2010 (9) TMI 1295 - HC - Indian Laws

CEO's Plea to Quash Check Bounce Complaints Dismissed; Court Cites Sufficient Responsibility Evidence.

The HC dismissed the petitions filed under Section 482 CrPC by the petitioner, a CEO, seeking to quash complaints under Section 138 of the Negotiable ... - Issues Involved:1. Vicarious liability of the petitioner u/s 138 of the Negotiable Instruments Act, 1881.2. Sufficiency of averments in the complaint to hold the petitioner liable u/s 141 of the Negotiable Instruments Act, 1881.Issue 1: Vicarious liability of the petitioner u/s 138 of the Negotiable Instruments Act, 1881Petitions u/s 482 of the Code of Criminal Procedure, 1973 were filed by the petitioner to quash complaints filed by respondent No. 1 u/s 138 of the Negotiable Instruments Act, 1881. The petitioner, Chief Operating Officer of respondent No. 2, was accused alongside the Managing Director and Chief Financial Officer. The complaint alleged that respondent No. 2 issued cheques to respondent No. 1, which were dishonored with the remark 'payment stopped by the drawer.' Statutory notices were sent, but the accused failed to pay the cheque amount, thus committing an offence u/s 138 of the Act.The petitioner argued that he could not be held vicariously liable as he was not working with respondent No. 2 at the relevant time. He was appointed as CEO of respondent No. 2 only on 14th January, 2009, after the cheques were issued and dishonored. The court noted that the petitioner's defense regarding his employment timeline required evidence and could only be resolved after the trial. The court emphasized that specific averments in the complaint indicated the petitioner was responsible for the day-to-day affairs of the company, thus the complaint could not be quashed at this premature stage.Issue 2: Sufficiency of averments in the complaint to hold the petitioner liable u/s 141 of the Negotiable Instruments Act, 1881The petitioner contended that mere reproduction of the language in Section 141(1) of the Act was insufficient to hold him liable. The complaint lacked specific averments detailing how he was in charge of the business at the relevant time. The court acknowledged that for officers other than the Managing Director or those who signed the cheque, specific averments were necessary. However, the court found that the complaint contained specific allegations that the petitioner, as Chief Operating Officer, was in charge and responsible for the day-to-day affairs of the company, and the cheques were issued within his knowledge.The court highlighted that the role of a Chief Executive Officer (CEO) inherently involves responsibility for the day-to-day affairs of the company. The complaint's clear averments and the petitioner's high-ranking position justified the continuation of the prosecution. The court concluded that the complaint could not be quashed merely because the petitioner alleged insufficient elaboration of his role.For the foregoing reasons, the petitions were dismissed as devoid of merits. The court clarified that the observations made were for the purpose of deciding the present petition and the Trial Court would not be influenced by the same. The Trial Court would decide the correctness of the averments made in the complaint against the petitioner after the trial.