Bhagwati Prasad Bajaj S/O Late ... vs Brahm Prakash Sharma Sole ...
2007 Latest Caselaw 1689 Del

JUDGMENT

V.B. Gupta, J.

1. By way of present petition, filed under Section 482 CrPC, the petitioner is seeking quashing of complaint case, pending in the court of Magistrate, filed under Section 138 of the Negotiable Instruments Act.

2. Respondent/complainant filed a complaint under Section 138 of the Negotiable Instruments Act against seven accused persons and the present petitioner is one of the accused in that complaint. It has been alleged in the complaint that accused no. 2 to 7 have been Directors of accused no. 1 and they have been in-charge and were responsible to the accused no. 1 company for the conduct of the business of the company. Towards the part payment of the dues of the respondent/complainant, the accused had issued cheque and when the respondent/complainant presented the cheque for encashment, the same was returned unpaid with the remarks "exceeds arrangement". Thereafter the legal notice was served by the respondent/complainant.

3. In the present petition, it has been alleged by the petitioner that this petitioner was sleeping Director at the time of the establishment of the company. He was never involved in the business activity and he tendered his resignation from the office of the Board of Directors of the company with effect from 7th September, 2004 and the Chairman of the Company accepted his resignation and the same was filed before the Registrar of the Companies and accordingly the petitioner's name was removed from the post of Director from the official record. All the cheques were issued in the year 2005 and at that time the petitioner was not concerned with the office of the company nor he was authorised signatory and was also not involved in the company affairs. Under these circumstances, the present complaint is liable to be quashed.

4. On the other hand, it has been contended by learned Counsel for the respondent that form no. 32, on the own showing of the petitioner, was submitted in the office of Registrar of Companies on 9th March, 2005 and the date of resignation in the form no. 32 has been mentioned as 16th February, 2005. In view of these facts, the petitioner cannot say that he was not a Director on the date of issue of the cheque and as per averments made in the complaint, the petitioner was in-charge of and responsible for the conduct of the business of the company. The learned Counsel for the respondent in support of his contention has cited a recent decision of the Supreme Court reported as N. Rangachari v. Bharat Sanchar Nigam Limited AIR 2007 SC 1682 contending that the question whether the Director is in-charge of affairs of the company or not at the given time can only be adjudged during the course of trial.

5. Admittedly, the present petitioner was the Director of the company which has issued the cheque though according to the petitioner he was a sleeping Director. The cheque in question is dated 15th February, 2005 whereas as per form no. 32 of the Registrar of Companies placed on record by the petitioner himself, the date of resignation mentioned in this form is 16th February, 2005. So, prima facie, admittedly on the date of the issue of the cheque, the petitioner was the Director of the company.

6. Now the question to be seen in the present case is as to whether the present petitioner was in-charge of the affairs of the company or not.

7. In the complaint it has been alleged by the respondent/complainant that the present petitioner has been the Director being the in-charge of and responsible for the affairs of the company. In the case of N.Rangachari(supra), cited by the learned Counsel for the respondent, a cheque issued by the company was dishonoured and a complaint under Section 138 of the Negotiable Instruments Act was filed in which allegations were made against the appellant and another who were the Directors and the question was whether they were in-charge of affairs of the company at the relevant time or not. It was held by the Apex Court that it can be adjudged only during the course of trial and the complaint cannot be quashed under Section 482 CrPC. Dealing with the provisions of Section 138 and 141 of the Negotiable Instruments Act. The Apex Court held that-

A person normally having business or commercial dealings with a company, would satisfy himself about its creditworthiness and reliability by looking at the promoters and Board of Directors and the nature and extent of its business and its Memorandum or Articles of Association. Other than that, he may not be aware of the arrangements within the company in regard to its management, daily routine, etc. Therefore, when a cheque issued to him by the company is dishonoured, he is expected only to be aware generally of who are in charge of the affairs of the company. It is not reasonable to expect him to know whether the person who signed the cheque was instructed to do so or whether he has been deprived of his authority to do so when he actually signed the cheque. Those are matters peculiarly within the knowledge of the company and those in charge of it. So, all that a payee of a cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in charge of its affairs. The Directors are prima facie in that position.

In the instant case, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another 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. Obviously, the complaint refers to the point of time when the two cheques were issued,their presentment, dishonour and failure to pay in spite of notice of dishonour. Thus, it cannot be said that the allegations in the complaint against the appellant did not contain sufficient averments to justify the issue of process to the appellant and therefore, the complaint ought to be quashed under Section 482 CrPC. In fact, an advertence to quashed under Sections 138 and 141 of the Negotiable Instruments Act shows that on the other elements of an offence under quashed under Section 138 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. Any restriction on their power or existence 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. Reading the complaint as a whole, 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.

8. In the case in hand also there are allegations made against the present petitioner that he was in-charge and responsible for the affairs of the company and so it is a matter of evidence and admittedly when the cheque was issued, on that date the petitioner was a Director of the company. So, under these circumstances, no ground is made out for quashing of the petition and the present petition is wholly misconceived and has been filed just to delay the proceedings pending before the trial court and as such it is dismissed with costs of Rs.10,000/-.

9. The petitioner is directed to deposit the costs with the trial court within one month from the date of this order, failing which the trial court shall recover the same in accordance with law. Copy of this judgment be sent to the trial court.