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        2020 (5) TMI 127 - HC - Indian Laws

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        Basic averment of responsibility can sustain summons in cheque dishonour cases unless unimpeachable proof shows the director was not responsible. A company officer described as an Executive Director in the promoter category could be summoned in a cheque dishonour prosecution where the complaint ...
                      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.

                          Basic averment of responsibility can sustain summons in cheque dishonour cases unless unimpeachable proof shows the director was not responsible.

                          A company officer described as an Executive Director in the promoter category could be summoned in a cheque dishonour prosecution where the complaint contained a basic averment that he was in charge of and responsible for the company's day-to-day business and joint liability for the dishonoured cheques. The court applied the settled rule under the Negotiable Instruments Act that such an averment is sufficient to attract process unless the accused produces unimpeachable material showing that he was not responsible at the relevant time. His unsupported claim of prior resignation was not enough, as no reliable material showed that it had taken effect before issuance and dishonour of the cheques. The summoning order was sustained.




                          Issues: Whether the petitioner, described in the company records as an Executive Director in the category of Promoter, could avoid summoning in a complaint under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 on the ground that there was no sufficient averment of responsibility for the company's business and that he had resigned before the proceedings.

                          Analysis: The complaint contained an averment that the petitioner, along with others, was looking after the day-to-day affairs of the company and was in charge of its affairs and jointly and severally liable for the dishonour of the cheques. The record showed that he was appointed as an Executive Director and fell within the category of Promoter. The Court applied the settled principle that for a director or officer who is legally responsible for the company's business, a basic averment of being in charge of and responsible for the conduct of business is sufficient to attract process. It also noted that the petitioner produced no unimpeachable material to show that his resignation had been accepted before the cheques were issued and dishonoured. In these circumstances, the plea that no further averment was required could not be accepted in the petitioner's favour.

                          Conclusion: The summoning order was sustained and the petition was rejected.

                          Ratio Decidendi: In a prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, an Executive Director or similar company officer can be summoned on the basis of a basic averment that he was in charge of and responsible for the company's business, unless unimpeachable material shows that he could not have been so at the relevant time.


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                          ActsIncome Tax
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