract Section 139 leaving the burden of proof of rebuttal by the drawer of the cheque. Thus, in cases arising out of stop payment situation, Sections 138 and 139 will have to be given a harmonious construction as in that event Section 139 would be rendered nugatory. 11. The instant matter however do not relate to a case of stop payment instruction to the bank as the cheque in question had been returned due to mismatching of the signatures but more than that the petitioner having neither raised nor proved to the contrary as envisaged under Section 139 of the NI Act that the cheques were not for the discharge of a lawful debt nor making the payment within fifteen days of the notice assigning any reason as to why the cheques had at all been issued if the amount had not been settled, obviously the plea of rebuttal envisaged under Section 139 does not come to his rescue so as to hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial such a restriction or to show that at the relevant time they were not incharge of the affairs of the company. Reading the complaint as a whole, we are satisfied that it is a case where the contentions sought to be raised by the appellant can only be dealt with after the conclusion of the trial. 20. We therefore affirm the decision of the High Court and dismiss this appeal. We make it clear that the case will have to be tried and disposed of in accordance with law on the basis of the evidence that may be adduced. 11. In the case of National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330, after reviewing several earlier judgments, Hon'ble Apex Court summarized the legal position as follows: 39. From the above discussion, the following principles emerge: (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaint as a whole, it appears that the allegations in the complaint are that at the time at which the dishonoured cheque was issued by the company, the persons were the Directors of the company and were in-charge of the affairs of the company, it is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons in-charge of the affairs of the company. In such facts and circumstances on the other elements of an offence under Section 138 of Negotiable Instrument Act being satisfied, the burden is on the Board of Directors or the Officers in-charge of the affairs of the company to show that they are not liable to be convicted. Insistence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial such a restriction or to show that at the relevant time they were not in charge of the affairs of the company. So far the case of Harshendra Kumar D (supra), relied by learned counsel for applicants is concerned, in that case fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsible for conduct of business of company. There are specific allegations that applicant nos.2 and 3 are Directors of said company and that the paddy was supplied to the company on their assurance. Thus, the contention of learned counsel for applicants that in view of Section 141 of Negotiable Instrument Act, the applicants cannot be held liable for criminal proceedings, has no force. Similarly, the version of applicants that the said cheque was given to opposite party no.2 as a blank cheque for security by deceased Director C.P. Chaudhary but after death of said C.P. Chaudhary, the opposite party no.2 has committed forgery by entering the said amount, date and name in the cheque, is liable to be outrightly rejected. It is apparent from record that after the cheque was dishonoured, the opposite party no.2 has issued a demand notice calling for payment against the said cheque but no payment was made. Opposite party no.2 has filed impugned complaint within prescribed period and all the legal requirements were complied with and complainant was examined under Section 200 Cr.P.C. and thereafter applicants were summoned vide order dated 23.03.2017. 15. It is well-settled that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f High Court has to be exercised in exceptional cases and to prevent the abuse of process or otherwise to secure ends of justice. The jurisdiction under Section 482 Cr.P.C. is discretionary, therefore, the High Court may refuse to exercise the discretion if a party has not approached it with clean hands. The inherent power should not be exercised to stifle a legitimate prosecution. In the instant case considering material on record and from the aforesaid discussion, it cannot be said that a prima facie case is not made out. It could not be shown that the case falls within any of category enumerated by Hon ble Apex Court through various pronouncements for exercise of powers under Section 482 Cr.P.C. to quash a complaint. 17. Considering submissions of learned counsel for the parties, all attending facts of the matter as well as the above discussed position of law, this Court is of the considered view that matter required adjudication by trial court and that no case for quashing of the impugned proceedings or the impugned summoning order is made out. The instant application under Section 482 Cr.P.C lacks merit and is accordingly dismissed. 18. Interim order, if any, stands vaca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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