The Jharkhand High Court while quashing proceedings against the Director of a company accused under the Negotiable Instruments Act reiterated that when the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company.
Brief Facts:
The present petition was filed for quashing the entire criminal proceeding including the order taking cognizance dated 12.04.2013 arising out of the Complaint Case registered under Section 138 of the Negotiable Instruments Act for the dishonour of cheque.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioners submitted that the allegations are made of dishonour of cheque against the company, namely, M/s Sonpura Estate Private Limited and these two petitioners were not drawers of the cheque in question. The case is arising under Section 138 of the Negotiable Instruments Act. She further submitted that there is no averment in the entire complaint case about the role played by these two petitioners and in view of that, Section 141 of the Negotiable Instruments Act is attracted. She further submitted that the case of the petitioners is fully covered in view of the judgment passed by the Hon'ble Supreme Court in the case of Sunita Palita and others v. Panchami Stone Quarry.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent submitted that the company is the party and these two petitioners, who are also Directors of the said company including the person who has signed the cheque in question are also party in the complaint case.
Observations of the Court:
The court noted that the case is arising under Section 138 of the Negotiable Instruments Act and for the dishonour of the cheque in question, the complaint case has been filed and in the complaint case, there is no averment about the role played by these two petitioners and further, the allegations are made that these two petitioners are Directors of the said company and admittedly, the person, who has signed the cheque in question, is not the petitioner in the present case.
The court agreed that that the judgement relied on the petitioner in the case of Sunita Palita fits in the present case, wherein it was held that when the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company. This is because the prefix “Managing” to the word “Director” makes it clear that the Director was in charge of and responsible to the company, for the conduct of the business of the company. A Director or an officer of the company who signed the cheque renders himself liable in case of dishonour. Other officers of a company can be made liable only under sub-section (2) of Section 141 of the NI Act by averring in the complaint, their position and duties in the company, and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence
The decision of the Court:
The court allowed the petition and quashed the entire criminal proceedings.
Case Title: Nitin Raj and Anr. vs State of Jharkhand and Anr.
Coram: Hon’ble Mr. Justice Sanjay Kumar Dwivedi
Case No.: Cr.M.P. No. 2488 of 2013
Advocate for the Applicant: Ms. Sonal Sodhani
Advocate for the Respondent: Mr. P.D. Agarwal and Mr. P.A.S. Pati
Read Judgment @LatestLaws.com
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