Friday, December 23, 2011
In absence of allegations that applicants at the relevant time were in day to day affairs & management of the accused Company in a complaint, the applicants cannot be held vicariously liable under Sec: 141 of NI Act
While granting an order to set aside a complaint, for the offence under Section 138 read with Section 141 of the NI Act for dishonor of cheque signed and issued by an accused Company, and admittedly not signed by the accused applicants chairman and its directors, the Hon. Mr. Justice M.R. Shah of Gujarat High Court has recently reiterated the ratio set up by the Hon. Apex Court and significantly observed upon disposal of CRIMINAL MISC.APPLICATION No. 13256 of 2007 that " There are no averments and allegations in the complaint that the applicants at the relevant time were in day to day affairs and management of the original accused Company, as required under Section 141 of the NI Act. Considering the decisions of the Hon'ble Supreme Court in the case of National Small Industries Corporation(Supra) and Central Bank of India(Supra), in absence of such averments in the complaint, the applicants cannot be held vicariously liable under Section 141 of NI Act for dishonor of the cheque issued by Company and for the offences alleged to have been committed by Company under Section 138 of the NI Act. It is also required to be noted that even the accused applicants have already resigned as Directors and intimation to that effect was given to the Registrar of Companies prior to the issuance of the cheque by original accused No.1 Company. Under the circumstances also, it cannot be said that applicants have committed any offence as alleged. Under the circumstances, to continue the criminal proceedings against the applicants would be unnecessary harassment to them and/or the same shall be abuse of process of law and Court as, as stated herein above, the applicants cannot be held vicariously liable under Section 141 of NI Act. Under the circumstances, this Court is of the opinion that this is a fit case to exercise powers under Section 482 of the CrPC and to quash and set aside the impugned complaint so far as the applicants accused are concerned."
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