Case Note & Summary
The petitioner, Sri Nabhiraj, a director of Aztec Digitals Private Limited, filed a criminal petition under Section 482 of the Code of Criminal Procedure, 1973 seeking to quash the complaint in C.C.No.764/2014 pending before the Judicial Magistrate, First Class (V Court), Mangaluru. The respondent, State Bank of India, had filed the complaint under Section 200 Cr.P.C. for an offence under Section 138 of the Negotiable Instruments Act, 1881, alleging that the petitioner issued a cheque for Rs.2,50,00,000/- drawn on Karnataka Bank Limited towards discharge of a portion of a loan borrowed by the company. The cheque was dishonoured due to insufficient funds. The learned Magistrate took cognizance and issued summons to the petitioner. The petitioner sought quashment on the ground that the averments in the complaint were bald and vague, and that he was not liable as a director. The court held that since the cheque was issued by the petitioner himself in his capacity as director towards the company's liability, the complaint disclosed a prima facie case under Section 138 of the N.I. Act. The petition was dismissed, and the proceedings were allowed to continue.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Vicarious Liability of Director - Complaint against director for cheque issued towards discharge of loan - Held that where the cheque is issued by the director in discharge of the company's liability, the director is liable under Section 138 even without specific averments of being in charge of the company, as the cheque was issued by him personally (Paras 2-3).
Issue of Consideration
Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 against the petitioner/director should be quashed on the ground that the averments are bald and vague?
Final Decision
The petition is dismissed. The proceedings in C.C.No.764/2014 pending on the file of the Judicial Magistrate, First Class (V Court), Mangaluru shall continue.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- vicarious liability of director
- quashing of complaint under Section 482 CrPC
- prima facie case
- insufficient funds
Case Details
2019 LawText (KAR) (08) 11
Criminal Petition No.6816 of 2015
K Shrihari (for petitioner), G N Sathyamurthy (for respondent)
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Nature of Litigation
Criminal petition under Section 482 Cr.P.C. seeking quashment of complaint under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
Petitioner sought quashment of the complaint in C.C.No.764/2014 pending before the Judicial Magistrate, First Class (V Court), Mangaluru.
Filing Reason
Petitioner contended that the averments in the complaint were bald and vague, and that he was not liable as a director.
Previous Decisions
The learned Magistrate took cognizance of the offence and issued summons to the petitioner.
Issues
Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 against the petitioner/director should be quashed on the ground that the averments are bald and vague?
Submissions/Arguments
Petitioner argued that the complaint lacks specific averments regarding his role as director and is vague.
Respondent argued that the cheque was issued by the petitioner himself towards discharge of loan, making him liable under Section 138.
Ratio Decidendi
Where a director issues a cheque in discharge of the company's liability, the director is personally liable under Section 138 of the Negotiable Instruments Act, 1881, and the complaint cannot be quashed on the ground of vague averments as the cheque itself establishes the liability.
Judgment Excerpts
The respondent – State Bank of India filed a complaint under section 200 Cr.P.C., seeking action under section 138 of the Negotiable Instruments Act, 1881 for dishonour of the cheque issued by the petitioner herein for a sum of Rs.2,50,00,000/-.
Petitioner has approached this court seeking quashment of the proceedings on the ground that averments made in the complaint are bald and vague.
Procedural History
The respondent filed a complaint under Section 200 Cr.P.C. before the Judicial Magistrate, First Class (V Court), Mangaluru, which was registered as C.C.No.764/2014. The Magistrate took cognizance and issued summons. The petitioner then filed this petition under Section 482 Cr.P.C. before the High Court of Karnataka seeking quashment.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973: 200, 482
