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Court quashes complaint case under Negotiable Instruments Act due to lack of liability and abuse of process. The court quashed the complaint case under Sections 138/141 of the Negotiable Instruments Act, finding the petitioners not liable as they had resigned ...
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Court quashes complaint case under Negotiable Instruments Act due to lack of liability and abuse of process.
The court quashed the complaint case under Sections 138/141 of the Negotiable Instruments Act, finding the petitioners not liable as they had resigned before the issuance of the dishonored cheques. The court held that the resignations were effective, and the complaint lacked specific averments attributing responsibility to the petitioners. Consequently, the court exercised its inherent power under Section 482 Cr.P.C. to quash the proceedings, deeming them an abuse of process. The petition was allowed, and the complaint was quashed, with parties directed to bear their own costs.
Issues Involved: 1. Whether the petitioners were liable under Sections 138/141 of the Negotiable Instruments Act, 1881. 2. Whether the petitioners' resignations were effective before the issuance of the cheques. 3. Whether the complaint contained sufficient averments regarding the petitioners' roles in the alleged offence. 4. Whether the inherent power under Section 482 Cr.P.C. can be exercised to quash the proceedings.
Detailed Analysis:
1. Liability under Sections 138/141 of the Negotiable Instruments Act, 1881: The petitioners sought to quash the complaint case under Sections 138/141 read with Section 142 of the Negotiable Instruments Act, 1881, on the grounds that they were not the Directors at the time of the issuance of the cheques. The complaint was filed against the company and its Directors for dishonour of cheques amounting to Rs. 19,82,000 due to insufficient funds. The court noted that the petitioners were not signatories of the dishonoured cheques and had resigned before the cheques were issued.
2. Effectiveness of Resignations: The petitioners argued that they had tendered their resignations on 01.02.2018 and 03.01.2018, respectively, before the cheques were issued on 27.03.2018. The court found that the petitioners had submitted their resignation letters to the Registrar of Companies, which were reflected on the company's website. The respondent's argument that the resignations were not accepted by the company was not sufficient to hold the petitioners liable, as the resignations were tendered before the issuance of the cheques.
3. Sufficiency of Averments in the Complaint: The court examined whether the complaint contained specific averments regarding the petitioners' roles in the alleged offence. It was observed that the complaint only contained an omnibus statement that all accused Directors were liable without specifying how the petitioners were responsible for the issuance of the cheques. The court referred to the Supreme Court's ruling in Pooja Ravinder Devidasani vs. State of Maharashtra, which held that there must be specific averments showing how and in what manner the Directors were responsible for the conduct of the company's business. The court found that the complaint did not meet this requirement.
4. Exercise of Inherent Power under Section 482 Cr.P.C.: The court considered whether it was appropriate to exercise its inherent power under Section 482 Cr.P.C. to quash the proceedings. It was concluded that the continuation of the proceedings against the petitioners would be an abuse of the process of the court, as the complaint did not contain sufficient averments to fasten vicarious liability on the petitioners. The court also referred to the Supreme Court's decision in National Small Industries Corporation vs. Harmeet Singh Paintal, which emphasized the need for specific allegations to make a Director liable under Section 141 of the NI Act.
Conclusion: The court allowed the petition and quashed Complaint Case No. 2845c/2018 pending before the learned SDJM-II, Kamrup (Metro) against the petitioners. The interim order was vacated, and the parties were directed to bear their own costs.
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