2023 (10) TMI 799 - HC - Indian Laws

Court Upholds Need for Specific Allegations in Section 138/141 NI Act Cases; Dismisses Revision Applications

The court dismissed the revision applications, affirming the importance of specific allegations in complaints under Section 138/141 of the NI Act to ... Dishonour of Cheque - discharge of existing debt and liability or not - actual role of the petitioner in the issuance of alleged cheques - complainant/company alleged that the accused persons had knowledge and were fully aware of the insufficient amount in its bank account in order to honor the said cheques - vicarious liability of accused - HELD THAT:- In view of provision of Section 141(1) and proviso thereto it appears that at the threshold of the case liability is on the complainant to make averment in the complaint regarding responsibility of the accused and accused can also furnish some sterling incontrovertible material or acceptable circumstances to substantiate the contention that alleged offence was committed without his knowledge. In fact, the actual role of the petitioner in the company, in my opinion, cannot be said to be in special knowledge of the complainant whereas role of the petitioner/accused in the company is surely within the special knowledge of the petitioner/accused himself, and that could have been substantiated by any sterling material. According to Section 141 of the NI Act, complainant is only supposed to have knowledge of the person in charge of the company as it is special knowledge of the petitioner/accused. In this case, petitioner/accused could not show any sterling material that he was not really concerned with the issuance of cheque in order to persuade this Court to quash the proceeding. The instant revision application is liable to be dismissed - Application dismissed. Issues involved:The issues involved in this case are related to complaints filed under Section 138/141 of the Negotiable Instruments Act, 1881, regarding dishonored cheques, liability of accused company, and the responsibility of individuals in charge of the company's conduct.Facts:The complainant company filed complaints against the petitioner and accused company for dishonoring cheques issued to discharge debts. The cheques were returned unpaid with 'Account Frozen' remarks. Demand notices were sent, alleging that the accused company delayed payment, causing doubt about their intention to honor the liabilities.Legal Analysis:The petitioner argued that the complaint did not disclose their role in the issuance of cheques, citing various cases. The court noted that to establish liability under Section 138/141 of the NI Act, the complaint must specify the accused's responsibility for the company's conduct. Section 141 imposes liability on those responsible for the company's business conduct.Provisions of Section 141:Section 141 of the NI Act holds individuals in charge of a company responsible for offenses committed by the company. It requires specific allegations in the complaint to make the accused vicariously liable and provides for proving lack of knowledge or due diligence to prevent the offense.Court's Decision:The court emphasized the complainant's duty to allege the accused's responsibility and the accused's ability to prove lack of involvement. The petitioner failed to provide evidence to show lack of connection to the issuance of cheques. Consequently, the revision applications were dismissed, and all parties were directed to act as per the court's order.Conclusion:The court's judgment emphasized the importance of specific allegations in complaints under Section 138/141 of the NI Act to establish liability. Lack of evidence to prove lack of involvement led to the dismissal of the revision applications, highlighting the need for clarity in legal proceedings regarding dishonored cheques and corporate liability.