Gujarat High Court

Manojkumar Ramnikbhai ... vs State Of Gujarat on 10 July, 2023

Bench: Sandeep N. Bhatt

    R/CR.MA/15360/2019                          JUDGMENT DATED: 10/07/2023




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/CRIMINAL MISC.APPLICATION NO. 15360 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15364 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15365 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15367 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15368 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15370 of 2019
                                  With
              R/CRIMINAL MISC.APPLICATION NO. 15371 of 2019

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE SANDEEP N. BHATT

==========================================================

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 ?

==========================================================
               MANOJKUMAR RAMNIKBHAI ROJIVADIYA (PATEL)
                               Versus
                         STATE OF GUJARAT
==========================================================
Appearance:
MR. ZALAK B PIPALIA(6161) for the Applicant(s) No. 1
MR VIMAL A PUROHIT(5049) for the Respondent(s) No. 2
MR SOAHAM JOSHI, APP for the Respondent(s) No. 1
VISHAL S AWTANI(7913) for the Respondent(s) No. 2
==========================================================

    CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT


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      R/CR.MA/15360/2019                                     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.2615 of 2016, 2621 of 2016,

2614 of 2016, 2611 of 2016, 2613 of 2016, 2622 of 2016

and 2618 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 APP

Mr.Joshi waives service of notice of rule for respondent

no.1-state and learned advocate Mr.Vimal Purohit waives

service of notice of rule for respondent no.2.

4. For the sake of convenience, the facts of

Criminal Miscellaneous Application No.15360 of 2019 are

considered, which are as under:

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4.1. A company namely Yogi Hi-Tech Private

Limited was incorporated in the year 1995, which was

engaged in the business of manufacturing, developing,

importing, exporting, trading, distributing etc. All kinds

of bearings, tapper rollers etc. And other required

materials for automobile, agricultural equipment, oil

equipment, oil engines and other allied engineering

industries. That on that date, along with the petitioner,

two others namely Anilkumar Ramnikbhai Patel and

Satishkumar Rasiklal Patel were the directors of the

company. Thereafter, new directors were appointed and

old directors retired. The applicant herein resigned on

18.1.2006 and therefore he was not in-charge of the affairs of the company.

4.2 A complaint came to be filed by the

complainant stating that the complainant as well as the

petitioner were business friends and when the

complainant reminded the applicant to return the

previous due amount, the applicant asked the

complainant to send goods to the company Yogi Hi-Tech

Private Ltd. And therefore the complainant sent the

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goods there. It is averred that due to the said

transaction, the applicant handed over the cheques which

were deposited but returned with an endorsement

`account closed'. As the demand for the amount was not

fulfilled, the demand notice was sent by the complainant

to the applicant.

4.3 Thereafter, a complaint came to be filed in the

year 2007 before the learned Chief Judicial Magistrate,

Probandar, thereafter, the case was transferred to the nd court of 2 Additional Chief Judicial Magistrate, Rajkot

and it was renumbered. However, thereafter, again in

view of the amendment in the NI Act, the complaint

was transferred to Porbandar and it was given the criminal case number impugned herein. It is the

impugned complaints which are made in the year 2007

and renumbered thereafter, which are sought to be

quashed by way of these applications.

5. Heard learned advocates for the parties.

5.1 Learned advocate Mr.Pipaliya for the applicant

submitted that the present applicant is impleaded as

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accused in the capacity of director of the company named

Yogi Hi-Tech Private Limited and from the tenor of the

complaint filed under Section 138 of the NI Act, it

transpires that the applicant has given assurance to the

complainant that the accused no.1 company shall do the

needful to pay the amount to the complainant. It is

submitted that as per the tenor of the complaint, the

cheques were issued from the account of accused no.1

company which were bounced and therefore the notice

under Section 138 of the NI Act was issued which was

not responded by the accused persons and therefore the

impunged complaint is filed. He has submitted that in

view of this background, he submitted from the form

no.32 filed under the provisions of the Companies Act before the Registrar of Companies and submitted that

the present applicant has already resigned as director on

8.1.2006 and the cheques are issued on 3.3.2007 and

bounced on 30.3.2007 i.e. much after the applicant has

resigned as director of the company.

5.2 Learned advocate Mr.Pipaliya has further

drawn the attention of this Court towards the form

no.20B filed in reference to Section 159 of the

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Companies Act, whereby also the factum of resignation is

mentioned. He, therefore, submitted that when the

applicant is not a director at the relevant point of time,

he cannot be held liable to pay the amount of the dues

of the respondent no.1-company. He has further

submitted that as per the complaint, the goods were

taken on 24.1.2007, the cheques were issued on 3.3.2007

and they were returned on 30.3.2007, notice is issued on

27.4.2007 and complaints are filed on 19.5.2007. It is

submitted that all these events had occurred subsequent

to his resignation dated 18.1.2006 as director of the

company. 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

for the applicant has drawn attention of this Court to

the submission made in the memo of the application and

more particularly, paragraph 18 of the application and

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submitted that the applicant has nothing to do with the

business or the affairs of the company after 18.1.2006

and alleged signature on the cheque of the applicant is

also disputed by him as he has no connection with the

business of the company after 18.1.2006.

5.3 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.

5.4 Learned advocate for the applicant further

submitted that even the notice is not served properly

and the provisions of Section 138 of the NI Act are not

properly complied with as the notice is dropped where

the applicants are not residing.

5.5 Learned advocate for the applicant, therefore,

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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 applicant,

especially, when the company is available to the present

complainant to recover the dues, if any.

6. 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 applicant was

director at the relevant point of time and the accused

no.2 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 the accused no.2, which

bounced and in view of Sections 138 and 141 of the NI

Act, the offences are made out against the accused

persons, more particularly, accused no.2 who is 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

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stage under Section 482 of the Code by appreciating the

material which can be proved by leading cogent and

convincing evidence.

6.1 Learned advocate for the respondent no.2-

complainant has submitted that even the present

applicant 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.

6.3 Learned APP Mr.Joshi for the respondent no.1-

state has adopted the arguments of learned advocate

Mr.Sharma for respondent no.2 and submitted that prima

facie the ingredients of Section 138 read with Section

141 of the NI Act are made out from the bare reading

of the complaint and therefore full-fledged trial is

required to be proceeded and therefore prayed to dismiss

these applications.

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7. I have considered the rival submissions and

perused the material on record.

7.1 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

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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 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

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the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

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."

7.2 Now, if the facts of the present case are

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perused, the applicant has already resigned as director of

the company at the time of issuance of the bounced

cheques, which factum, is prima facie established from

the perusal of form no.32 and form no.20B 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 applicant is actively responsible for day-to-day

affairs of the company. It is an undisputed fact that the

resignation is given by the present applicant as per the

record available on this petition on 18.1.2006 and the

entire transaction of giving the goods has started from

24.1.2007 and continued till the complaints are filed on

19.5.2007, which is much subsequent to the resignation given by the present applicant. 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 applicant in these

applications remained uncontroverted and as such, these

documents pertain to government record and found

acceptable in the eye of law.

7.3 As regards the judgments cited at the bar, it

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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

made in very specific manner. In the case on hand,

there is no specific allegation that the cheques were

issued by the present applicant and therefore the

question of the signature on the cheques which is

disputed by the present applicant is not required to be

considered.

8. 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

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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 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.

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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 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

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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 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

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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 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."

9. 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

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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. 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

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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 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

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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 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

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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 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

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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. 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

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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."

10. In the case of Aneeta Hada V/s Godfather

Travels & Tours Pvt. Ltd., reported in (2012) 5 SCC 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.

11. 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

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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.

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

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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. 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

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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."

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

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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 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

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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 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."

12. In view of the above settled legal position,

though huge amount is involved and the applicant might

be involved in many such other transactions with other persons also, the applicant cannot be arraigned as

accused as he has 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 applicant 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 applicant.

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13. 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 :

"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

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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."

14. 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.

15. Resultantly, all these applications are allowed