Case Note & Summary
The applicant, Vijay Khairatilal Bhatia, was accused No. 5 in a criminal complaint filed by respondent No. 1, Ashwin Ramesh Mittal, under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The complaint alleged that the complainant provided a friendly loan of Rs. 25 lakhs to accused No. 1 company, Tricom Indian Limited, and in repayment, a cheque was issued which was dishonoured due to insufficient funds. The Metropolitan Magistrate issued process against all accused including the applicant. The applicant, a 70-year-old Director, filed an application under Section 482 CrPC to quash the proceedings against him, contending that there were no specific allegations that he was in charge of or responsible for the conduct of the business of the company. The High Court examined the complaint and found that it contained only general and omnibus allegations against all Directors without specifying the role of the applicant. The Court held that to attract vicarious liability under Section 141, there must be specific averments that the Director was in charge of and responsible for the conduct of the business. Since the complaint lacked such averments, the issuance of process against the applicant was an abuse of process. The Court allowed the application, set aside the order of issuance of process against the applicant, and quashed the criminal proceedings to the extent of the applicant.
Headnote
A) Criminal Law - Negotiable Instruments Act - Section 138 read with Section 141 - Vicarious Liability of Director - Requirement of Specific Averments - The complaint must contain specific allegations that the Director 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 is insufficient to attract vicarious liability. (Paras 5-7) B) Criminal Procedure Code - Section 482 - Quashing of Criminal Proceedings - Abuse of Process - Where the complaint lacks essential averments to make out a case against a Director, continuation of proceedings would be an abuse of process of law. The High Court can quash such proceedings to prevent miscarriage of justice. (Paras 8-9) C) Negotiable Instruments Act - Section 141 - Director not in charge of day-to-day affairs - Absence of specific allegations - The applicant, a Director aged 70 years, was not involved in day-to-day affairs of the company. The complaint did not specify his role or responsibility. Held that the order of issuance of process against him is liable to be set aside. (Paras 5-9)
Issue of Consideration
Whether the order issuing process against the applicant/accused No. 5 under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 can be quashed for want of specific allegations regarding his role as Director.
Final Decision
Application allowed. Order of issuance of process dated 17/10/2013 passed by Metropolitan Magistrate, 14th Court at Girgaon, Mumbai in Criminal Complaint Case No. 603/SS/2013 is set aside to the extent of applicant. Criminal proceedings against applicant are quashed.
Law Points
- Vicarious liability under Section 141 NI Act requires specific averments of role and responsibility
- Director not in charge of day-to-day affairs cannot be prosecuted without specific allegations
- Quashing under Section 482 CrPC for abuse of process
