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        Companies Law

        2014 (2) TMI 1368 - HC - Companies Law

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        Cheque dishonour complaints with specific director allegations cannot be quashed at the threshold despite disputed resignation claims. Cheques-dishonour complaints containing specific averments that the accused directors negotiated the transaction, managed the company's day-to-day ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Cheque dishonour complaints with specific director allegations cannot be quashed at the threshold despite disputed resignation claims.

                          Cheques-dishonour complaints containing specific averments that the accused directors negotiated the transaction, managed the company's day-to-day affairs, and were in office when the post-dated cheques were issued are not liable to be quashed at the threshold under Section 482 CrPC. The court held that disputed resignation documents and other defence material cannot be weighed against the complaint allegations at the quashing stage, especially where the pleaded facts place the transactions and cheque issuance before resignation took effect. The challenge to the summoning orders therefore failed, leaving the accused to contest liability in accordance with law at trial.




                          Issues: Whether the summoning orders in cheque dishonour complaints were liable to be quashed under the inherent jurisdiction on the plea that the petitioners had resigned as directors before the cheques were presented and, therefore, could not be fastened with vicarious liability.

                          Analysis: The complaint contained specific averments that the petitioners had negotiated for supply of goods, were responsible for the day-to-day affairs of the company, and that the post-dated cheques were issued during the period when they were admittedly directors. In proceedings for quashing, the defence version could not be examined against the complaint allegations. The materials relied upon by the petitioners regarding resignation did not displace the complaint case at the threshold, particularly when the transactions and issuance of cheques were pleaded to have occurred before the resignation took effect. The inherent power under Section 482 of the Code of Criminal Procedure, 1973 was therefore not attracted for interference.

                          Conclusion: The challenge to the summoning orders failed, and the petitions were not liable to be quashed.

                          Final Conclusion: The complaint allegations were held sufficient to proceed against the petitioners, leaving them to rebut their liability in accordance with law at the appropriate stage.

                          Ratio Decidendi: A complaint alleging dishonour of cheques may not be quashed under Section 482 of the Code of Criminal Procedure, 1973 where it contains specific averments showing that the accused were directors and responsible for the company's business at the relevant time; disputed resignation and other defence material cannot be ative at the quashing stage.


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                          ActsIncome Tax
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