Court sets aside summoning order & quashes complaints under Section 138 NI Act. Specific averments needed for vicarious liability.

The court allowed the petitions, setting aside the summoning order and quashing the complaints filed under Section 138 of the Negotiable Instruments Act against the petitioner. The court emphasized the necessity of specific averments against those sought to be held vicariously liable, following the principles established in the "National Small Industries Corporation Limited" case. The court found that the petitioner, not being a director or signatory of the cheques, and having no involvement in the business transactions, could not be held vicariously liable under Section 141 of the NI Act.

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Issues Involved:
1. Quashing of complaints filed under Section 138 of the Negotiable Instruments Act, 1881.
2. Setting aside the summoning order and subsequent proceedings.
3. Vicarious liability of the petitioner under Section 141 of the NI Act.

Detailed Analysis:

1. Quashing of Complaints Filed Under Section 138 of the NI Act:
The petitioner sought to quash complaints filed under Section 138 of the NI Act, which pertained to dishonored cheques issued by the company. The complaints were based on a Memorandum of Understanding (MOU) executed between the complainant and accused Nos. 2 and 3. The petitioner argued that he was not a signatory to the MOU or the cheques and had no business dealings with the complainant. The court found merit in the petitioner's argument, noting that the MOU and the cheques were signed by accused Nos. 2 and 3, not the petitioner.

2. Setting Aside the Summoning Order and Subsequent Proceedings:
The petitioner also sought to set aside the summoning order dated 07.04.2018 and all subsequent proceedings. The court observed that the complaints did not provide specific allegations against the petitioner that he was in charge of the company's day-to-day business or that he was a signatory to the cheques. The court referenced the Supreme Court's decision in "National Small Industries Corporation Limited vs. Harmeet Singh Paintal," which emphasized the need for specific averments to hold a director vicariously liable. The court concluded that the complaints lacked the necessary specifics to implicate the petitioner.

3. Vicarious Liability of the Petitioner Under Section 141 of the NI Act:
The court analyzed the principles laid down in "National Small Industries Corporation Limited vs. Harmeet Singh Paintal," which clarified that for a director to be held vicariously liable under Section 141, there must be specific averments showing how and in what manner the director was responsible for the company's conduct. The court noted that the complaints only made a bald statement that the petitioner was in charge of the company's affairs without providing supporting documents or specific allegations. The court found that the petitioner was not a director or signatory of the cheques and had no role in the business transactions between the complainant and the company. Therefore, the court held that the petitioner could not be held vicariously liable.

Conclusion:
The court allowed the petitions, set aside the summoning order dated 07.04.2018, and quashed the complaints filed under Section 138 of the NI Act against the petitioner. The court emphasized that the primary responsibility lies with the complainant to make specific averments against those sought to be held vicariously liable, which was not done in this case. The decision was based on the principles laid down by the Supreme Court in the "National Small Industries Corporation Limited" case.

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