2007 (1) TMI 613 - HC - Indian Laws

Court quashes process orders against applicant due to lack of evidence. Other accused to face trial.

Amit Mohan S/o Inder Mohan Sharma Versus Mamta Agency and ors.

The High Court quashed the orders of issue of process against the applicant under Section 138 of the Negotiable Instruments Act and Section 420 of the ... - Issues Involved:1. Challenge to the order of issue of process under Section 138 of the Negotiable Instruments Act.2. Applicability of Section 420 of the Indian Penal Code.3. Consideration of resignation and liability of a director.4. Applicability of Section 482 of the Criminal Procedure Code.5. Delay in filing the revision application.6. Vicarious liability of directors under Section 141 of the Negotiable Instruments Act.Comprehensive, Issue-Wise Detailed Analysis:1. Challenge to the Order of Issue of Process under Section 138 of the Negotiable Instruments Act:The applications under Section 482 of the Criminal Procedure Code were directed against the common order passed by the 10th Ad hoc Additional Sessions Judge, Nagpur, which rejected the applicant's plea to recall the process issued against him for the offence under Section 138 of the Negotiable Instruments Act. The respondent had filed complaints alleging that the cheques issued by the accused company were dishonored, leading to the filing of complaints under Section 138 of the Act and Section 420 of the Indian Penal Code.2. Applicability of Section 420 of the Indian Penal Code:The complainant alleged that the directors, including the applicant, had issued cheques with the intention to cheat and defraud the complainant. The learned Magistrate issued the process after recording the verification statement of the complainant. The Sessions Judge found that the allegations in the complaint were sufficient to attract the offences under Section 138 of the Act and Section 420 of the Indian Penal Code.3. Consideration of Resignation and Liability of a Director:The applicant contended that he had resigned from the directorship of the company on 6-10-1997, prior to the issuance of the cheques. The Sessions Judge held that the factum of resignation needed to be considered at the time of trial. The applicant argued that the resignation was effective immediately upon its submission and that Form No. 32, which was accepted by the Registrar of Companies, was a mere formality.4. Applicability of Section 482 of the Criminal Procedure Code:The applicant sought to invoke the inherent powers of the High Court under Section 482 of the Criminal Procedure Code to quash the order of issue of process, arguing that he should not be required to face trial as there were no sufficient allegations against him. The respondent argued that the trial had already been delayed and that the applicant was responsible for the business of the company at the relevant time.5. Delay in Filing the Revision Application:The Sessions Judge noted that the applicant had not applied for condonation of delay in filing the revision application, which was barred by limitation. However, the Judge dismissed the applications on merits, not merely on the ground of limitation. The applicant argued that the delay was due to a change in the principle of law regarding the maintainability of an application under Section 482 of the Criminal Procedure Code.6. Vicarious Liability of Directors under Section 141 of the Negotiable Instruments Act:The High Court observed that the complaint did not specifically allege that the applicant was in active directorship or responsible for the conduct of the business of the company at the time of issuance of the cheques. The Court referred to several precedents, including the Supreme Court's judgment in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, which emphasized the necessity of specific averments in the complaint to establish vicarious liability under Section 141 of the Negotiable Instruments Act.Conclusion:The High Court concluded that there was no sufficient material on record to show that the applicant was responsible for the business of the company at the relevant time. The Court held that asking the applicant to face trial would be an abuse of the process of law. Consequently, the orders of issue of process against the applicant were quashed and set aside. The trial of the remaining accused was directed to be expedited. The Court also clarified that this order would not prevent the trial Court from taking cognizance of any offence noticed during the course of the trial under Section 319 of the Criminal Procedure Code.