POOJA RAVINDER DEVIDASANI Vs. STATE OF MAHARASHTRA & ORS.
Negotiable Instruments Act, 1881
Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the account.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 2604-2610 of 2014, Judgment Date: Dec 17, 2014
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.2604-2610 OF 2014
ARISING OUT OF
SPECIAL LEAVE PETITION (CRL) NOs. 9133-9139 OF 2010
POOJA RAVINDER DEVIDASANI ... APPELLANT
VERSUS
STATE OF MAHARASHTRA & ANR. ... RESPONDENTS
JUDGMENT
N.V. RAMANA, J.
Leave granted.
2. These appeals by special leave are filed by the appellant challenging
the impugned judgment and order dated 6th October, 2010 passed by the High
Court of Judicature at Bombay in Writ Petition Nos. 614-620 of 2010 whereby
the High Court dismissed the writ petitions filed by the appellant seeking
quashing of the complaints filed by the Respondent No.2 under Section 138
read with Section 141 of the Negotiable Instruments Act, 1881 (hereinafter
referred to as "the N.I. Act").
3. The brief facts of these appeals are that Respondent No. 2, a finance
Company, filed seven complaints under the N.I. Act against the appellant
and others viz., (1) Complaint No. 3370/SS/2008 claiming Rs.1,64,69,801-14
(2) Complaint No. 3641/SS/2008 claiming Rs.1,06,55,289-91 (3) Complaint No.
3368/SS/2008 claiming Rs. 1,41,95,806-40 (4) 3640/SS/2008 claiming Rs.
85,21,294/- (5) 3369/SS/2008 claiming Rs. 1,88,12,292/- (6) 3642/SS/2008
claiming Rs. 1,69,95,353-50 and (7) Complaint No. 4086/SS/2009 for a claim
of Rs. 8,08,973-25. In all the complaints the allegation was that the
Respondent No. 2 Company had extended trade finance facility to M/S Elite
International Pvt. Ltd. to which the appellant was a Director at the
relevant time and several Cheques (119 in number) issued by M/S Elite
International Pvt. Ltd. aggregating to Rs.8,64,58,810-16, in discharge of
its liability towards part payment, stood dishonoured with the banker's
remarks "insufficient funds". According to the complainant, at the
material time, the accused (appellant) was in charge and at the helm of
affairs of M/S Elite International Pvt. Ltd. and therefore she is
vicariously liable for the default of the Company as she is responsible for
the conduct of its business. Metropolitan Magistrate, 12th Court, Bandra,
Mumbai took cognizance of the complaints and issued process against the
accused (appellant) for the offence punishable under Section 138 of the
N.I. Act.
4. The aggrieved appellant filed Criminal Writ Petitions before the High
Court under Section 482, Cr.P.C. seeking quashing of the criminal
proceedings pending before the Metropolitan Magistrate. The High Court
initially by an interim order dated 28th July, 2010 granted stay of the
criminal proceedings qua the appellant and directed the trial to be
proceeded against the other accused. Finally, by the impugned order, the
High Court dismissed the writ petitions filed by the appellant. Challenging
the said order of dismissal, the appellant has preferred these appeals
before this Court.
5. The main contention advanced by the learned counsel for the appellant
is that the appellant is merely a housewife who was appointed as a Non-
Executive Director of M/s Elite International Private Ltd. and had no
active role in the conduct of business of the Company, particularly in the
issuance of the cheques in question. As a matter of fact, the appellant had
resigned as the Director much before the issuance of the cheques in
question, her resignation was also approved by the Board of Directors in
the meeting held on 17th December, 2005. The resignation of the appellant
as Director of M/S Elite International Pvt. Ltd. has also been informed to
the Registrar of Companies by Form No. 20B under Section 159, Schedule V,
Part II of the Companies Act, 1956 when the annual return for the year
ending on 31st March, 2006 was filed. The trade facility was sanctioned by
the Respondent No. 2 on 19th January, 2005 as per the Letter of Guarantee
executed by the appellant on the same date. The effective date of
resignation of the appellant as Director of the Company was 17th December,
2005. With the result of approval of her resignation by the Board of
Directors, the appellant ceased to play any role in the activities of the
Company. The Cheques in question were issued by the Company in the year
2008 i.e. about two and half years after resignation of the appellant as
Director. This fact itself emphasizes that the appellant was not involved
in the affairs of the Company when the Cheques were issued and had no role
either in the conduct of the business of the Company or in issuing the
Cheques.
6. After resignation of the appellant as a Director, Form 32 under the
Companies Act, 1956, pursuant to Section 303(2), was filed by M/S Elite
International Pvt. Ltd. on 20th December, 2005 with the Registrar of
Companies indicating the appointments and changes among Directors. In the
said Form 32, the names of two Directors who were newly appointed were
shown with remarks "appointed as a Director-Operations" and against the
name of the appellant the remarks "resigned as a Director" were shown.
Taking note of this Form 32, Respondent No. 2 arrayed the newly appointed
Directors as accused Nos. 4 & 5 in the complaints. It is thus clear that
the Respondent No. 2 is well aware of the fact that the appellant was no
longer a part of M/S Elite International Pvt. Ltd, yet initiated criminal
proceedings fastening vicarious liability on the appellant.
7. Learned counsel submitted that to fasten vicarious liability it is
necessary under Section 141 of the N.I. Act that the complainant must aver
and prove how and in what manner the appellant was responsible in the
conduct of the business of the Company. The complainant shall also state in
the light of proviso to Section 141(1), in what capacity the appellant was
in charge of day to day affairs of the default Company at the relevant
time, particularly when cheques were issued. Respondent No. 2 (complainant)
did not fulfill these prerequisites contemplated by the Act but sought to
impute the appellant with vicarious liability only on account of the fact
that the appellant had attended the Board Meeting of M/S Elite
International Pvt. Ltd. held on 14th August, 2004. In that meeting, the
Board of Directors authorized another Director to execute necessary
documents in connection with trade finance facility from Respondent No. 2.
The mere presence of the appellant in the Board Meeting on 14th August,
2004 would not amount to an offence punishable under Section 138 of the
N.I. Act. Merely arraying a Director of a Company as an accused in the
Complaint and making a bald or cursory statement without attributing any
specific role, that the Director is responsible for the conduct of the
business would not make a case of vicarious liability against a Director of
the company under Section 141 of the N.I. Act. Similarly, simply stating
that the appellant was in charge of the affairs of the Company would not be
sufficient to justify the allegation under Section 138 of the N.I. Act. In
other words, the complainant must explain the role specifically
attributable to the appellant in the commission of the offence. Placing
reliance on this Court's judgment in National Small Industries Corporation
Vs. Harmeet Singh Paintal & Anr. (2010) 3 SCC 330 learned counsel submitted
that the law is well settled by this Court in a catena of cases that the
complainant should specifically show as to how and in what manner the
accused was responsible.
8. Despite Respondent No. 2 has knowledge of the resignation of the
appellant as Director of the Company and she has no role in the issuance of
cheques in question, yet as an arm twisting measure, the complainant
arrayed the appellant in the complaint as a defaulter and initiated
criminal proceedings against her. Knowing fully well about the change of
Directors, Respondent No. 2 unnecessarily dragged the name of appellant
into the litigation in a casual and callous manner and initiated criminal
proceedings against her along with the existing Directors of the Company
which is untenable under the law. The Metropolitan Magistrate without
proper application of mind issued process and the High Court also erred in
construing the penal provision enunciated under the N.I. Act, and
wrongfully dismissed the Criminal Writ Petitions filed by the appellant
under Section 482, Cr.P.C.
9. In support of his contention that the appellant was no more a
Director of the Company and responsible for the conduct of its business at
the relevant time, learned counsel relied upon the following:
(i) Agenda item 4 of the Minutes of the Board meeting dated 17th
December, 2005 which reads as under:
"4. RESIGNATION OF DIRECTOR
Chairman placed before the Members of the Board a letter received from Ms.
Pooja Devidasani tendering her resignation as a Director of the Company.
Members of the Board noted the same and then they unanimously resolved as
under:
RESOLVED THAT resignation tendered by Ms. Pooja Devidasani be and is hereby
accepted from the conclusion of this Board Meeting".
(ii) Form 32 submitted to the Registrar of Companies in pursuance of
requirements of provisions of the Companies Act, 1956 in which against the
name of appellant, it was shown as "resigned as a Director". Whereas
against the names of Mr. Hitesh Haria and Mr. Parag Tejani, the words
"appointed as a Director-Operations" were shown. Against the column "Date
of appointment or change" the dates against all the above three persons
were shown as 17th December, 2005. Taking note of these changes,
Respondent No. 2 arrayed the newly added Directors as defaulters, but not
omitted the appellant who has resigned as a Director which is specified in
the very Form 32.
(iii) The Annual Return filed by the Company for the year ending 31st
March, 2006 which also showed that the appellant was no longer a Director
of the Company. In Column IV of the Annual Return against the name of
appellant, it was clearly mentioned as "Date of ceasing : 17-12-2005".
A letter dated 5th February, 2009 issued by the default Company in favour
of Respondent No. 2. In the said letter, while forwarding certain
details/information, a list of Directors was also sent. The said list did
not contain name of the appellant.
Learned counsel for the appellant submitted that in the light of the above
Respondent No. 2 was fully aware that appellant was ceased to be a Director
of the Company (a) prior to the issuance of cheques (b) prior to the
dishonor of cheques (c) prior to the date of issuance of legal notice (d)
prior to the expiry of 15 days period after issuance of legal notice after
which cause of action to file criminal complaints arose and (e) prior to
the filing of the criminal complaints.
10. Learned counsel finally submitted that the allegations set out in the
complaint do not constitute any offence against the appellant and the High
Court committed a manifest error in interpreting Section 141 of the N.I.
Act in its proper perspective, which led to travesty of justice. He
therefore urged for setting aside the impugned judgment and quash the
criminal proceedings against the appellant.
11. Learned senior counsel appearing for the respondents, on the other
hand, supported the impugned judgment of the High Court and submitted that
by dismissing the writ petitions of the appellant the High Court had
neither committed any illegality nor misinterpreted the provisions of the
N.I. Act. Vehemently contending that the resignation of the appellant
itself is a disputed fact, he submitted that no certified copy of Form 32
was produced by the appellant and only a certified copy of Annual Return
has been filed before this Court. Under Section 79 of the Evidence Act,
1872, a Court can presume genuineness of a document only when a certified
copy is filed. Even if certified copy of Form 32 is produced by the
appellant to contend that at the time of issuance of cheques, she had
already resigned, when such Form 32 is disputed by the complainant, it
shall be the bounden duty of the appellant to prove such Form 32 by leading
evidence in the trial. Only supplying a copy of Form 32, without proving
its contents, would not be sufficient to quash a complaint under Section
138 read with Section 141 of the N.I. Act.
12. In support of his contention that when the Form 32 furnished by the
appellant was disputed by the Respondent No. 2 the High Court cannot draw
an inference on the basis of such disputed document, learned counsel relied
on decisions of this Court in Chand Dhawan Vs. Jawahar Lal (1992) 3 SCC
317, Malwa Cotton and Spinning Mills Ltd. Vs. Virsa Singh Sidhu (2008) 17
SCC 147. Therefore, the High Court was right in dismissing the writ
petitions preferred by the appellant. Hence the appellant cannot take the
plea of her resignation to escape from legal liability that too when the
resignation itself is a disputed fact. Unless and until trial takes place,
it cannot be held that the appellant is no more a Director and not liable.
At the material time relating to the financial transaction between
Respondent No. 2 and the accused Company, the appellant was a Director and
looking after the day to day affairs of the Company as a Director and
hence she is liable to be prosecuted since she had connived in the
commission of offence.
13. Learned counsel further submitted that apart from the averments made
in the complaint, the appellant has also executed an irrevocable Letter of
Guarantee on 19th January, 2005 in favour of Respondent No. 2-Complainant,
for availing trade finance facility. In the said Letter of Guarantee, the
appellant categorically undertook that in the event of the Company failing
or neglecting or refusing to pay the amount remaining unpaid, the same
would be payable by her. She further agreed that her liability and
obligation under the Guarantee shall be continuing, absolute, unconditional
and irrevocable until the borrower is fully discharged from all
liabilities, irrespective of any disputes or differences between the
parties. The binding clause of the guarantee reads:
"I, the Guarantor, expressly, irrevocably and unconditionally agree that
your Company shall be entitled to enforce this Guarantee without making any
demand on or taking any proceedings against the Client for all the amounts
due and payable by the Client to your Company under and in relation to the
Agreement".
The cheques in question were issued on the basis of the said Guarantee
given by the appellant and on the simple ground of resignation she cannot
deviate from vicarious liability as per the assurance given by her in the
Letter of Guarantee.
14. Learned counsel for the respondents made a reference to the Judgment
of this Court in Gunmala Sales Private Ltd. Vs. Anu Mehta & Ors. (Criminal
Appeal No. 2228 of 2014) decided on October 17, 2014 and submitted that
once in a complaint filed under Section 138 read with Section 141 of the
N.I. Act, the basic averment is made that the Director was in charge of and
responsible for the conduct of the business of the Company at the relevant
time when the offence was committed, the Magistrate can issue process
against such Director and the basic averment is sufficient to make out a
case against the Director. Hence, learned senior counsel concluded that
there is no illegality in issuing process against the appellant.
15. We have given our thoughtful consideration to the arguments advanced
by the counsel on either side at length. The questions that arise for
determination are (i) whether the appellant is liable for prosecution under
Section 138 read with Section 141 of the N.I. Act for the alleged offence
of dishonor of cheques committed by the default Company?; (ii) whether the
High Court was right in dismissing the writ petitions filed by the
appellant seeking quashing of the criminal proceedings initiated against
her by the Respondent No. 2?
16. Before delving into the merits of the case, it would be apt to take
note of relevant portions of the complaints filed by Respondent No. 2 which
read thus:
"I say that the accused No. 2 to 5 on behalf of accused No. 1 have
approached us with request for trade finance facility and accordingly the
said facility has been granted by us to the accused as per their request
and requirement.
I say that accused No. 1 is private limited Company of which accused No. 2,
3 & 5 are Directors and accused No. 4 is the Director & authorized
signatory of accused No. 1 M/S Elite International Pvt. Ltd.-Imprest. At
all material time relevant and relating to the complaint, accused No. 2 to
5 were and are in charge of and responsible for the conduct of business of
accused No. 1 and are also looking after day to day affairs of accused No.
1. It is further submitted that accused No. 2 to 5 with accused No. 1 are
liable to be prosecuted and / or connived in the commission of the present
offence, in their capacity as a Director/signatory of the said private
limited Company.
I say that as narrated in para 4 accused No. 2 to 5 being responsible for
the affairs of accused No. 1 i.e. private limited Company are liable to be
prosecuted for having committed a criminal offence in the event of failure
on their part to comply with the requisitions contained in the statutory
notice dated 03-11-08, which was sent to them both under R.P.A.D. & U.P.C.
on 06/11/08. I say that notice was received by all the accused on or about
08/11/08 and notice sent through U.P.C. are deemed to have been served.
However, accused have failed and neglected to make our payment under the
above said dishonored cheques".
17. There is no dispute that the appellant, who was wife of the Managing
Director, was appointed as a Director of the Company-M/S Elite
International Pvt. Ltd. on 1st July, 2004 and had also executed a Letter of
Guarantee on 19th January, 2005. The cheques in question were issued during
April, 2008 to September, 2008. So far as the dishonor of Cheques is
concerned, admittedly the cheques were not signed by the appellant. There
is also no dispute that the appellant was not the Managing Director but
only a non-executive Director of the Company. Non-executive Director is no
doubt a custodian of the governance of the Company but does not involve in
the day-to-day affairs of the running of its business and only monitors the
executive activity. To fasten vicarious liability under Section 141 of the
Act on a person, at the material time that person shall have been at the
helm of affairs of the Company, one who actively looks after the day-to-day
activities of the Company and particularly responsible for the conduct of
its business. Simply because a person is a Director of a Company, does not
make him liable under the N.I. Act. Every person connected with the Company
will not fall into the ambit of the provision. Time and again, it has been
asserted by this Court that only those persons who were in charge of and
responsible for the conduct of the business of the Company at the time of
commission of an offence will be liable for criminal action. A Director,
who was not in charge of and was not responsible for the conduct of the
business of the Company at the relevant time, will not be liable for an
offence under Section 141 of the N.I. Act. In National Small Industries
Corporation (supra) this Court observed:
"Section 141 is a penal provision creating vicarious liability, and which,
as per settled law, must be strictly construed. It is therefore, not
sufficient to make a bald cursory statement in a complaint that the
Director (arrayed as an accused) is in charge of and responsible to the
company for the conduct of the business of the company without anything
more as to the role of the Director. But the complaint should spell out as
to how and in what manner Respondent 1 was in charge of or was responsible
to the accused Company for the conduct of its business. This is in
consonance with strict interpretation of penal statutes, especially, where
such statutes create vicarious liability.
A company may have a number of Directors and to make any or all the
Directors as accused in a complaint merely on the basis of a statement that
they are in charge of and responsible for the conduct of the business of
the company without anything more is not a sufficient or adequate
fulfillment of the requirements under Section 141.
18. In Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC 189, 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.
19. A Director of a Company is liable to be convicted for an offence
committed by the Company if he/she was in charge of and was responsible to
the Company for the conduct of its business or if it is proved that the
offence was committed with the consent or connivance of, or was
attributable to any negligence on the part of the Director concerned [See:
State of Karnataka Vs. Pratap Chand & Ors. (1981) 2 SCC 335].
20. In other words, the law laid down by this Court is that for making a
Director of a Company liable for the offences committed by the Company
under Section 141 of the N.I. Act, there must be specific averments against
the Director showing as to how and in what manner the Director was
responsible for the conduct of the business of the Company.
21. In Sabitha Ramamurthy & Anr. Vs. R.B.S. Channbasavaradhya (2006) 10
SCC 581, it was held by this Court that it is not necessary for the
complainant to specifically reproduce the wordings of the section but what
is required is a clear statement of fact so as to enable the court to
arrive at a prima facie opinion that the accused is vicariously liable.
[pic]Section 141 raises a legal fiction. By reason of the said provision, a
person although is not personally liable for commission of such an offence
would be vicariously liable therefor. Such vicarious liability can be
inferred so far as a company registered or incorporated under the Companies
Act, 1956 is concerned only if the requisite statements, which are required
to be averred in the complaint petition, are made so as to make the accused
therein vicariously liable for the offence committed by the company. By
verbatim reproducing the wording of the Section without a clear statement
of fact supported by proper evidence, so as to make the accused vicariously
liable, is a ground for quashing proceedings initiated against such person
under Section 141 of the N.I. Act.
22. As held by this Court in Pepsi Foods Ltd. & Anr. Vs. Special
Judicial Magistrate & Ors. (1998) 5 SCC 343, summoning of an accused in a
criminal case is a serious matter. Criminal law cannot be set into motion
as a matter of course. The order of the Magistrate summoning the accused
must reflect that he has applied his mind to the facts of the case and the
law applicable thereto. He has to examine the nature of allegations made in
the complaint and the evidence both oral and documentary in support thereof
and would that be sufficient for the complainant to succeed in bringing
charge home to the accused. It is not that the Magistrate is a silent
spectator at the time of recording of preliminary evidence before summoning
of the accused. The Magistrate has to carefully scrutinise the evidence
brought on record and may even himself put questions to the complainant and
his witnesses to elicit answers to find out the truthfulness of the
allegations or otherwise and then examine if any offence is prima facie
committed by all or any of the accused.
23. In Gunmala Sales Private Ltd. (supra) on which learned counsel for
the respondents has heavily relied, this Court at Para 33(c) held :
"In the facts of a given case, on an overall reading of the complaint, the
High Court may, despite the presence of the basic averment, quash the
complaint because of the absence of more particulars about role of
the Director in the complaint. It may do so having come across
some unimpeachable, uncontrovertible evidence which is beyond suspicion or
doubt or totally acceptable circumstances which may clearly indicate
that the Director could not have been concerned with the issuance of
cheques and asking him to stand the trial would be abuse of the process
of the court. Despite the presence of basic averment, it may come to a
conclusion that no case is made out against the Director. Take for
instance a case of a Director suffering from a terminal illness
who was bedridden at the relevant time or a Director who had
resigned long before issuance of cheques. In such cases, if the High
Court is convinced that prosecuting such a Director is merely an arm-
twisting tactics, the High Court may quash the proceedings. It bears
repetition to state that to establish such case unimpeachable,
uncontrovertible evidence which is beyond suspicion or doubt or some
totally acceptable circumstances will have to be brought to the notice
of the High Court. Such cases may be few and far between but the
possibility of such a case being there cannot be ruled out".
24. In the light of the law laid down by this Court, the present case be
examined. It is not in dispute that two persons, namely, Parag Tejani and
Hitesh Haria, were inducted as Director-Operations of the Company w.e.f.
17th December, 2005 by virtue of a resolution passed by the Company on the
same date. It is on the same date the appellant had ceased to be a Director
as per the Annual Report which is not disputed by the Respondent No. 2. A
perusal of the Complaint shows that Respondent No. 2 has made the newly
appointed Directors-Operations Parag Tejani and Hitesh Haria also as
accused stating that all the accused approached him with a request for
trade finance facility and accordingly the said facility was granted as per
their request. It thus gives an impression that Respondent No. 2 is well
aware of the change of Directors in the accused Company. In spite of
knowing the developments taken place in the Company that the appellant was
no longer a Director of the Company and two new Directors were inducted,
the Respondent No. 2 has chosen to array all of them as accused in the
Complaints. Moreover, Respondent No. 2 had not disputed this fact
emphatically in the proceedings before the High Court. We have gone though
the reply affidavit filed by Respondent No. 2 before the High Court of
Bombay.
25. A bare reading of the averment of Respondent No. 2 before the High
Court, suggests that his case appears to be that the appellant has not
proved her resignation in unequivocal terms and it is a disputed question
of fact. It is noteworthy that the respondent No. 2 except making a bald
statement and throwing the burden on the appellant to prove authenticity of
documents, has not pleaded anywhere that the public documents Form 32 and
Annual Return are forged and fabricated documents. Curiously, respondent
No. 2 on the one hand raises a doubt about the genuineness of Form 32, a
public document, through which the default Company had communicated the
change of Directors to the Registrar of the Companies with the effect of
resignation of the appellant and induction of two Directors-Operations and
on the other hand, he has arrayed the two newly appointed Directors-
Operations as accused whose names were communicated to the Registrar of
Companies by the very same Form 32. The respondent/complainant cannot be
permitted to blow hot and cold at the same time. When he denies the
genuineness of the document, he cannot act upon it and array the newly
appointed Directors as accused.
26. We have also perused the copy of Annual Return filed by M/S Elite
International Pvt. Ltd. for the year 2006, on 31st March, 2006 furnished in
Form 20B as per Section 159 of the Companies Act, 1956. Column IV of
Schedule V - Part II of the Annual Return, requires information regarding
Directors/Manager/Secretary (Past and Present) in which against the name of
Devidasani Ravinder Pooja-appellant it was mentioned "Date of ceasing : 17-
12-2005". Admittedly, a certified copy of the Annual Return became part of
record. Hence, we are of the considered opinion that the factum of
appellant resigning from the Board of Directors is established.
27. Unfortunately, the High Court did not deal the issue in a proper
perspective and committed error in dismissing the writ petitions by holding
that in the Complaints filed by the Respondent No. 2, specific averments
were made against the appellant. But on the contrary, taking the complaint
as a whole, it can be inferred that in the entire complaint, no specific
role is attributed to the appellant in the commission of offence. It is
settled law that to attract a case under Section 141 of the N.I. Act a
specific role must have been played by a Director of the Company for
fastening vicarious liability. But in this case, the appellant was neither
a Director of the accused Company nor in charge of or involved in the day
to day affairs of the Company at the time of commission of the alleged
offence. There is not even a whisper or shred of evidence on record to show
that there is any act committed by the appellant from which a reasonable
inference can be drawn that the appellant could be vicariously held liable
for the offence with which she is charged.
28. In the entire complaint, neither the role of the appellant in the
affairs of the Company was explained nor in what manner the appellant is
responsible for the conduct of business of the Company, was explained. From
the record it appears that the trade finance facility was extended by the
Respondent No. 2 to the default Company during the period from 13th April,
2008 to 14th October, 2008, against which the Cheques were issued by the
Company which stood dishonored. Much before that on 17th December, 2005 the
appellant resigned from the Board of Directors. Hence, we have no
hesitation to hold that continuation of the criminal proceedings against
the appellant under Section 138 read with Section 141 of the N.I. Act is a
pure abuse of process of law and it has to be interdicted at the threshold.
29. So far as the Letter of Guarantee is concerned, it gives way for a
civil liability which the respondent No. 2-complainant can always pursue
the remedy before the appropriate Court. So, the contention that the
cheques in question were issued by virtue of such Letter of Guarantee and
hence the appellant is liable under Section 138 read with Section 141 of
the N.I. Act, cannot also be accepted in these proceedings.
30. Putting the criminal law into motion is not a matter of course. To
settle the scores between the parties which are more in the nature of a
civil dispute, the parties cannot be permitted to put the criminal law into
motion and Courts cannot be a mere spectator to it. Before a Magistrate
taking cognizance of an offence under Section 138/141 of the N.I. Act,
making a person vicariously liable has to ensure strict compliance of the
statutory requirements. The Superior Courts should maintain purity in the
administration of Justice and should not allow abuse of the process of the
Court. The High Court ought to have quashed the complaint against the
appellant which is nothing but a pure abuse of process of law.
31. For all the foregoing reasons, we are of the view that this is a fit
case for quashing the complaint, and accordingly allow these appeals by
setting aside the impugned judgment passed by the High Court and quash the
criminal proceedings pending against the appellant before the Trial Court.
........................................................J.
(SUDHANSU JYOTI MUKHOPADHAYA)
........................................................J.
(N.V. RAMANA)
NEW DELHI
DECEMBER 17, 2014
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