Case Note & Summary
The petitioners, Prerana Sharma, S. Nagarajan, and B. Ashoka, filed a criminal petition under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) seeking quashing of the entire proceedings in C.C.No.214/2016 pending before the Senior Civil Judge and JMFC, Hanagal. The case arose from a complaint filed by the respondent, Mahesh Joshi, alleging an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for dishonour of a cheque. The cheque in question was drawn by a company, but the statutory notice under Section 138 NI Act was sent to the petitioners, who were employees of the company, and not to the company itself. The petitioners argued that they were not the drawers of the cheque and that the notice was not served on the correct legal entity, i.e., the company. The respondent contended that the petitioners were responsible for the conduct of the company's business. The court, after hearing both sides, examined the factual matrix and found that the cheque was issued by the company, and the notice was addressed to the petitioners individually, not to the company. The court held that the essential ingredients of Section 138 NI Act were not satisfied as the notice was not served on the drawer of the cheque. Consequently, the court allowed the petition and quashed the proceedings against the petitioners, holding that continuing the proceedings would be an abuse of the process of law.
Headnote
A) Criminal Procedure Code - Quashing of Proceedings - Section 482 CrPC - Inherent Powers - Petition under Section 482 CrPC to quash proceedings in C.C.No.214/2016 for dishonour of cheque - Court examined whether the complaint disclosed any offence against the petitioners - Held that the proceedings were liable to be quashed as the notice was not served on the company but on individuals, and the petitioners were not the drawers of the cheque (Paras 1-10). B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 NI Act - Notice Requirement - The statutory notice under Section 138 NI Act must be served on the drawer of the cheque - In this case, the cheque was drawn by a company, but the notice was sent to the petitioners who were employees, not the company - Held that the notice was not in compliance with Section 138, and the proceedings cannot continue (Paras 5-8). C) Criminal Procedure Code - Quashing of Proceedings - Section 482 CrPC - Abuse of Process - The court found that continuing the proceedings against the petitioners would be an abuse of process of law as the essential ingredients of Section 138 NI Act were not satisfied - Held that the petition deserves to be allowed and the proceedings quashed (Paras 9-10).
Issue of Consideration
Whether the criminal proceedings for dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881 can be sustained when the statutory notice was not served on the correct legal entity and the petitioners were not the drawers of the cheque.
Final Decision
The court allowed the petition and quashed the entire proceedings in C.C.No.214/2016 against the petitioners.
Law Points
- Quashing of criminal proceedings under Section 482 CrPC
- Dishonour of cheque under Section 138 NI Act
- Proper service of demand notice
- Vicarious liability of directors
- Corporate liability
