Case Note & Summary
The petitioners, Shaju K. Nair (Managing Director) and Riya Nair (Director) of M/s. Clariya Marketing Services Private Limited, filed a criminal petition under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of the complaint in P.C. No. 89/2012 and all further proceedings in C.C. No. 938/2012 pending before the II Addl. Civil Judge (Jr. Dn.) & JMFC Court, Bellary. The respondent, M/s. S.L.V. Steels & Alloys Pvt. Ltd., had filed the complaint under Section 138 of the Negotiable Instruments Act, 1881 alleging dishonour of a cheque issued by the petitioners' company. The petitioners contended that the complaint did not contain any specific averments that they were in charge of and responsible for the day-to-day affairs of the company at the time of the offence, which is essential to attract vicarious liability under Section 141 of the NI Act. The respondent was served but remained unrepresented. The court, after hearing the petitioners' counsel, examined the complaint and found that it merely described the petitioners as Managing Director and Director without any specific allegations regarding their role in the conduct of business. Relying on the principle that for directors to be vicariously liable, there must be specific averments that they were in charge of and responsible for the day-to-day affairs of the company, the court held that the prosecution against the petitioners was not maintainable. The court quashed the complaint and all further proceedings against the petitioners, allowing the petition.
Headnote
A) Criminal Procedure Code - Quashing of Complaint - Section 482 CrPC - Abuse of Process - Complaint under Section 138 of Negotiable Instruments Act, 1881 against Managing Director and Director of company - Allegations lacked specific averments that petitioners were in charge of and responsible for day-to-day affairs of the company at the time of offence - Held that in absence of such averments, prosecution cannot be sustained and is liable to be quashed to prevent abuse of process of court (Paras 5-8). B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 read with Section 141 - Vicarious Liability of Directors - Requirement of Specific Averments - For directors to be vicariously liable, complaint must contain specific allegations that they were in charge of and responsible for conduct of business of company - Mere description as Managing Director or Director without further particulars is insufficient - Held that complaint lacking such averments is liable to be quashed (Paras 5-8).
Issue of Consideration
Whether the complaint and proceedings under Section 138 of the Negotiable Instruments Act, 1881 against the petitioners, who are Managing Director and Director of the drawer company, can be quashed under Section 482 of the Code of Criminal Procedure, 1973 for want of specific averments regarding their role in the day-to-day affairs of the company.
Final Decision
The petition is allowed. The complaint in P.C. No. 89/2012 and all further proceedings in C.C. No. 938/2012 pending on the file of the II Addl. Civil Judge (Jr. Dn.) & JMFC Court, Bellary, are quashed. The order of issuance of process dated 24.12.2012 is set aside.
Law Points
- Quashing of criminal proceedings under Section 482 CrPC
- Dishonour of cheque under Section 138 NI Act
- Vicarious liability of directors under Section 141 NI Act
- Requirement of specific averments regarding role of accused
- Abuse of process of court
