2022 (8) TMI 694 - HC - Indian Laws

Court quashes criminal complaint due to lack of specific allegations.

The court quashed the criminal complaint against the petitioner, who had resigned from the company before the alleged offense, citing lack of specific ... Dishonor of Cheque - petitioner is Director of the first Accused Company - vicarious liability of Director - deemed liability against the Petitioner as per Section 141(1) of the Negotiable Instruments Act, 1881 - HELD THAT:- The specific averments in the complaint regarding the role of each of the Directors is found vague. As rightly pointed by the learned Counsel for the Petitioner that the averments in the complaint does not state clearly the role of the Director Tajinder Singh Kataria. The averments in the complaint that each of the Directors of the Company are responsible for the day-to-day affairs of the Company will not specify the claim under Section 141(1) of the Negotiable Instrument Act, 1881. The fact that the Petitioner resigned from the Company as Director of the Company, the same was accepted by the Registrar of the Companies is available on the web portal of the Registrar of the Companies which is uploaded on daily basis. This fact is available and had to be considered before the Complainant proceeds to file a criminal complaint as the complaint contains allegations of the role played by each of the Director in committing the offence under Section 138 of Negotiable Instruments Act. Therefore, this particular contention that the Petitioner was not at all responsible for the first Accused Company on a day-to-day basis on the date of issuance of the cheque i.e., on 27.02.2019. The Petitioner resigned from the Company on 05.02.2016. Therefore, as per the details regarding the Directors of the first Accused Company available with the Registrar of Companies, on the date of filing of the criminal complaint, the Petitioner cannot be arrayed as Accused by the Respondent/Complainant. The uploaded details regarding the status of the Directors of the Company available on the web portal of the Registrar of Companies cannot be disputed by any one as it is an authenticated web portal under the Ministry of Company Affairs, Government of India. This Court exercising discretion under Section 482 of Cr.P.C., as per the guidelines issued by the Hon'ble Supreme Court in the case STATE OF HARYANA VERSUS BHAJAN LAL [1990 (11) TMI 386 - SUPREME COURT] can consider this aspect. The Petitioner need not be forced to face trial. The ruling relied by the learned Counsel for the Petitioner in MRS. ANITA MALHOTRA VERSUS APPAREL EXPORT PROMOTION COUNCIL (APPAREL EXPORT PROMOTION COUNCIL) [2011 (11) TMI 532 - SUPREME COURT] is regarding the role of each of the Directors of the Company while prosecuting the Company and its Directors for the alleged offences under Section 138 of Negotiable Instruments Act. When the Director of Company resigns and the resignation had been accepted by the Registrar of Companies, the said Director cannot be prosecuted. Therefore, as per Section 141 of the Negotiable Instruments Act, while prosecuting the Directors of the Company, it has to be clearly stated by the Complainant regarding the role of each of the Director in the alleged offence committed by the Company. In the light of the ruling cited by the learned Counsel for the Petitioner in Anita Malhotra, the averments in the complaint regarding the role of each of the Director cannot be accepted, particularly, when the Petitioner herein had already resigned from the Board of Directors of the first Accused Company on 05.02.2016. There shall be a specific averment regarding the role of the Director who was a signatory on the Cheque for the day-to-day affairs of the Company. Under those circumstances, it is found from the Company that the Petitioner Tajinder Singh Kataria was not the Director of the Company as on the date of alleged offence in complaint. That is, when the Cheque was issued by the Company/Accused No.1 - Petition allowed. Issues Involved:1. Quashing of the criminal complaint against the petitioner.2. The petitioner's resignation from the company prior to the cause of action.3. Applicability of Section 141(1) of the Negotiable Instruments Act, 1881.4. Role of each director in the alleged offence.5. Judicial discretion under Section 482 of Cr.P.C.Detailed Analysis:1. Quashing of the criminal complaint against the petitioner:The petitioner sought to quash the criminal complaint in C.C.No.1027 of 2019, pending before the Metropolitan Magistrate, Fast Track Court - IV, George Town, Chennai. The petitioner was arrayed as Accused No.5, with the primary accused being the company. The petitioner argued that he had resigned from the company on 05.02.2016, which was three years prior to the cause of action stated in the complaint. The Registrar of Companies, Chennai, had completed the requisite procedural formalities confirming his resignation. Therefore, the petitioner contended that there was no deemed liability against him as per Section 141(1) of the Negotiable Instruments Act, 1881.2. The petitioner's resignation from the company prior to the cause of action:The petitioner highlighted that he had resigned from the company on 05.02.2016, and this was evidenced by records from the Registrar of Companies, Chennai. The resignation was accepted and recorded by the Registrar of Companies, which was an unimpeachable statutory source. Since the petitioner was not a director at the time of the alleged offence (between 29.02.2019 to 09.05.2019), he argued that he could not be held liable for the actions of the company during that period.3. Applicability of Section 141(1) of the Negotiable Instruments Act, 1881:The petitioner argued that there was no specific allegation or prima facie evidence to prove that he was in charge of and responsible for the day-to-day affairs of the company. The complaint merely stated that he was a director of the company, which was insufficient to establish liability under Section 141(1) of the Negotiable Instruments Act, 1881. The petitioner cited the Supreme Court ruling in Anita Malhotra Vs. Apparel Export Promotion Council, which emphasized the need for specific averments regarding the role of each director in the alleged offence.4. Role of each director in the alleged offence:The complaint stated that the accused company issued two cheques, which were dishonored with the remark 'PAYMENT STOPPED BY THE DRAWER.' The complainant issued a statutory notice to all directors, including the petitioner, but the petitioner did not respond. The complainant argued that the petitioner and other directors were responsible for the day-to-day affairs of the company. However, the court found that the specific averments regarding the role of each director were vague and did not clearly state the petitioner's involvement in the alleged offence. The court noted that the petitioner had resigned from the company before the cheques were issued, and therefore, he could not be held liable.5. Judicial discretion under Section 482 of Cr.P.C.:The court exercised its discretion under Section 482 of Cr.P.C. to quash the criminal complaint against the petitioner. The court took judicial notice of the petitioner's resignation, which was accepted by the Registrar of Companies and was available on the web portal of the Registrar of Companies. The court found that the petitioner need not be forced to face trial, as the complaint did not specify his role in the alleged offence. The court cited the Supreme Court guidelines in the case of State of Haryana Vs. Bhajan Lal, which allowed the High Court to quash a complaint when the allegations did not constitute an offence.Conclusion:The Criminal Original Petition was allowed, and the criminal complaint in C.C.No.1027 of 2019 was quashed against the petitioner. The Metropolitan Magistrate, Fast Track Court - IV, was directed to dispose of the case within three months from the date of receipt or uploading of the order. Consequently, connected miscellaneous petitions were closed.