TaxTMI 
TaxTMI 
2021 (2) TMI 404
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....licants have authorised the opposite party No.2 for purchase of paddy from 'mandi' and thereafter the opposite party no.2 Sanjay Goel has purchased huge quantity of paddy and supplied the same to the applicant's company. The applicant company used to pay the consideration amount through cheques against the supply of paddy made by opposite party no.2/ complainant and accordingly the said company has issued a cheque no. 314904 dated 16.12.2016 of Oriental Bank of Commerce, Khair, Aligarh for a sum of Rs. 2,80,00000/- in favour of opposite party No. 2 towards purchase and supply of paddy. The opposite party no.2 presented the said cheque in his bank for encashment of the same in his account but the said cheque was dishonoured vide bank memo dated 19.12.2016, as the applicants have closed the account. The opposite party no.2 issued a notice dated 27.12.2016 to the applicants asking for payment of cheque amount but neither any reply was given nor the payment was made. Thereafter, the impugned complaint was filed by the opposite party No. 2 against applicants under Section 138 of Negotiable Instrument Act. The opposite party no.2/ complainant was examined under Section 200 Cr....
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.... was stated that after death of aforesaid C.P. Chaudhary, the complainant has forged the said cheque by filling in amount of Rs. 2,80,00000/- and mentioning the date and his name in the cheque. Learned counsel submitted that in view of above stated facts and circumstances of the matter, no prima facie case is made out and that the impugned summoning order is not sustainable and the impugned proceedings are liable to be quashed. In support of his contentions learned counsel for applicants has relied upon in case of Harshendra Kumar D Vs. Rebatilata Koley etc., AIR 2011 SC 1090 and Central Bank of India Vs. Asian Global Ltd. And others, AIR 2010 SC 2835. 5. Learned counsel for opposite party no.2 has argued that applicant no.1 was a registered Company and it has two Directors i.e. applicant no.2 Siddhatha Chaudhary and applicant no.3 Smt. Anju Chaudhary, who have power of operation of accounts of company and that they both are responsible for work and conduct of business of the company. Learned counsel submitted that the said company has cheated a number of persons and that husband of applicant no.3 has obtained loan of several crores from several Banks. The Memorandum and Articles ....
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....es to differ with the judgment and order of the High Court. The judgment in S.M.S. Pharmaceuticals Ltd.'s case (supra), which was relied upon by the High Court, while interpreting the provisions of sub-section (1) of Section 141 of the 1881 Act, made it very clear that unless a specific averment was made in the complaint that at the time when the offence was committed, the person accused was in charge of and responsible for the conduct of the business of the Company, the requirements of Section 141 would not be satisfied. It was further held that while a Managing Director or a Joint Director of the Company would be admittedly in charge of the Company and responsible to the Company for the conduct of its business, the same yardstick would not apply to a Director. The position of a signatory to a cheque would be different in terms of Sub-section (2) of Section 141 of the 1881 Act. That, of course, is not the fact in this case. 14. The law as laid down in S.M.S. Pharmaceuticals Ltd. 's case (supra) has been consistently followed and as late as in 2007, this Court in the case of N.K. Wahi's case (supra), while considering the question of vicarious liability of a Director ....
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....a facie, it would be difficult to assume that cheques in the sum exceeding Rs. 5 crores could have been issued by the persons in charge of the company without the knowledge or connivance of the board of directors. The course of events culled out from the record, prima facie, lends credence to the allegations of the complainant that it was induced and deceived into delivering goods on credit against the security of cheques which bounced when presented for realization. Thus, the allegations against the petitioners indicate larger offences of cheating or abetment thereof within which the monetary transaction of issuance of cheques and dishonour thereof will have to be examined on the basis of evidence that may be led at the trial. When it is alleged that the offences were committed by the company as well as the directors collectively, it would not be necessary to separately allege that each director had consented to or connived at the commission of the alleged offences. It is not just a case of bald allegation of the petitioners being responsible as directors of the company whose cheques were dishonoured but, instead, specific statements on oath are made by the complainant to allege t....
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....at presumption in favour of the holder of a cheque under Section 139 of the NI Act has been held by the NI Act as also by this Court to be a rebuttable presumption to be discharged by the accused/drawee of the cheque which may be discharged even at the threshold where the magistrate examines a case at the stage of taking cognizance as to whether a prima facie case has been made out or not against the drawer of the cheque.'' 10. In case of N. Rangachari (supra), Hon'ble Apex Court has held as under: ''18. In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another were the Directors of the company and were incharge of the affairs of the company. It is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons incharge of the affairs of the company. Obviously, the complaint refers to the point of time when the two cheques were issued, their presentment, ....
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....ite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence committed by the company along with averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. (vi) If the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases. 12. From above stated case law it is apparent that it is necessary to specifically av....
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....stant case it may be observed that there are allegations in the impugned complaint that applicant No. 2 and 3 are Directors of the company (applicant No. 1) and they were responsible for duties and rights on behalf of the applicant No. 1-company and that the cheque in question was issued by applicant No. 2 in presence of applicant No. 3 for payment of paddy supplied by the opposite party No. 2 to the said company and that they have assured that the cheque would be honoured. It is not being disputed that said cheque was dishonoured due to 'account closed'. The version of applicants, that said cheque was given by late C.P. Chaudhary as a blank cheque for security but the complainant has made forgery by filling the amount, date and his name in said cheque, cannot be accepted. The reading of the complaint as whole shows that substance of accusation discloses necessary averment that the applicants Nos. 2 and 3 were Director of applicant No. 1-company and they were in-charge and responsible for conduct of business and even the cheque was issued by applicant No.2. It is not necessary that in averments of complaint the particular terminology that ''the person accused was i....
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....82 Cr.P.C. though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. The inherent power should not be exercised to stifle a legitimate prosecution. Recently in case of Rajeev Kourav vs. Bhaisahab & Ors. (Criminal Appeal No. 232 of 2020), decided on 11.02.2020, Hon'ble Apex Court held: ''It is no more res integra that exercise of power under Section 482 CrPC to quash a criminal proceeding is only when an allegation made in the FIR or the charge sheet constitutes the ingredients of the offence/offences alleged. Interference by the High Court under Section 482 CrPC is to prevent the abuse of....