Case Note & Summary
The applicant, Prakash Koranne, was original accused no. 3 in a complaint filed by Sarvesh Kotwal (non-applicant no. 1) under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, arising from dishonour of a cheque issued by M/s Reatox Builders & Developers Pvt. Ltd. (non-applicant no. 2). The applicant challenged the order dated 03.02.2014 passed by the District Judge-5 and Additional Sessions Judge, Nagpur, dismissing his revision application against the dismissal of his application seeking quashing of process issued against him by the Special Court on 18.10.2012. The applicant contended that he was neither a Director nor a signatory to the cheque, and the complaint did not contain specific averments that he was responsible for the conduct of the affairs of the company or was in charge of the company at the time of the offence. He relied on the Supreme Court decision in National Small Industries Corporation Ltd. v. Harmeet Singh Paintal & anr., (2010) 3 SCC 330. The non-applicant no. 1 argued that the applicant had represented himself as a Director during contract execution and dealings, and that the defence should be decided at trial. The court examined the documents filed along with the reply, particularly Annexures A and B, which were undisputed. The court found that the complaint lacked specific averments to fasten vicarious liability on the applicant, as required under Section 141 of the NI Act. The court held that the essential ingredients for vicarious liability were not established, and therefore, the process could not have been issued against the applicant. The court allowed the application, quashed the process issued against the applicant, and set aside the impugned orders.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Vicarious Liability - Section 141 - Requirement of Specific Averments - The court considered whether process could be issued against an accused who is neither a Director nor signatory to the cheque, and where the complaint lacks specific averments that the accused was in charge of and responsible for the conduct of the business of the company. Held that essential ingredients of vicarious liability under Section 141 must be established, and in their absence, process cannot be issued. (Paras 3-5)
Issue of Consideration
Whether process could be issued against an accused who is neither a Director nor signatory to the cheque, and where the complaint lacks specific averments of being in charge of or responsible for the conduct of the company's affairs, for the offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.
Final Decision
Application allowed. The order dated 03.02.2014 passed by District Judge-5 and A.S.J., Nagpur in Cri. Revi. No. 127/13 and the order dated 18.10.2012 issuing process against the applicant are quashed and set aside. The process issued against the applicant is quashed.
Law Points
- Vicarious liability under Section 141 NI Act requires specific averments that accused was in charge of and responsible for conduct of business of company
- mere description as Director insufficient
Case Details
2015 LawText (BOM) (01) 97
Criminal Application (apl) No. 370 of 2014
Ms. Vidya Umale for Applicant, Ms. Ramnik Kaur Dadiyal for N.A. No. 1, Mr. S.S. Ganvir for N.As. 2 & 3
Prakash s/o Kamlakar Koranne
Sarvesh s/o Sanjay Kotwal, M/s Reatox Builders & Developers Pvt. Ltd., Atul Dattaram Shirodkar
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Nature of Litigation
Criminal application challenging order dismissing revision against issuance of process under Section 138 read with Section 141 of Negotiable Instruments Act, 1881.
Remedy Sought
Quashing of process issued against the applicant (original accused no. 3) by the Special Court.
Filing Reason
Applicant claimed he was neither a Director nor signatory to the cheque, and complaint lacked specific averments of his being in charge of or responsible for the conduct of the company's affairs.
Previous Decisions
Special Court issued process on 18.10.2012; applicant's application to quash process was dismissed; revision before District Judge-5 and A.S.J., Nagpur was dismissed on 03.02.2014.
Issues
Whether process could be issued against an accused who is neither a Director nor signatory to the cheque, and where the complaint lacks specific averments of being in charge of or responsible for the conduct of the company's affairs, for the offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.
Submissions/Arguments
Applicant: He is neither Director nor signatory to the cheque; complaint lacks specific averments that he was responsible for conduct of affairs or in charge of company; essential ingredients of vicarious liability not established; process could not have been issued. Relied on National Small Industries Corporation Ltd. v. Harmeet Singh Paintal.
Non-applicant no. 1: Applicant represented himself as Director during contract execution and dealings; defence that he was not in charge or responsible should be decided at trial with evidence, not at this stage.
Ratio Decidendi
For vicarious liability under Section 141 of the Negotiable Instruments Act, 1881, 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 of the offence. Mere description as Director or involvement in contract execution is insufficient to fasten liability. In the absence of such averments, process cannot be issued.
Judgment Excerpts
According to the applicant, he is neither Director nor a signatory to the cheque issued in this case and there have been no specific averments made in the complaint that the applicant was responsible for the conduct of the affairs of the company or was incharge of the company at the time of commission of the offence.
On going through the documents filed along with the reply of respondent no. 1, especially the documents at Annexures A & B, about which there is no dispute raised by the applicant as well as remaining non-applicants, I find that there is a g
Procedural History
Complaint filed under Section 138 read with Section 141 of NI Act; Special Court issued process on 18.10.2012 against applicant (accused no. 3); applicant filed application to quash process, which was dismissed; applicant filed revision (Cri. Revi. No. 127/13) before District Judge-5 and A.S.J., Nagpur, which was dismissed on 03.02.2014; applicant then filed the present criminal application under Section 482 CrPC before the High Court.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 141
