2022 (11) TMI 281 - HC - Indian Laws

Court dismisses petition to quash summoning order under Sections 138 & 141 of NI Act

The court dismissed the petition seeking to quash the summoning order under Section 138 of the Negotiable Instruments Act. The petitioner's resignation ... Dishonor of Cheque - vicarious liability of the Director - It is submitted that the petitioner had resigned from the directorship of the accused company prior to the date of the issuance of cheque - offences under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- The petitioner on behalf of the accused company was allegedly directly responsible for dealing with the respondent/complainant, he executed transaction documents/agreements with the complainant/respondent, the petitioner expressed his continued commitment towards on going funding process of the accused company and assured to be available for discussion and support to the accused company, even after his resignation. The pleas raised by the petitioner in his defence are a matter of trial and the petitioner is at liberty to raise the same before the Ld. Trial Court - There are no merits in the petition - petition dismissed. Issues Involved:1. Quashing of the summoning order dated 24.11.2021.2. Petitioner's resignation from directorship prior to the issuance of the cheque.3. Specific averments required under Section 141 of the NI Act.4. Non-receipt of legal notice by the petitioner.5. Petitioner's liability under Section 138 read with Section 141 of the NI Act.Detailed Analysis:1. Quashing of the Summoning Order:The petitioner sought quashing of the summoning order dated 24.11.2021 issued by the Learned MM (NI) Act, Saket Courts, New Delhi. The order was based on the complaint filed under Section 138 of the Negotiable Instruments Act, 1881, and the court found sufficient grounds to proceed against the accused under Section 202 Cr.P.C. The petitioner was summoned as he was the signatory of the dishonoured cheque issued on behalf of the accused company.2. Petitioner's Resignation from Directorship:The petitioner argued that he had resigned from the directorship of the accused company with effect from 17.07.2021, prior to the issuance of the cheque dated 21.08.2021. This resignation was reflected in Form DIR-12. However, the respondent contended that the petitioner's resignation was a sham to avoid legal complications, highlighting an email dated 19.07.2021 where the petitioner assured his continued availability for discussions and support to the company. The court noted that the petitioner's name still appeared as the country manager on the company's website and his company email was still active, indicating that his resignation did not sever his connection with the company.3. Specific Averments Required under Section 141 of the NI Act:The petitioner argued that there were no specific averments in the complaint about him being in charge and responsible for the conduct of the business of the company. The court referred to the Supreme Court judgment in K.K. Ahuja vs. V.K. Vora and Another, which held that a director who signed the cheque on behalf of the company is responsible under sub-section (2) of Section 141 without the need for specific averments. The court found that the petitioner, being the signatory of the cheque and directly involved in the transactions, was responsible under Section 141(2) of the NI Act.4. Non-Receipt of Legal Notice by the Petitioner:The petitioner claimed that the legal notice of demand dated 18.09.2021 was never delivered to him. The respondent, however, submitted that the notice was duly delivered by email and the petitioner did not respond to it. The court noted that the petitioner's refusal to accept the summons and the delivery report of the Speed Post indicated that he was avoiding the process of law.5. Petitioner's Liability under Section 138 read with Section 141 of the NI Act:The court examined the relevant provisions of Sections 138 and 141 of the NI Act. It was established that the petitioner, as the signatory of the dishonoured cheque, was liable under Section 138. The court also found that the petitioner's resignation did not absolve him of liability as he continued to be involved with the company's affairs. The court referred to the Supreme Court judgment in Ved Prakash Gupta & Anr. Vs. M/S. Anchon Chemplast Pvt. Ltd. & Ors., which held that a director cannot be absolved of liability by resigning before the cheque's encashment if they continued to control the company's affairs.Conclusion:The court dismissed the petition, finding no merit in the petitioner's arguments. The petitioner's pleas were deemed matters for trial, and he was at liberty to raise them before the trial court. The court's observations were not to be construed as opinions on the merits of the case.