Case Note & Summary
The case involves a criminal complaint filed by respondent No. 1 (complainant) under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 against M/s. Tricom India Limited (accused No. 1) and twelve other persons, including the applicants who were directors of the company. The complainant alleged that the company took a loan of Rs. 47,00,000 from her and issued four cheques towards repayment and interest. Two cheques were dishonoured—one with endorsement 'account was closed' and another with 'payment stopped by drawer'. After issuing a demand notice, the complainant filed the complaint. The applicants (accused Nos. 6, 8, and 10) filed an application under Section 482 of the Code of Criminal Procedure, 1973 to quash the order of issuance of process and the complaint against them. The main legal issue was whether the complaint contained specific allegations that the applicants were in charge of and responsible for the conduct of business of the company at the time the offence was committed, as required under Section 141 of the NI Act. The applicants argued that the complaint lacked such specific averments and that they were merely directors without active involvement. The respondent contended that the complaint sufficiently alleged that all directors were responsible. The court analyzed the complaint and found that it only contained general allegations against all directors without specifying the role of each applicant. Relying on precedents, the court held that vicarious liability under Section 141 cannot be imposed without specific averments. Consequently, the court quashed the complaint against the applicants and set aside the order of issuance of process.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Vicarious Liability of Directors - Section 138 r/w 141 - The complaint must contain specific averments that the director was in charge of and responsible for the conduct of business of the company at the time the offence was committed; mere description as director is insufficient to attract vicarious liability. (Paras 6-10) B) Criminal Procedure Code - Quashing of Complaint - Section 482 - Inherent power to quash proceedings when the complaint does not disclose the essential ingredients of the offence alleged; the High Court can interfere to prevent abuse of process of court. (Paras 11-12) C) Negotiable Instruments Act - Requirement of Notice - Section 138 - The complainant must prove service of demand notice on the accused; however, in this case, the court did not delve into the notice issue as the complaint was quashed on other grounds. (Para 3)
Issue of Consideration
Whether the criminal complaint under Section 138 r/w 141 of the Negotiable Instruments Act, 1881 against the applicants (directors of the company) can be quashed for lack of specific allegations regarding their role in the conduct of business of the company at the time the offence was committed.
Final Decision
The court allowed the application, quashed the criminal complaint against the applicants (accused Nos. 6, 8, and 10), and set aside the order of issuance of process dated 25/04/2013 passed in S.C.C. No. 3670/2012.
Law Points
- Section 138 read with Section 141 of Negotiable Instruments Act
- 1881 requires specific averments against directors regarding their role in company affairs at the time of offence
- vicarious liability cannot be imposed without such allegations
- quashing under Section 482 Cr.P.C. is permissible when complaint lacks necessary ingredients.
