Case Note & Summary
The petitioner, Sri Shamanur Shivashankarappa, filed three criminal petitions under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of proceedings in CC Nos. 243/2013, 244/2013, and 242/2013 pending before the Prl. Civil Judge & JMFC, Hospet. The petitioner was arrayed as Accused No.4 in these cases, which were filed by the respondent, M/s. India Sugars and Refineries Ltd., under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of cheques issued by M/s. Davangere Sugar Company Limited. The petitioner was a director of M/s. Davangere Sugar Company Limited and Chairman of M/s. Shamanur Sugars Limited. The respondent alleged that the cheques were issued by the company and dishonoured. The petitioner contended that he was not a director of the drawer company at the time of the alleged offence and that the complaints lacked specific averments regarding his role. The court examined the complaints and found that they did not contain specific allegations that the petitioner was in charge of and responsible for the conduct of the business of the company at the time of the offence. The court also noted that the petitioner had resigned as director prior to the relevant period. Relying on precedents, the court held that vicarious liability under Section 138 NI Act requires specific averments and that mere mention of the accused as a director is insufficient. The court allowed the petitions and quashed the proceedings against the petitioner.
Headnote
A) Criminal Law - Dishonour of Cheque - Vicarious Liability of Directors - Section 138 Negotiable Instruments Act, 1881 - Requirement of Specific Averments - The court considered whether a director can be held vicariously liable under Section 138 NI Act without specific allegations that he was in charge of and responsible for the conduct of the business of the company at the time of the offence. Held that mere mention of the accused as a director is insufficient; there must be specific averments that the accused was in charge of and responsible for the conduct of the business of the company. (Paras 5-10) B) Criminal Procedure - Quashing of Proceedings - Section 482 Code of Criminal Procedure, 1973 - Abuse of Process - The court examined whether the proceedings against the petitioner, who was not a director of the drawer company at the relevant time, constitute an abuse of process of law. Held that where the complaint lacks necessary averments and the accused was not a director at the time of the offence, continuation of proceedings would be an abuse of process, warranting quashing. (Paras 11-15)
Issue of Consideration
Whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 can be sustained against a director who was not a director of the drawer company at the time of the alleged offence, and whether the complaint lacks specific averments regarding the role of the accused director.
Final Decision
The court allowed the criminal petitions and quashed the proceedings in CC Nos. 243/2013, 244/2013, and 242/2013 against the petitioner.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881
- vicarious liability of directors
- requirement of specific averments
- quashing of criminal proceedings under Section 482 Cr.P.C.
