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        Case ID :

        2018 (10) TMI 1777 - HC - Indian Laws

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        Vicarious liability under the Negotiable Instruments Act requires specific pleadings; a former director cannot be summoned on bare statutory language. A petition under Section 482 CrPC was held maintainable to seek quashing despite the availability of revision against the summoning order, because ...
                      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.

                          Vicarious liability under the Negotiable Instruments Act requires specific pleadings; a former director cannot be summoned on bare statutory language.

                          A petition under Section 482 CrPC was held maintainable to seek quashing despite the availability of revision against the summoning order, because revision under Section 397 CrPC is limited to examining legality and propriety and does not itself provide power to quash a complaint. On vicarious liability under Section 141 of the Negotiable Instruments Act, a former director who had ceased to hold office before the cheque was issued could not be summoned unless the complaint contained specific averments showing how he was in charge of and responsible for the company's business at the relevant time. Mere repetition of the statutory language was insufficient, and the complaint and summoning order were quashed qua that person.




                          Issues: (i) Whether the petition under Section 482 of the Code of Criminal Procedure, 1973 was maintainable despite the availability of revision against the summoning order. (ii) Whether a former director, who had ceased to hold office long before issuance of the cheque, could be summoned under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 in the absence of specific averments showing the manner in which he was in charge of and responsible for the conduct of the company's business.

                          Issue (i): Whether the petition under Section 482 of the Code of Criminal Procedure, 1973 was maintainable despite the availability of revision against the summoning order.

                          Analysis: Revision under Section 397 of the Code of Criminal Procedure, 1973 is confined to examining the correctness, legality or propriety of an order and the regularity of proceedings. It does not confer power to quash a criminal complaint. The inherent jurisdiction under Section 482 remains available to prevent abuse of process and secure the ends of justice where quashing is sought.

                          Conclusion: The petition was maintainable and the objection based on alternate remedy was rejected.

                          Issue (ii): Whether a former director, who had ceased to hold office long before issuance of the cheque, could be summoned under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 in the absence of specific averments showing the manner in which he was in charge of and responsible for the conduct of the company's business.

                          Analysis: Vicarious liability under Section 141 arises only when the complaint contains material showing that the accused was in charge of and responsible for the conduct of the business of the company at the relevant time. For a person who had already ceased to be a director before the cheque was issued, the complaint must specifically plead the role played by that person in the company's affairs. Mere reproduction of the language of Section 141 is insufficient. Form No. 32 and the annual return, being public documents, may be relied upon to ascertain the status of directorship at the prima facie stage. In the absence of such specific averments, summoning is unwarranted.

                          Conclusion: The former director could not be summoned on the basis of the complaint as framed, and the complaint and summoning order were liable to be quashed qua him.

                          Final Conclusion: The Court held that a former director cannot be proceeded against under Section 141 of the Negotiable Instruments Act, 1881 without specific allegations of responsibility for the company's business, and the inherent power under Section 482 of the Code of Criminal Procedure, 1973 can be invoked to quash such proceedings.

                          Ratio Decidendi: For fastening vicarious criminal liability on a director or officer under Section 141 of the Negotiable Instruments Act, 1881, the complaint must contain specific facts showing that the person was in charge of and responsible for the conduct of the company's business at the relevant time; a bare reproduction of the statutory words is not enough, especially where the accused had already ceased to hold office before the cheque was issued.


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