Complaint u/s 138 of N.I.Act against Proprietor -- Proprietorship Firm not made party – Complaint reveals that the sole proprietary concern has not been arrayed as an accused, but only its sole proprietor has been arrayed as an accused – Petition allowed complaint u/s of the N.I. Act as well as, the summoning order both are quashed and set aside.

(P&H HC) Reserved on: 09.08.2022 Pronounced on: 26.08.2022

Security deposit cheque – High Court quashed the complaint -- Dispute between the parties regarding the quality of the material supplied – Respondent/ accused made a complaint in writing of the defective material and then stopped the payment – Respondent has already filed a Civil Suit for damages – Held, the issues between the parties can be effectively resolved through Civil Suit only – Petitioner shall be at liberty either to file counter claim or a separate suit in accordance with law – Observations made by the High Court in its impugned order shall have no bearing on the outcome of the Civil Suit.

(SC) Decided on: 22.07.2022

Joint liability/debt – Non-account holder with drawer – Non signatory to cheque – A person who might have been liable to pay the debt jointly, cannot be prosecuted unless the bank account is jointly maintained and that he was a signatory to the cheque -- Criminal complaint quashed and set aside.

(SC) Decided on: 08.03.2021

Company Cheque bounce case of Company -- Accused neither Director nor a signatory of cheque -- Incharge of the affairs of the -- (a) The complaint is based on a Memorandum of Understanding, which is not signed by the petitioner and is rather signed by accused No.3. The dishonoured cheques were given to the complainant at the time of signing of the Memorandum of Understanding. (b) The cheque numbers of the disputed cheques are duly mentioned in the body of the Memorandum of Understanding signed by accused No.3, which show that he was the person In-charge of the Company as he entered into a Memorandum of Understanding on behalf of accused No.1-Company and had issued the cheques in favour of the complainant. (c) Even the cheques are not signed by the petitioner and the same are signed by accused Nos.2 and 3. (d) In the complaints, the only allegation in para 3 is that accused No.4-petitioner is In-charge of the affairs of accused No.1-Company, however, there is no document to support this version and rather in the reply filed by the complainant in High Court, nowhere reflects that the petitioner is the In-charge of the affairs of accused No.1-Company, in any manner. (e) There is nothing on record to support the complaints that the petitioner is one Director of accused No.1-Company as it is the case of the petitioner that he never remained the Director of accused No.1-Company at any stage and this fact is not disputed in the reply. Summoning orders and all other subsequent proceedings arising therefrom, are ordered to be quashed qua the petitioner.

(P&H HC) Decided on: 05.03.2020

Cheque bounce case – Presumption of legal enforceability debt – Rebuttal of -- Once the issuance of cheque is admitted/established, the presumption would arise u/s 139 of the N.I. Act in favour of the holder of cheque -- Burden lies upon the accused to rebut the presumption by adducing evidence -- When disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint u/s 138 of the N.I. Act ought not to have been quashed by the High Court by taking recourse to Section 482 Cr.P.C.

(SC) Decided on: 10.02.2020

Power u/s 482 Cr.P.C. can be exercised in favour of the petitioner only when the Court is certain that the continuation of the proceedings would be of no use and the Court is in a position to record from finding that continuation of such proceedings would result in abuse of the process of the Court -- Once there is a doubt or there are certain questions which need adjudication on appreciation of evidence, the High Court should not exercise powers under Section 482 Cr.P.C. to quash the complaint.

(P&H HC) Decided on: 27.08.2019

Liability of Director – Law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company’s business at the time when the offence was committed – High Court, in deciding a quashing petition u/s 482, Cr.P.C., must consider whether the averment made in the complaint is sufficient or if some unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time -- High Court must exercise its power u/s 482, Cr.P.C. when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse of process of the Court.

(SC) Decided on: 28.02.2019

Maintainability of petition u/s 482 Cr.P.C. -- Revisional Jurisdiction -- Held, in exercise of revisional power, Court of Sessions or the High Court is not vested with the power of quashing a criminal complaint -- This power is available to the High Court alone under Section 482 Cr.P.C., whereunder the High Court, in exercise of its inherent powers, can pass orders to prevent abuse of process of any Court or to secure the ends of justice -- Thus, the prayer made in this petition could not have been granted by the revisional Court and, therefore, it cannot be said that the petitioner had an alternative remedy before the Court of Sessions in the first instance.

(P&H HC) Decided on: 30.10.2018

Offence by Company – Liability of Director of the Company – Averment made in the legal notice “You address No. 3 being Chairman/Director of addressee No. 1 are also being incharge and being responsible person of address No. 1 company for conduct to the business of the Company are also liable for the punishment prescribed under the Act ibid.” – Held, averments made in the legal notice u/s 138 of the Act cannot be construed to be averments made in the complaint -- Even the averments made in the legal notice, do not fulfill the requirement of law -- Summoning orders as well as Complaints alongwith consequential proceedings having arisen therefrom, are quashed qua the petitioner.

(P&H HC) Decided on: 30.10.2018

Vicarious liability – Contention that the cheque in question not issued and signed by petitioner – Fact of complaint are that he was director and authorized signatory and the firm issued cheque in question and upon presentation it was dishonoured with the remarks “Insufficient Funds” – Held, the petitioner has been summoned in view of Section 141 of Negotiable Instruments Act which imposes vicarious liability upon every person who at the time of offence was in charge of conducting the business of the company – No ground to quash the impugned complaint or to interfere with the well reasoned order of summoning.

(P&H HC) Decided on: 23.05.2017

Arbitration clause -- Contention that there is arbitration clause in the agreement, therefore, complaints are not maintainable – Held, this argument has no force -- When the cheques have been dishonoured and returned back unpaid by the Bank and legal notices have been sent, then non-payment of the amount within prescribed period gave cause of action to file the complaints under Section 138 of the Negotiable Instruments Act.

(P&H HC) Decided on: 09.05.2017

Loan agreement nowhere shows that cheques in question have been taken by the respondent as security cheques -- Whether the respondent has taken blank signed cheques as security or post-dated cheques for payment of loan installments in case of default as security is to be decided by the trial Court on the basis of the evidence produced before it -- Finding of fact cannot be given at this stage by High Court without any evidence – No ground is made out for quashing the complaints.

(P&H HC) Decided on: 09.05.2017

Post dated security cheque – Reference to the complaint shows that as per the case of the complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the dues under the loan agreement – While dealing with a quashing petition, the Court has ordinarily to proceed on the basis of averments in the complaint -- Defence of the accused cannot be considered at this stage -- Court considering the prayer for quashing does not adjudicate upon a disputed question of fact.

(SC) Decided on: 19.09.2016

Offence by Company – Petitioners have not placed on record the memorandum or articles of association to show who were the working Directors -- Directors are aware of the affairs of the company and it would be a matter of evidence which would be led at the trial – At this stage, the specific allegations in the complaint are enough – High Court is not inclined to go into that matter in the proceedings under Section 482 Cr.P.C.

(P&H HC) Decided on: 17.11.2015

Petitioners had approached the Court primarily on the ground that the directors had resigned from the company -- The fact is disputed by the other side -- Petitioners failed to place on record the certified copies of Form-32 -- High Court is not inclined to go into that matter in the proceedings under Section 482 Cr.P.C.

(P&H HC) Decided on: 17.11.2015

Offence by Company/Director – Vicarious liability of Director – (i) In order to make the company liable u/s 138 of the Act vicariously, the Director can be prosecuted if there is specific recital that the Directors thereof were at the time when offence the offence committed, were responsible for the conduct and day to day business of the complaint -- Director, who had resigned long back before the cheque was presented cannot be prosecuted -- One of the Director in the array of accused was never Director of the company since its incorporation and still he has been arrayed as accused in the capacity of Director -- The certification to this effect is computerized information, which is perse admissible under Section 65-B of the Evidence Act, rather this document has not been denied with reference to any evidence to the contrary. (ii) Averments even if made in the complaint that the Director was in-charge, the same can be negated if the High Court comes across some unimpeachable/acceptable circumstance, which may lead to the conclusion that the Director could never have been in-charge of and responsible for the conduct of business of the company at the relevant time and therefore, making such Director as an accused to stand trial would be an abuse of process of law. (iii) It is mandatory in terms of Section 138 and 141 of the Act to specifically aver in the complaint that Director was in-charge of and responsible for the conduct of the business of the company at the relevant time, when the offence was committed and he was responsible for day to day functioning of the company -- Role of the Director in a company is a question of fact depending upon the nomenclature of the company and other circumstances prevailing therein -- There cannot be any universal application of the rule that a Director of company is in-charge of its day to day affairs. (iv) Section 141 of the Act is a penal provision creating criminal liability -- As per nature of the offence it has to be strictly construed -- It is not sufficient to make bald cursory statement in a complaint that Director/Directors is/are in-charge of and are responsible for the conduct of the business of the company without specifying anything more as to the role of the Director/Directors -- It is requirement of law that the complainant must spell out as to how and in what manner the accused are in-charge of the affairs of the company in the conduct of its business and thus responsible for the same. (v) Some times a Director is not the active Director and he may be non executive Director, who was no doubt a custodian of governance of the company, but at the same time was not involved in day to day affairs running of its business -- For making such a Director liable there must have been specific averment in the complaint as to how and in what manner such a Director was responsible for conduct of business of the company -- In the absence of such plea the Court can definitely come to rescue of such Director against whom the proceedings are nothing but a pure abuse of process of law. (vi) “no criminal proceedings shall be initiated against the Director/accused unless specific allegations should comeforth in complaint, earmarking unambiguous role in the context of charge and responsibility in discharge of day to functioning of the company so as to prevent embarking on a fishing expedition to try and unearth material against the Director. Complaint is liable to quashed being abuse of process of law and is deficient in formulising vicarious liability of the petitioners in terms of Section 141 of the Act.

(P&H HC) Decided on: 01.04.2015

Cheque bounce case -- Cheque amount and compensation awarded by Trial Court paid – 15% amount deposited in Legal Services Authority – Resultantly, impugned judgments and order of sentence are set aside and criminal complaint filed by the complainant is quashed.

(P&H HC) Decided on: 30.03.2015

Liability of Director – One of the petitioner /accused / Director of company had resigned from the Company on 16.02.2013 and the Board of Directors have accepted her resignation on 18.02.2013 and the other had tendered his resignation on 21.02.2013 i.e before the cheque was issued -- Registrar of Companies was informed about resignation on 16.09.2013 and June, 2013 respectively -- This gap would not make the petitioners liable for dishonor of the cheques, which was presented on 27.05.2013 and was dishonored – Petitioners were not involved in day to day affairs of the company and no liability can be thus fastened upon them – Complaint and summoning order are quashed.

(P&H HC) Decided on: 13.11.2014

Cheque bounce case -- High Court may quash the complaint despite the basic averment – It may come across some unimpeachable evidence or acceptable circumstances which may in its opinion lead to a conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time and therefore making him stand the trial would be abuse of the process of court as no offence is made out against him.

(SC) Decided on: 17.10.2014

Cheque bounce case -- Offence against Director of Company – Issuance of process against Company/Directors -- Supreme Court summarized the law as follows: a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director. c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, uncontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; d) No restriction can be placed on the High Court’s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.

(SC) Decided on: 17.10.2014

Cheque bounce case -- Offence against Director of Company -- When in view of the basic averment process is issued the complaint must proceed against the Directors -- But, if any Director wants the process to be quashed on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling uncontrovertible material or acceptable circumstances to substantiate his contention -- He must make out a case that making him stand the trial would be abuse of the process of court -- He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial -- Quashing of a complaint is a serious matter -- Complaint cannot be quashed for the asking -- For quashing of a complaint it must be shown that no offence is made out at all against the Director.

(SC) Decided on: 17.10.2014

Cheque bounce case -- Delay in filing complaint – Condonation of delay -- Two communications, one a handwritten note and the other a formal legal notice issued by the advocate, were served on the accused calling upon him to pay the Cheque amounts – Before the Trial Court, the accused did not raise the issue of ‘limitation’ -- Issue was raised for the first time before the High Court in Section 482, Cr.P.C. proceedings -- High Court, considering the handwritten note sent by the appellant as ‘notice’ u/s 138 of the Act, came to the conclusion that the complaint is barred by limitation – Held, High Court was not right in quashing the complaint merely on the ground that complaint is barred by limitation -- High Court ought to have remanded the matter to the Trial Court for deciding the issue of limitation – Matter remanded back to Trial Court – Liberty given to Complainant file application for condonation of delay.

(SC) Decided on: 11.08.2014