![Allahabad High Court Rules : [Cheque Bounce] Merely Being Director Of The Compnay Is Not Enough U/S. 138 Negotiable Instrument Act](https://onlylegal.in/public/default-image/default-730x400.png )
Allahabad High Court Rules : [Cheque Bounce] Merely Being Director Of The Compnay Is Not Enough U/S. 138 Negotiable Instrument Act
Allahabad High Court Rules : [Cheque Bounce] Merely Being Director Of The Compnay Is Not Enough U/S. 138 Negotiable Instrument Act
The Allahabad High Court has ruled that merely being a Director of a Company does not make him liable under Section 138 Negotiable Instrument Act.
Justice Syed Aftab Husain Rizvi allowed a Petition filed under Section 482 Cr.P.C by Jatinder Pal Singh, quashing the summoning order and proceedings against the Director of the Company.
The O.P. No. 2 filed a complaint alleging therein that complainant is engaged in business of manufacturing and trading in signalling equipments, industrial batteries and other equipment. The accused no. 1 is also a public limited company incorporated under the Companies Act, 1956 and the other accused are the Directors/Executive Directors of the company/accused no. 1 and are responsible for the acts and deeds of the company/accused no. 1.
The accused no. 1 placed a purchase order for the supply of two sets of Battery Bank, Charger along with accessories. The complainant supplied the material.The accused issued two cheques for Rs. 1,00,00,000 each (Rupees One Crore each) in favour of the complainant towards the payment for goods supplied at their site.
The complainant presented the said cheques and on presentation for payment the same has been dishonored with the remarks “Exceeds Arrangement”. The Second Cheque was also dishonoured with same remarks.” Aggrieved with the aforesaid summoning order the applicant filed a criminal revision no. 72 of 2019 which was been dismissed by Special Judge SC/ST Act vide judgment and order dated 2.1.2021.
The Court referred to the Judgment of Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neta Bhalla and another (2005) 8 Supreme Court Cases 89 and Srikanth Singh Vs. North East Securities Limited (2007) 12 SCC 788, wherein the Supreme Court has held that for vicarious liability of Director of a company it must be pleaded and shown that the Director was responsible for the conduct of the business of the company at the time of commission of offence. Only being a Director is not enough to cast a criminal liability. Vicarious liability must be pleaded and proved and can not be merely inferred.
The Court found that it is clear from the perusal of the complaint that there is no specific averment that applicant is involved in day-to-day affairs of the company. There is only general allegation that applicant is a Director of the company. The documents filed by the applicant establishes that the applicant was a nominee Director and who has now resigned.
The Court said taht the Magistrate has failed to consider the matter properly. The order of summoning regarding applicant is unjust and illegal and cannot be sustained.
Therefore application U/S 482 Cr.P.C. has been allowed and the order dated 2.1.2021 passed in Criminal Revision NO. 72 of 2019 and further the summoning order dated 7.1.2014 passed against the applicant-accused Jatinder Pal Singh has been quashed.
