Gujarat High Court
Anilkumar Ramniklal Patel vs K G S Tyres Distributors ... on 10 July, 2023
Bench: Sandeep N. Bhatt
R/CR.MA/9121/2019 JUDGMENT DATED: 10/07/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 9121 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9124 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9125 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9128 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9129 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9131 of 2019
With
R/CRIMINAL MISC.APPLICATION NO. 9137 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
ANILKUMAR RAMNIKLAL PATEL
Versus
K G S TYRES DISTRIBUTORS PROPRIETOR RAJESHKUMAR KANTILAL
SAMANI THROPOA LALITKUMAR KANTILALA SAMANI
==========================================================
Appearance:
MR YOGESHKUMAR A RATANPARA(7260) for the Applicant(s) No. 1,2,3
MR VIMAL A PUROHIT(5049) for the Respondent(s) No. 1
VISHAL S AWTANI(7913) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Page 1 of 28
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R/CR.MA/9121/2019 JUDGMENT DATED: 10/07/2023
Date : 10/07/2023
ORAL JUDGMENT
1. All these applications are filed under Section
482 of the Code of Criminal Procedure, 1973 (`the Code'
for short) for quashing and setting aside the complaints
being Criminal Case Nos.2613 of 2016, 2615 of 2016,
2622 of 2016, 2611 of 2016, 2614 of 2016, 2618 of 2016
and 2621 of 2016 respectively filed under the provisions
of the Negotiable Instruments Act (`NI Act' for short).
2. As the common question of facts and law are
involved in all these applications, at the request of
learned advocates for the parties, they are heard together
and disposed of by this common oral judgment.
3. Rule returnable forthwith. Learned advocate
Mr.Vimal Purohit waives service of notice of rule for
respondent no.1.
4. Heard learned advocates for the parties.
4.1 Learned advocate Mr.Ratanpara for the
applicants submitted that the impugned complaint is not
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maintainable against the applicants as no specific
averments, much less any averment as per the
requirement of Section 141 of the NI Act has been made
against the applicants. He further submitted that the
applicant nos. 1 and 2 resigned as director in the yer
2006 and the applicant no.3 resigned in the year 1996,
and the resolution is passed to that effect. Form No.32
also came to be filed with the Registrar of Companies,
while the cheques in question were issued on 3.3.2007
and deposited and dishonoured on 30.3.2007. He,
therefore, submitted that vicarious liability of the accused
company cannot be extended to the applicants, who have
already resigned much prior to the issuance of cheques.
4.2 He has further submitted that even from the
reading of the complaint, there is no specific averment or
allegation about the liability of the director of the
company; that in any case, the complainant can certainly
recover the dues as the company is still in existence;
that there is no specific averment about the cheques
being given for security or post-dated cheques for any
specific purpose; that the averments regarding the change
of affairs is missing in the complaint. Learned advocate
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for the applicants has submitted that the applicants have
no connection with the business of the company after
they resigned in the year 2006 and 1996 respectively.
4.3 Learned advocate for the applicant has relied
on the decisions in the case of Anil Khadkiwala V/s
State (Government of NCT of Delhi) and another,
reported in (2019)17 SCC 294, more particularly,
paragraphs 1 to 3, 7 and 11 and in the case of
Gunmala Sales Private Ltd. V/s Anu Mehta & Ors.,
Navkar Infra Projects Pvt. Ltd. & Etc. Reported in
(2015) 1 SCC 103, more particularly, paragraphs 29 to
31.
4.4 Learned advocate for the applicants further
submitted that it is not sufficient to make a bald
cursory statement in a complaint that the Director is in
charge of and responsible to the company for the conduct
of the business of the company without anything more as
to the role of the Director. He submitted that from the
bare reading of the complaint, all the allegations are
levelled against the accused no.1- and no averments are
made against the present applicants except that the
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applicants were directors of the accused no.1-company
and they were responsible for the conduct of the
business. He, therefore, the ingredients of Sections 138
and 141 of the NI Act are not made out.
4.5 Learned advocate for the applicant, therefore,
submitted that this is a fit case where the Court should
exercise inherent powers under Section 482 of the Code
by quashing the impugned complaints qua the applicants,
especially, when the company is available to the present
complainant to recover the dues, if any.
5. Per contra, learned advocate Mr.Abhishek
Sharma appearing for learned advocate Mr.Vimal Purohit
for the respondent no.2-complainant has opposed these
applications and submitted that the applicants were
directors at the relevant point of time and the accused
in the said complaint filed by the complainant is
managing the affairs of the accused no.1-company; he has
purchased the goods from the complainant and thereafter
the cheques were issued and from the account of the
company which was signed by these applicants, which
bounced and in view of Sections 138 and 141 of the NI
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Act, the offences are made out against the accused
persons, more particularly, applicants who are signatory
of the cheque. He further submitted that resignation
which is tendered before the Registrar of Companies is
also prima facie required to be established during the
course of trial and this Court cannot interfere at this
stage under Section 482 of the Code by appreciating the
material which can be proved by leading cogent and
convincing evidence.
5.1 Learned advocate for the respondent no.2-
complainant has submitted that even the present
applicants and other accused persons have duped many
other persons by entering into such transaction and
thereafter not paying the dues and therefore it can be
considered as an offence against the society and therefore
also no relief can be granted at this stage by exercising
inherent jurisdiction under Section 482 of the Code,
which otherwise, should be exercised sparingly and
therefore prayed to dismiss these applications.
6. I have considered the rival submissions and
perused the material on record.
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7. At the outset, the provisions of Sections 138
and 141 of the NI Act are required to be seen, which
read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in
the account.
Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any
amount of money to another person from out of that account
for the discharge, in whole or in 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 provisions of this Act, be punished
with imprisonment for "a term which may extend to two
year", 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
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within the period of its validity, whichever is earlier.
(b) The payee or the holder induce 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 cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of
the said amount of money to the payee or, as the case may
be, to the holder in due course of the cheque, within fifteen
days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other
liability" means a legally enforceable debt or other liability."
"141 Offences by companies. (1) If the person committing
an offence under section 138 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 proceeded against and punished
accordingly:
Provided that nothing contained in this subsection 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:
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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 subsection (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 attribute
to, any neglect on the part of, any director, Manager,
secretary, or other office of the company, such director,
manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded
against and punished accordingly.
Explanation. For the purposes of this section,
(a) "company" means any body corporate and includes a firm
or other association of individuals; and
(b) "Director", in relating to a firm, means a partner in the
firm."
8. Now, if the facts of the present case are
perused, the applicants have already resigned as directors
of the company at the time of issuance of the bounced
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cheques, which factum, is prima facie established from
the perusal of form no.32 filed before the Registrar of
Companies. Even on bare perusal of the complaint, it
transpires that there is no specific allegation about the
post-dated cheques or that the present applicants are
actively responsible for day-to-day affairs of the company.
It is an undisputed fact that the resignation is given by
the present applicants as per the record available on this
petition on 18.1.2006, 24.4.2006 and 17.9.1996 respectively
and the cheques were issued on 3.3.2007 and deposited
and bounced on 30.3.2007, which is much subsequent to
the resignation given by the present applicants. It is also
the fact that the company is still existing and available
for recovery of the dues, if any, of the complainant.
Further, the documents produced on record by the
applicants in these applications remained uncontroverted
and as such, these documents pertain to government
record and found acceptable in the eye of law.
9. As regards the judgments cited at the bar, it
is held that the allegations made in the complaint must
be very specific and the allegations that the directors are
responsible for day-to-day affairs are also required to be
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made in very specific manner. In the case on hand,
there is no specific allegation against the present
applicants.
10. In the case of Gunmala Sales Private Limited
(supra), it is held in paragraphs 29 to 31 by the
Hon'ble Apex Court, which read as under:
"29.When a petition is filed for quashing the process, in a
given case, on an overall reading of the complaint, the High
Court may find that the basic averment is sufficient, that it
makes out a case against the Director; that there is nothing
to suggest that the substratum of the allegation against the
Director is destroyed rendering the basic averment
insufficient and that since offence is made out against him,
his further role can be brought out in the trial. In another
case, the 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.
30.When in view of the basic averment process is issued the
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complaint must proceed against the Directors. But, if any
Director wants the process to be quashed by filing a petition
under Section 482 of the Code 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.
31.In this connection, it would be advantageous to refer to
Harshendra Kumar D. v. Rebatilata Koley and Ors., 22where
process was issued by the Magistrate on a complaint filed
under Section 138 read with Section 141 of the NI Act. The
appellant therein challenged the proceeding by filing revision
application under Section 397 read with Section 401 of the
Code. The case of the appellant-Director was that he had
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resigned from Directorship. His resignation was accepted and
notified to the Registrar of Companies. It was averred in
the complaint that the appellant was responsible for the
day-to-day affairs of the company and it was on his and
other Directors assurance those demand drafts were issued.
Despite this averment, this Court quashed the complaint
taking into account resolution passed by the company,
wherein it was reflected that the appellant had resigned
from the post of Director much prior to the issuance of
cheque and the fact that the company had submitted Form-
32. It was argued before this Court that the documents
furnished by the accused could not have been taken into
account. Repelling this submission this Court observed as
under: (Paras 20 to 22 of AIR, AIR SCW)"24. In Awadh
Kishore Gupta, (AIR 2004 SC 517 : 2003 AIR SCW 6501)
this Court while dealing with the scope of power under
Section 482 of the Code observed: (SCC p. 701, para 13) :
(Para 13 of AIR, AIR SCW)"13. It is to be noted that the
investigation was not complete and at that stage it was
impermissible for the High Court to look into materials, the
acceptability of which is essentially a matter for trial. While
exercising jurisdiction under Section 482 of the Code, it is
not permissible for the court to act as if it was a trial
Judge."
25. In our judgment, the above observations cannot be read
to mean that in a criminal case where trial is yet to take
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place and the matter is at the stage of issuance of
summons or taking cognizance, materials relied upon by the
accused which are in the nature of public documents or the
materials which are beyond suspicion or doubt, in no
circumstance, can be looked into by the High Court in
exercise of its jurisdiction under Section 482 or for that
matter in exercise of revisional jurisdiction under Section
397 of the Code. It is fairly settled now that while
exercising inherent jurisdiction under Section 482 or
revisional jurisdiction under Section 397 of the Code in a
case where complaint is sought to be quashed, it is not
proper for the High Court to consider the defence of the
accused or embark upon an enquiry in respect of merits of
the accusations. However, in an appropriate case, if on the
face of the documents - which are beyond suspicion or doubt
- placed by the accused, the accusations against him cannot
stand, it would be travesty of justice if the accused is
relegated to trial and he is asked to prove his defence
before the trial court. In such a matter, for promotion of
justice or to prevent injustice or abuse of process, the High
Court may look into the materials which have significant
bearing on the matter at prima facie stage.
26. Criminal prosecution is a serious matter; it affects the
liberty of a person. No greater damage can be done to the
reputation of a person than dragging him in a criminal
case. In our opinion, the High Court fell into grave error in
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not taking into consideration the uncontroverted documents
relating to the appellant's resignation from the post of
Director of the Company. Had these documents been
considered by the High Court, it would have been apparent
that the appellant has resigned much before the cheques
were issued by the Company."
11. In the case of Anil Khadkiwala (supra), it is
held in paragraphs 1 to 3, 7 and 11 by the Hon'ble
Apex Court as under:
"1. The application preferred by the appellant under Section
482, Cr.P.C. to quash the summons issued in complaint case
No.3403/1/2015 was dismissed by the High Court opining
that since the earlier Crl.M.C. No.877 of 2005 for the same
relief had already been dismissed, the second application was
not maintainable.
2.Respondent No.2 filed a complaint under Section 142 read
with Section 138 of the Negotiable Instruments Act
(hereinafter referred to as "the Act") against the appellant
who was the Director of M/s. ETI Projects Ltd., the
Company in question. It was alleged that the accused person
had issued cheques dated 15.02.2001 and 28.02.2001, which
were dishonoured upon presentation. The appellant had
preferred Crl.M.P. No.1459 of 2005 for quashing the same.
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He took the defence, without any proof that he had already
resigned from the Company on 20.12.2000 and which was
accepted by the Board of Directors on 20.01.2001. The
application was dismissed on 18.09.2007 after noticing the
plea of resignation, solely on the ground that the cheques
were issued under the signature of the appellant.
3.The appellant then preferred a fresh application under
Section 482 giving rise to the present proceedings. The High
Court noticing the reliance on Form 32 issued by the
Registrar of Companies, under the Companies Act, 1956, in
proof of resignation by the appellant prior to the issuance of
the cheques, issued notice, leading to the impugned order of
dismissal subsequently.
7.The complaint filed by respondent No.2 alleges issuance of
the cheques by the appellant as Director on 15.02.2001 and
28.02.2001. The appellant in his reply dated 31.08.2001, to
the statutory notice, had denied answerability in view of his
resignation on 20.01.2001. This fact does not find mention in
the complaint. There is no allegation in the complaint that
the cheques were post-dated. Even otherwise, the appellant
had taken a specific objection in his earlier application
under Section 482, Cr.P.C. that he had resigned from the
Company on 20.01.2001 and which had been accepted. From
the tenor of the order of the High Court on the earlier
occasion it does not appear that Form 32 issued by the
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Registrar of Companies was brought on record in support of
the resignation. The High Court dismissed the quashing
application without considering the contention of the
appellant that he had resigned from the post of the Director
of the Company prior to the issuance of the cheques and
the effect thereof in the facts and circumstances of the case.
The High Court in the fresh application under Section 482,
Cr.P.C. initially was therefore satisfied to issue notice in the
matter after noticing the Form 32 certificate. Naturally there
was a difference between the earlier application and the
subsequent one, inasmuch as the statutory Form 32 did not
fall for consideration by the Court earlier. The factum of
resignation is not in dispute between the parties. The
subsequent application, strictly speaking, therefore cannot be
said to a repeat application squarely on the same facts and
circumstances.
8.In Mohan Singh (AIR 1975 SC 1002)(supra), it was held
that a successive application under Section 482, Cr.P.C.
under changed circumstances was maintainable and the
dismissal of the earlier application was no bar to the same,
observing:
"2. ...... Here, the situation is wholly different. The earlier
application which was rejected by the High Court was an
application under Section 561A of the CrPC to quash the
proceeding and the High Court rejected it on the ground
that the evidence was yet to be led and it was not
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desirable to interfere with the proceeding at that stage. But,
thereafter, the criminal case dragged on for a period of
about one and half years without any progress at all and it
was in these circumstances that respondents Nos. 1 and 2
were constrained to make a fresh application to the High
Court under Section 561-A to quash the proceeding. It is
difficult to see how in these circumstances it could ever be
contended that what the High Court was being asked to do
by making the subsequent application was to review or
revise the Order made by it on the earlier application.
Section 561-A preserves the inherent power of the High
Court to make such Orders as it deems fit to prevent abuse
of the process of the Court or to secure the ends of justice
and the High Court must, therefore, exercise its inherent
powers having regard to the situation prevailing at the
particular point of time when its inherent jurisdiction is
sought to be invoked. The High Court was in the
circumstances entitled to entertain the subsequent application
of Respondents Nos. 1 and 2 and consider whether on the
facts and circumstances then obtaining the continuance of
the proceeding against the respondents constituted an abuse
of the process of the Court or its quashing was necessary to
secure the ends of justice. The facts and circumstances
obtaining at the time of the subsequent application of
respondents Nos. 1 and 2 were clearly different from what
they were at the time of the earlier application of the first
respondent because, despite the rejection of the earlier
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application of the first respondent, the prosecution had failed
to make any progress in the criminal case even though it
was filed as far back as 1965 and the criminal case rested
where it was for a period of over one and a half
years............"
9.In Harshendra Kumar D. v. Rebatilata Koley Etc., 2011
Cri.L.J. 1626, this Court held:"22. Criminal prosecution is a
serious matter; it affects the liberty of a person. No greater
damage can be done to the reputation of a person than
dragging him in a criminal case. In our opinion, the High
Court fell into grave error in not taking into consideration
the uncontroverted documents relating to Appellant's
resignation from the post of Director of the Company. Had
these documents been considered by the High Court, it
would have been apparent that the Appellant has resigned
much before the cheques were issued by the Company. As
noticed above, the Appellant resigned from the post of
Director on March 2, 2004. The dishonoured cheques were
issued by the Company on April 30, 2004, i.e., much after
the Appellant had resigned from the post of Director of the
Company. The acceptance of Appellant's resignation is duly
reflected in the resolution dated March 2, 2004. Then in the
prescribed form (Form No. 32), the Company informed to the
Registrar of Companies on March 4, 2004 about Appellant's
resignation. It is not even the case of the complainants that
the dishonoured cheques were issued by the Appellant.
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These facts leave no manner of doubt that on the date the
offence was committed by the Company, the Appellant was
not the Director; he had nothing to do with the affairs of
the Company. In this view of the matter, if the criminal
complaints are allowed to proceed against the Appellant, it
would result in gross injustice to the Appellant and
tantamount to an abuse of process of the court."
10.Atul Shukla (supra) is clearly distinguishable on its facts
as the relief sought was for review/recall/modify the earlier
order of dismissal in the interest of justice. Consequently,
the earlier order of dismissal was recalled. It was in that
circumstance, it was held that in view of Section 362,
Cr.P.C. the earlier order passed dismissing the quashing
application could not have been recalled. The case is
completely distinguishable on its own facts.
11.The Company, of which the appellant was a Director, is
a party respondent in the complaint. The interests of the
complainant are therefore adequately protected. In the
entirety of the facts and circumstances of the case, we are
unable to hold that the second application for quashing of
the complaint was not maintainable merely because of the
dismissal of the earlier application."
12. In the case of Aneeta Hada V/s Godfather
Travels & Tours Pvt. Ltd., reported in (2012) 5 SCC
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661, the Hon'ble Apex Court has held that in absence of
the direct liability of the person, criminal proceeding
which is harsh to any person shall not be permitted to
continue.
13. It is also fruitful to refer to the judgment
rendered by the Hon'ble Apex Court in the case of
S.P.Mani and Mohan Dairy V/s Dr.Snehalatha Elangovan
reported in 2022 SCC Online SC 1238, more particularly,
paragraphs 40, 41 and 47, which read as under:
"40.The principles discernible from the aforesaid decision of
this Court in the case of Ashutosh Ashok Parasrampuriya
(supra) is that the High Court should not interfere under
Section 482 of the Code at the instance of an accused
unless it comes across some unimpeachable and
incontrovertible evidence to indicate that the Director/
partner of a firm could not have been concerned with the
issuance of cheques. This Court clarified that in a given
case despite the presence of basic averments, the High
Court may conclude that no case is made out against the
particular Director/ partner provided the Director/partner is
able to adduce someunimpeachable and incontrovertible
evidence beyond suspicion and doubt.
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Specific Averments in the complaint:
41.In Gunmala Sales Private Limited (supra), this Court
after an exhaustive review of its earlier decisions on Section
141 of the NI Act, summarized its conclusion as under:
"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, incontrovertible 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.
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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 armtwisting tactics,
the High Court may quash the proceedings. It bears
repetition to state that to establish such case unimpeachable,
incontrovertible 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."
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47.Our final conclusions may be summarised as under:-
a.) The primary responsibility of the complainant is to make
specific averments in the complaint so as to make the
accused vicariously liable. For fastening the criminal liability,
there is no legal requirement for the complainant to show
that the accused partner of the firm was aware about each
and every transaction. On the other hand, the first proviso
to sub-section (1) of Section 141 of the Act clearly lays
down that if the accused is able to prove to the satisfaction
of the Court that the offence was committed without his/her
knowledge or he/she had exercised due diligence to prevent
the commission of such offence, he/she will not be liable of
punishment.
b.) The complainant is supposed to know only generally as
to who were in charge of the affairs of the company or
firm, as the case may be. The other administrative matters
would be within the special knowledge of the company or
the firm and those who are in charge of it. In such
circumstances, the complainant is expected to allege that the
persons named in the complaint are in charge of the affairs
of the company/firm. It is only the Directors of the company
or the partners of the firm, as the case may be, who have
the special knowledge about the role they had played in the
company or the partners in a firm to show before the court
that at the relevant point of time they were not in charge
of the affairs of the company. Advertence to Sections 138
and Section 141 respectively of the NI Act shows that on
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the other elements of an offence under Section 138 being
satisfied, the burden is on the Board of Directors or the
officers in charge of the affairs of the company/partners of a
firm to show that they were not liable to be convicted. The
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 to show that at
the relevant time they were not in charge of the affairs of
the company or the firm.
c.) Needless to say, the final judgement and order would
depend on the evidence adduced. Criminal liability is
attracted only on those, who at the time of commission of
the offence, were in charge of and were responsible for the
conduct of the business of the firm. But vicarious criminal
liability can be inferred against the partners of a firm when
it is specifically averred in the complaint about the status of
the partners 'qua' the firm. This would make them liable to
face the prosecution but it does not lead to automatic
conviction. Hence, they are not adversely prejudiced if they
are eventually found to be not guilty, as a necessary
consequence thereof would be acquittal.
d.) If any Director wants the process to be quashed by
filing a petition under Section 482 of the Code on the
ground that only a bald averment is made in the complaint
and that he/she is really not concerned with the issuance of
the cheque, he/she must in order to persuade the High
Court to quash the process either furnish some sterling
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incontrovertible material or acceptable circumstances to
substantiate his/her contention. He/she must make out a
case that making him/her stand the trial would be an abuse
of process of Court."
14. In view of the above settled legal position,
though huge amount is involved and the applicants
might be involved in many such other transactions with
other persons also, the applicants cannot be arraigned as
accused as they have already resigned as director much
prior to the alleged transaction, therefore, the ingredients
of Sections 138 and 141 of the NI Act are not satisfied
against the present applicants and this is a fit case to
exercise the inherent powers under Section 482 of the
Code. However, it is open for the complainant to avail
remedies whichever is permissible under criminal as well
as civil laws against the applicants.
15. It is also relevant to refer to the judgment of
the Hon'ble Apex Court in the case of Inder Mohan
Goswami and Another versus State of Uttaranchal
reported in (2007) 12 SCC 1, more particularly para : 23
& 24 thereof, which read as under :
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"23. This Court in a number of cases has laid
down the scope and ambit of courts' powers
under Sec. 482 CrPC. Every High Court has
inherent power to act ex debito justitiae to do
real and substantial justice, for the
administration of which alone it exists, or to
prevent abuse of the process of the court.
Inherent power under Sec. 482 CrPC can be
exercised:
[(i) to give effect to an order under the Code;]
[(ii) to prevent abuse of the process of court,
and]
[(iii) to otherwise secure the ends of justice.]
24. Inherent powers under Sec. 482 CrPC
though wide have to be exercised sparingly,
carefully and with great caution and only when
such exercise is justified by the tests specifically
laid down in this section itself'. Authority of the
court exists for the advancement of justice. If
any abuse of the process leading to injustice is
brought to the notice of the court, then the
court would be justified in preventing injustice
by invoking inherent powers in absence of
specific provisions in the statute. Discussion of
decided cases."
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16. In view of above settled position of law and
after considering the facts as alleged in the complaint
under Section 138 of the Act and circumstances of the
present case, it transpires that continuation of further
proceedings pursuant to the said complaint under Section
138 of the NI Act will cause greater hardships to the
applicants and no fruitful purpose would be served if
such further proceedings are allowed to be continued.
The Court must ensure that criminal prosecution is not
used as instrument of harassment or for seeking private
vendetta or with ulterior motive to pressurise accused or
to settle the score.
17. Resultantly, all these applications are allowed
qua the present applicants. The Criminal Case Nos. 2613
of 2016, 2615 of 2016, 2622 of 2016, 2611 of 2016, 2614
of 2016, 2618 of 2016 and 2621 of 2016 are hereby
quashed and set aside qua the present applicants only.
Rule is made absolute. Direct service is permitted.
(SANDEEP N. BHATT,J)
SRILATHA
