TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 851
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....froy Road, Flat No. 4, Calcutta Mansion, Kolkata-700020 and the accused No. 2 to 5 are the Directors, accused No. 6 is the Managing Director and accused No. 7 is whole-time Director of accused No. 1 company, they are responsible for the day to day affairs of the company that is the accused No. 1. c) The accused persons in order to liquidate their liabilities towards the complainant issued two cheques in favour of the complainant company aggregating to a sum of Rs. 11,48,500/- (Rupees Eleven Lakh Forty Eight Thousand and Five Hundred only). The said cheques were presented for encashment with the complainant's bankers but the same were dishonoured and after complying with all the formalities the complainant company filed a complaint case under Section 200 of the Code of Criminal Procedure for offences under Section 138/141 of the Negotiable Instruments Act being Case No. CS/54933/2016 before the Learned Chief Metropolitan Magistrate, Calcutta. The Learned Metropolitan Magistrate was pleased to take cognizance of the offences and transferred the case to the Learned Metropolitan Magistrate, 15th Court, Calcutta, for enquiry, trial and disposal of the same. In course of the proceeding....
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....s Act. Records reflect that the learned Magistrate was pleased to take cognizance of the offence on 05.05.2017 and transferred the case to the learned Metropolitan Magistrate, 15th Court, Calcutta for enquiry and disposal according to law. On 02.08.2017 the learned Magistrate after perusing the affidavit under Section 145 of the Negotiable Instruments Act along with the original documents and other papers was pleased to issue summons against the accused persons fixing 06.09.2017 for service return and appearance. The order dated 06.09.2017 reflects that some of the accused persons physically appeared and they were granted bail. The present petitioner (being the accused no.4 as per complaint) filed an application before the learned Magistrate for discharging him from the case. The main thrust of contention of the present petitioner is that since he has resigned from the company he cannot be made liable for the dishonoured cheque. Learned Magistrate after considering the materials appearing against him refused to discharge him and dismiss the petition which was filed on 06.09.2017. Mr. Abhirup Chakraborty, learned advocate appearing for the petitioner submits that the petitioner is....
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....arty refuted the contentions advanced by the learned Advocate for the petitioner and submitted that it has been categorically averred in the petition of complain that prior to the initiation of the present complaint case the accused persons in order to liquidate their part liabilities towards the complainant issued two cheques aggregating to Rs. 11,48,500/-(Rupees Eleven Lakh Forty Eight Thousand and Five Hundred only). The present petitioner (Accused No.4 in the petition of complaint) was the signatory to the said two cheques. The present complainant initiated a complaint case being C.S. Case No. 54933/2016 under Sections 138/141 of the Negotiable Instruments Act for dishonour of the said two cheques before the Learned Chief Metropolitan Magistrate, Calcutta against the petitioner and other accused persons. Subsequently, a term of settlement was executed by and between the parties wherein it was agreed that the complainant/opposite party No.2 would withdraw the complaint case against the petitioner and other accused persons and in return the petitioner and other accused persons would issue cheque for liquidating their liabilities towards the complainant company. It has been empha....
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.... the payment of the said amount to the payee within 15 days from the date of receipt of notice. 15. Therefore, in the case of post dated cheques, the relevant time of commission of an offence is the date of presentation and dishonour of the cheque. Any person in-charge of and responsible for the conduct of the business of the Company at this point of time alone are vicariously liable and the person who had resigned from the Directorship of the Company cannot be held responsible unless specific allegations are made that the said person was incharge of and responsible for the conduct of the business of the company even after resignation. In DCM Financial Services Limited v. J.S. Sareen, 2008 (2) MWN (Cr.) DCC 1 (SC) : 2008 (3) SCC (Crl) 401 in a similar situation, it is held "he had no say in the matter seeing that the cheque is honoured he could not ask the company to pay the amount". It is also pertinent to note that the Petitioner was not the signatory of the cheques. Therefore, I am of the considered view that the Petitioner cannot be held liable for the dishonour of the cheque." Reliance was also placed by the petitioner in respect of the following paragraphs in Harshendra Ku....
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....een apparent that the appellant has resigned much before the cheques were issued by the Company. 27. As noticed above, the appellant resigned from the post of Director on 2-3-2004. The dishonoured cheques were issued by the Company on 30-4-2004 i.e. much after the appellant had resigned from the post of Director of the Company. The acceptance of the appellant's resignation is duly reflected in the Resolution dated 2-3-2004. Then in the prescribed form (Form 32), the Company informed to the Registrar of Companies on 4-3-2004 about the appellant's resignation. It is not even the case of the complainants that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date the offence was committed by the Company, the appellant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of the court." In case of K. Srikanth Singh v. North East Securities Ltd., (supra) emphasis was made on the following paragraphs by the petitione....
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....person' the section would have said 'every director, manager or secretary in a company is liable' ..., etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action." 5. Negotiation for obtaining financial assistance on behalf of the company by its Directors itself is not an ingredient for the purpose of constituting an offence under Section 138 of the Negotiable Instruments Act. Furthermore, a vicarious liability on the part of a person must be pleaded and proved. It cannot be a subject-matter of mere inference." In Ashoke Mal Bafna -Vs.- Upper India Steel Mfg. & Engg. Co. Ltd., (supra) the attention of the Court was drawn to the following paragraphs: "7. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279], this Court observed that a person "in charge of a business" means that the person should be in overall control of the day-to-day business of the Company. 9. To fasten vicarious li....
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....be said to a repeat application squarely on the same facts and circumstances. 9. In Harshendra Kumar D. v. Rebatilata Koley [Harshendra Kumar D. v. Rebatilata Koley, (2011) 3 SCC 351 : (2011) 1 SCC (Civ) 717 : (2011) 1 SCC (Cri) 1139 : 2011 Cri LJ 1626] , this Court held : (SCC p. 362, paras 26-27) "26. Criminal prosecution is a serious matter; it affects the liberty of a person. No greater damage can be done to the reputation of a person than dragging him in a criminal case. In our opinion, the High Court fell into grave error in not taking into consideration the uncontroverted documents relating to the appellant's resignation from the post of Director of the Company. Had these documents been considered by the High Court, it would have been apparent that the appellant has resigned much before the cheques were issued by the Company. 27. As noticed above, the appellant resigned from the post of Director on 2-3-2004. The dishonoured cheques were issued by the Company on 30-4-2004 i.e. much after the appellant had resigned from the post of Director of the Company. The acceptance of the appellant's resignation is duly reflected in the Resolution dated 2-3-2004. Th....
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....h the complaint proceeded. Fairness on the part of the complainant is also expected in such a matter. It is now not in dispute that the first respondent had intimated the complainant as regards his resignation from the Company. 21. The cheque in question was admittedly a post-dated one. It was signed on 3-4-1995. It was presented only sometime in June 1998. In the meantime the first respondent had resigned from the directorship of the Company. The complaint petition was filed on or about 20-8-1998. Intimation about his resignation was given to the complainant in writing by the first respondent on several occasions. The appellant was, therefore, aware thereof. Despite having the knowledge, the first respondent was impleaded as one of the accused in the complaint as a Director in charge of the affairs of the Company on the date of commission of the offence, which he was not. If he was proceeded against as a signatory to the cheques, it should have been disclosed before the learned Judge as also the High Court so as to enable him to apply his mind in that behalf. It was not done. Although, therefore, it may be that as an authorised signatory he will be deemed to be person in-charge,....
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....ctive and a dead letter should be averted. If the interpretation, which is sought for, were given, then it would only encourage dishonest persons to issue cheques and before presentation of the cheque close "that account" and thereby escape from the penal consequences of Section 138. 15. In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above "brush away the cobweb varnish, and shew the transactions in their true light" (Wilmot, C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an i....
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....for dishonour of the cheque on 20th February, 2017, the demand notice was issued and consequently the cause of action arose in the year 2017 itself, at the relevant period of time in the year 2017 the present petitioner cannot be said to be a director or a person in-charge of the company since he had resigned much earlier in the year 2015. The authorities so relied upon by the petitioner on the basis of the documents of the Registrar of Company do support such contention. There is no dispute regarding the authorities placed by the petitioner so far as a director who has resigned from the company is concerned when the cause of action arose. However, each case is based on its distinctive feature and characteristic. To that effect the submission of the learned Advocate appearing for the complainant/opposite party cannot be ruled out. The submission of the learned Advocate for the opposite party is that they initiated a complaint case under Section 138 of the Negotiable Instruments Act and the subject matter of the said cheque was signed by the present petitioner. The said case was compromised and terms of settlement were prepared and the petitioner happened to be a signatory of the t....