Case Note & Summary
The applicant, Gaurav Vijay Bhatia, was arraigned as accused No. 3 in a criminal complaint filed by Ramnath P. Subramaniam (respondent No. 1) under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (NI Act). The complaint alleged that M/s. Tricom India Limited (accused No. 4) issued two cheques totaling Rs. 3,00,000 towards repayment of an Inter Corporate Deposit loan. The cheques were dishonoured due to insufficient funds. After statutory notice and non-payment, the complainant filed the complaint on 12/08/2013. The Metropolitan Magistrate, 7th Court at Dadar, Mumbai, issued process against all accused including the applicant, who was a director of the company. The applicant filed this application under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) to quash the process and proceedings against him. The applicant contended that the complaint did not contain any specific averment that he was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. He argued that mere designation as a director does not attract vicarious liability under Section 141 NI Act. The respondent No. 1 remained absent despite service. The State opposed the application. The High Court examined the complaint and found that the only allegation against the applicant was that he was a director of the company. There was no specific averment regarding his role or responsibility. The court relied on the settled legal position that for vicarious liability under Section 141, there must be a clear statement that the accused was in charge of and responsible for the conduct of the business. In the absence of such averments, the process issued against the applicant was an abuse of process. The court allowed the application, quashed the order of issuance of process dated 12/08/2013, and quashed the criminal proceedings to the extent of the applicant.
Headnote
A) Criminal Law - Negotiable Instruments Act - Vicarious Liability of Director - Section 138 r/w 141 NI Act - Quashing of Process - The complaint lacked specific averments that the applicant was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. The court held that mere designation as a director does not attract vicarious liability without specific allegations. The process issued against the applicant was quashed as an abuse of process of law. (Paras 2-10) B) Criminal Procedure Code - Inherent Powers - Section 482 CrPC - Quashing of Criminal Proceedings - The High Court exercised its inherent jurisdiction to quash proceedings where the complaint did not disclose the necessary ingredients to make the director vicariously liable. The court reiterated that the power under Section 482 can be invoked to prevent abuse of process. (Paras 1-10)
Issue of Consideration
Whether the issuance of process against the applicant, a director of the accused company, under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, can be sustained in the absence of specific allegations regarding his role and responsibility in the conduct of the company's business.
Final Decision
The application is allowed. The order of issuance of process dated 12/08/2013 passed in Criminal Complaint Case No. 2917/SS/2013 by the Metropolitan Magistrate, 7th Court at Dadar, Mumbai, is set aside. The criminal proceedings to the extent of the applicant are quashed. Rule is made absolute accordingly.
Law Points
- Vicarious liability under Section 141 NI Act requires specific averments of role and responsibility
- Director cannot be held liable merely by being a director
- Quashing under Section 482 CrPC for abuse of process
