2023 (7) TMI 1059 - HC - Indian Laws

Court dismisses petitions to quash Complaint Cases under Section 138 NI Act, emphasizes fair trial procedures

The High Court dismissed the petitions seeking to quash Complaint Case No. 4629/2022 and Complaint Case No. 527/2022 under Section 138 of the Negotiable ... Dishonour of Cheque - existence of legally enforceable debt or liability - vicarious liability of nominee and non-executive directors - HELD THAT:- Taking into consideration the various provisions of Cr.PC which have been discussed in various judgments time and again demonstrate that the Negotiable Instruments Act, provides sufficient opportunity to a person who issues the cheque. Once a cheque is issued by a person, it must be honoured and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences. It is seen in many cases that the petitioners with malafide intention and to prolong the litigation raise false and frivolous pleas and in some cases, the petitioners do have genuine defence, but instead of following due procedure of law, as provided under the N.I. Act and the Cr.PC, and further, by misreading of the provisions, such parties consider that the only option available to them is to approach the High Court and on this, the High Court is made to step into the shoes of the Metropolitan Magistrate and examine their defence first and exonerate them. The High Court cannot usurp the powers of the Metropolitan Magistrate and entertain a plea of accused, as to why he should not be tried under Section 138 of the N.I. Act. This plea, as to why he should not be tried under Section 138 of the N.I. Act is to be raised by the accused before the Court of the Metropolitan Magistrate under Section 251 of the Cr.PC & under Section 263(g) of the Cr.PC. In view of the procedure prescribed under the Cr.PC, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.PC and enter his plea of defence and fix the case for defence evidence, unless an application is made by an accused under Section 145(2) of N.I. Act for recalling a witness for cross-examination on plea of defence - Once the summoning orders in all these cases have been issued, it is now the obligation of the accused to take notice under Section 251 of Cr. PC., if not already taken, and enter his/her plea of defence before the concerned Metropolitan Magistrate’s Court and make an application, if they want to recall any witness. If they intend to prove their defence without recalling any complainant witness or any other witnesses, they should do so before the Court of Metropolitan Magistrate. Moreover, as far as the contention of the Ld. Counsel for the petitioners that the petitioners were only nominee and nonexecutive directors of M/s Sure Waves MediaTech Private Limited (SMPL) at the relevant time when the offence was committed and were neither in charge of the conduct of business nor involved in the day to day affairs of SMPL, does not cut much ice as perusal of Form No. MGT-7 nowhere shows that the petitioners were non-executive directors and E-Form DIR 12 also reveals that there was no change in directors of M/s Sure Waves MediaTech Private Limited in 2021 as well as in 2022 and the petitioners were only nominee directors of SMPL. There are no flaw or infirmity in the proceedings pending before the Trial Court - petition dismissed. Issues involved:The petitioners filed petitions under Section 482 Cr.P.C. seeking to quash Complaint Case No. 4629/2022 and Complaint Case No. 527/2022 under Section 138 of the Negotiable Instruments Act, 1881, along with summoning orders issued by the Metropolitan Magistrate.Issue 1: Quashing of Complaint Case No. 4629/2022 and summoning order:The complainant board filed a case against the petitioners for non-payment against a dishonored cheque. The petitioners argued they were only nominee and non-executive directors of the company at the time of the alleged offense and had no knowledge or involvement in the matter. They contended that no evidence showed their liability, and no specific roles were assigned to them by the respondent. The petitioners relied on various judgments to support their defense.Issue 2: Quashing of Complaint Case No. 527/2022 and summoning order:Similar to the first case, the complainant board filed another case against the petitioners for non-payment against a dishonored cheque. The respondent argued that the petitioners, as directors, were involved in the company's affairs and had substantial stakes. The respondent highlighted discrepancies in the petitioners' filings with the Ministry of Corporate Affairs to show their active roles in the company. The respondent emphasized the outstanding loan amount and the petitioners' alleged knowledge of the dishonored cheques.Judgment:The High Court dismissed the petitions, stating that the Trial Court should consider the petitioners' contentions and defense in accordance with the law. The Court found no flaws in the ongoing proceedings and emphasized that the accused must present their defense before the Metropolitan Magistrate. The Court reiterated the importance of following the procedures outlined in the Negotiable Instruments Act and the Criminal Procedure Code for fair trial and defense presentation.