Case Note & Summary
The petitioners, comprising a company and its directors, filed a writ petition under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of Criminal Case No. 1452 of 2012 pending before the Judicial Magistrate First Class, Vashi at CBD Belapur, Navi Mumbai. The case arose from a complaint lodged by the respondent bank under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, alleging dishonour of a cheque issued by the company. The petitioners contended that the complaint did not contain specific averments against each director regarding their role in the conduct of the company's business, which is essential to attract vicarious liability under Section 141. The court examined the complaint and found that it merely reproduced the statutory language without specifying the role of each accused. Relying on settled law, the court held that in the absence of specific allegations, the proceedings against the directors could not be sustained. The court quashed the proceedings against all petitioners except the company, which remained liable. The petition was partly allowed.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Vicarious Liability of Directors - Section 138 read with Section 141 - Quashing of Proceedings - The complaint must contain specific averments that the accused was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. Mere reproduction of statutory language is insufficient. In the absence of such averments, proceedings against directors are liable to be quashed. (Paras 3-8) B) Criminal Procedure Code - Inherent Powers - Section 482 - Quashing of Criminal Proceedings - The High Court can exercise inherent powers to quash proceedings if the complaint does not disclose the essential ingredients of the offence. Where the complaint lacks specific allegations against certain accused, continuing proceedings would be an abuse of process of law. (Paras 3-8)
Issue of Consideration
Whether criminal proceedings under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 can be sustained against directors and officers of a company in the absence of specific averments regarding their role and responsibility in the conduct of the company's business.
Final Decision
The petition is partly allowed. The criminal proceedings in Court Case No. 1452 of 2012 pending before the JMFC Vashi at CBD Belapur, Navi Mumbai, are quashed insofar as they relate to petitioners No. 2 to 6 (directors). The proceedings against petitioner No. 1 (the company) shall continue.
Law Points
- Vicarious liability under Section 141 NI Act requires specific averments
- Quashing of criminal proceedings for lack of ingredients
- Strict compliance with statutory requirements for corporate criminal liability
