Court quashes cases against petitioners due to lack of specific allegations against Directors

The court quashed the proceedings against the petitioners in various cases as the complaints lacked specific averments against the Directors, involved suppression of material facts, and did not relate to any legally enforceable debt. The court emphasized the necessity of detailed allegations against the Directors for vicarious liability and found that the cheques were not issued for a legally enforceable debt but as security. Consequently, the criminal original petitions were allowed, and the proceedings were quashed.

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Issues Involved:
1. Specific Averments Against Directors
2. Suppression of Notice
3. Legally Enforceable Debt
4. Instructions to Refrain from Presenting Cheques

Detailed Analysis:

1. Specific Averments Against Directors:
The petitioners argued that the complaints lacked specific averments indicating that the Directors (petitioners 2 to 4) were in charge of and responsible for the conduct of the business of the first accused company. The court noted that the complaint did not specify who signed the cheques or who issued them on behalf of the company. It emphasized that merely stating that the Directors were responsible without detailing their roles and responsibilities was insufficient. The court cited the Supreme Court judgment in *Aneeta Hada vs. Godfather Travels and Tours Private Limited*, which mandates that for vicarious liability under Section 141 of the NI Act, the company must be arraigned as an accused, and specific averments must be made against the Directors. The lack of such specific allegations rendered the complaints unsustainable.

2. Suppression of Notice:
The petitioners contended that the respondent suppressed a notice dated 15.10.2018, which was part of the reply notice dated 26.12.2018. This notice requested the respondent to refrain from presenting the cheques and to return them. The court found that the respondent did not deny the averments made in the notice dated 15.10.2018, which amounted to suppression of facts. The court held that this suppression indicated that the respondent did not approach the court with clean hands.

3. Legally Enforceable Debt:
The petitioners argued that there was no legally enforceable debt as the cheques were issued as security and not for any due payment. They highlighted that there were disputes regarding the quality of the garments supplied, leading to the issuance of stop payment instructions. The court observed that the petitioners had filed a suit for damages and a private complaint for cheating against the respondent, indicating ongoing disputes. The court concluded that the cheques were not issued for any legally enforceable debt, referencing the Supreme Court judgment in *National Small Industries Corporation Limited vs. Harmeet Singh Paintal*, which states that mere directorship does not make one liable under Section 141 of the NI Act without specific averments of responsibility.

4. Instructions to Refrain from Presenting Cheques:
The petitioners had instructed the respondent not to present the cheques for collection due to quality defects in the supplied garments. The court noted that the cheques were post-dated and that the petitioners had issued stop payment instructions. This was corroborated by the notice dated 15.10.2018, which indicated that the cheques were stopped due to quality issues and that the respondent had adjusted payments against a security cheque amount. The court found that this supported the petitioners' claim that the cheques were not issued for any legally enforceable debt.

Conclusion:
The court concluded that the complaints lacked specific averments against the Directors, involved suppression of material facts, and did not pertain to any legally enforceable debt. Consequently, the proceedings against the petitioners in CC.Nos.375, 376, 368, 62, 51, and 37 of 2019 were quashed, and the criminal original petitions were allowed.

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