2019 (1) TMI 1888 - HC - Companies Law

Court quashes complaint for non-impleadment of company under Negotiable Instruments Act

The court quashed Criminal Complaint No. 43307 of 2016 under Section 138 of the Negotiable Instruments Act, 1881, as the Company was not impleaded as an ... Dishonor of Cheque - insufficiency of funds - dispute regarding the status of the Company - HELD THAT:- Merely because Cheque no. 506664 does not bear the seal or stamp of the Company, and the same only bears the signatures of the applicants, it cannot be presumed that the cheque is issued from the personal bank account of the applicants in their personal capacity in wake of the fact that the bank account is in the name of the Company. Thus, once it is established that the cheque, which is dishonoured, is issued from the bank account of the Company, then, as per the law enunciated by the Apex Court in the case of ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT], the impugned complaint is required to be quashed and set aside since it was imperative to arraign the Company as an accused to the impugned complaint for maintaining the prosecution under section 141 of the N.I. Act. In the present case, all the cheques are issued in the name of the Company, except Cheque No. 506664 of ₹ 4,00,000/-. The same bears the signatures of applicants No. 1 and 2, however, it is issued from the bank account of the Company and not from the personal account of applicants No. 1 and 2 - in the considered opinion of this court, the impugned Criminal Complaint No. 43307 of 2016 pending before the court of Chief Judicial Magistrate, Vadodara as well as all consequential and subsequent proceedings arising therefrom are quashed and set aside. Application allowed. Issues Involved:1. Quashing of Criminal Complaint under Section 138 of the Negotiable Instruments Act, 1881.2. Non-joinder of the Company as a necessary party in the complaint.3. Validity of cheques issued by the applicants.4. Status of the Company and disqualification of its Directors.Issue-wise Detailed Analysis:1. Quashing of Criminal Complaint under Section 138 of the Negotiable Instruments Act, 1881:The applicants sought to quash Criminal Complaint No. 43307 of 2016 pending before the Chief Judicial Magistrate, Vadodara, for offences punishable under Section 138 of the N.I. Act, using powers under Section 482 of the Code of Criminal Procedure, 1974. The complaint was filed by respondent No. 2 due to dishonoured cheques issued by the applicants.2. Non-joinder of the Company as a necessary party in the complaint:The applicants argued that the complaint was not maintainable as the Company was not joined as a party, which is a mandatory requirement under Section 138 read with Section 141 of the N.I. Act, as supported by the Supreme Court's decisions in Aneeta Hada Vs. M/s. Godfather Travels and Tours Private Limited and Kiritbhai Patel Vs. State of Gujarat. The court observed that arraigning the company as an accused is imperative for maintaining the prosecution under Section 141 of the N.I. Act.3. Validity of cheques issued by the applicants:The applicants issued three cheques: (i) Rs. 6,00,000/- from HDFC Bank, (ii) Rs. 4,00,000/- and (iii) Rs. 2,00,000/- from Allahabad Bank. The cheque for Rs. 2,00,000/- was cleared, while the others were dishonoured. The applicants contended that the cheques were issued from the Company's account, and any act done under the guise of the Company should hold the Company accountable. The respondent argued that one cheque did not bear the Company's seal, implying personal liability.4. Status of the Company and disqualification of its Directors:The respondent argued that the Company ceased operations in 2011, did not file returns, and was struck off, making the Directors disqualified. The applicants countered that the Company was active and the Directors were not disqualified when the cheques were issued. The court verified the Company's status through the Registrar of Companies (RoC), confirming the Company was in existence till August 2018.Judgment:The court concluded that the Company was in existence when the cheques were issued and at the time of filing the complaint. Since the Company was not impleaded as an accused, the complaint was not maintainable under Section 141 of the N.I. Act. The court quashed and set aside Criminal Complaint No. 43307 of 2016 and all subsequent proceedings.Costs:The court ordered respondent No. 2 to pay costs of Rs. 25,000/- to the RoC, Ahmedabad, as the report of the RoC was in consonance with the investigating officer's statement.Final Order:The writ application was allowed, and RULE was made absolute.