The Gujarat High Court reiterated that criminal liability on account of dishonour of cheque primarily falls on drawer company and extends to its officers only when the condition stated in Section 141 Negotiable Instruments Act Act are fulfilled.

The Court was considering an application under Section 482 CrPC seeking quashing of the proceedings in Criminal Case registered under for the offence punishable under Sections138 of N.I. Act.

The single-bench of Justice Divyesh A. Joshi observed, "...The criminal liability on account of dishonour of cheque primarily falls on drawer company and extends to its officers only when the condition stated in Section 141 are fulfilled. Therefore, this court is of the opinion that the prosecution launched against the applicant-accused is required to be quashed."

The Petitioner was represented by Advocate Aditya A Gupta while the Respondent was represented by Advocate Helly Panchal.

Facts Of The Case

The complainant, a finance company alleged that the accused persons approached it and demanded loan of Rs.23,73,500/- and accordingly signed an agreement and subsequently a cheque was issued by the accused persons in favour of the complainant and also, given oral assurance that as and when the cheque was deposited in the bank, in that event, the cheque would be hounoured. However, when the same was presented in the bank, at that time, the same was returned with an endorsement of ‘insufficient balance’. The accused persons neither replied to the notice nor did they pay the amount of loan. The complainant thus filed complaint against all the accused persons alongwith all relevant documents and materials available with him. The Court concerned thought it fit that a prima-facie case is made out against accused persons and passed an order for issuance of process under Section-204 of Cr.P.C. against the accused persons. As soon as order of issuance of process was served on to the accused persons, the applicant-accused no.3 approached the court.

Reasoning By Court

The Court at the outset cited Supreme Court's ruling in ‘K.K Ahuja Vs. VK Vora and Anita Hada Vs. M/s. Godfather Travels & Tours Pvt. Ltd.

"It is found out from the materials available on record that the applicant accused no.3 is not the signatory of the cheque and she has tender her resignation way-back in the year 2013. It is well settled that where the Court finds that the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the applicant. As per the above-stated case laws, the liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a Company, in the present case, the applicant -accused has tendered her resignation way-back in the year 2013 and the cheque in question was presented in the bank in the year 2017 and therefore, after a lapse of more than four years, she cannot be held liable for an offence under Section-138 of N.I. Act," the Court observed.

It held that criminal liability on account of dishonour of cheque primarily falls on drawer company and extends to its officers only when the condition stated in Section 141 NI Act are fulfilled.

The Application was accordingly allowed.

Cause Title: Rakhidevi Umashankar Agarwal vs. Religare Finvest Ltd. & Anr.

Appearances:

Applicants- Advocate Aditya A Gupta, Advocate Mohit A Gupta, Advocate AR Gupta

Respondents- Advocate Helly Panchal, Advocate Manan Mehta

Click here to read/ download Order


Sheetal Joon