Case BriefsHigh Courts

Delhi High Court: Suresh Kumar Kait, J., allowed a petition wherein directions were sought for quashing the complaint case filed against the petitioner under Section 138 (dishonour of cheque) read with Sections 141 (offences by companies) and 142 (cognizance of offence) of the Negotiable Instruments Act, 1881.

The petitioner- Society, Employees Welfare Fund of the employees of Hindustan Aeronautics Ltd., had issued four cheques for a total sum of Rs 4.1 Crores in favour of the respondent-complainant. According to the complainant, the petitioner had drawn to said cheques in the discharge of legally recoverable debt pursuant to the terms of the MoU/ Agreement to Sell concerned, however, on presentation of encashment, the subject cheques got dishonoured. The complainant-builder was represented by Nimesh Chib and Siddharth Chaturvedi, Advocates.

Per contra, Vikas Gupta and Ieshaan Gupta, Advocates, submitted on behalf of the petitioner that the proceeding initiated by the complainant was an abuse of the process of law, and the complaint does not satisfy ingredients of the offence punishable under Section 138 NI Act.

The High Court noted that the subject cheques were issued by the petitioner-Society on behalf of its individual members to facilitate the transaction in getting their houses constructed by the respondent. Since the individual members of the Society immediately doubted whether the respondent would be able to complete the flats, they did not deposit the amount with the Society and, thus, the cheques issued by the Society got dishonoured.

Being of the opinion that the petitioner-Society was not liable under Section 138, the High Court observed: “It is not disputed that the society was constituted for the welfare of its members who were interested in getting their houses constructed by the respondent. Therefore, the society played a role only to facilitate its members in getting their houses constructed and the society had no liability as per Section 138 NI Act on the date of signing of the MoU.”

It was further opined that even if it is presumed that the said was paid to the respondent as advance money, even then there appeared to be no criminal liability or any liability which was recoverable under provisions of Section 18.

In such view of the matter, the court allowed the instant petition and quashed the complaint case filed against the petitioner as also all proceedings emanating therefrom. [Employees Welfare Fund v. KRA Infrastructure Developer (P) Ltd., 2019 SCC OnLine Del 11245, decided on 19-11-2019]

Case BriefsHigh Courts

Bombay High Court: S.S. Shinde, J. refused to interfere with the order of the Magistrate whereby process was issued against the applicants (directors of the accused company) for the commission of offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.

The complainant’s case was that the accused company had issued a post-dated cheque on their favour on account of payment for supply of certain bio-medical equipment’s. However, on presentation, the said cheque was dishonoured and, therefore, the complainant instituted the current proceedings against the accused company as well as the applicants (directors of the accused company).

The applicants submitted that the Magistrate erred in issuing process against them as he failed to consider that the applicants had, at the time of commission of the offence, already resigned from their offences. Per contra, the complainant rebutted their submission with the help of Section 168 of the Companies Act, 2013 (resignation of directors).

Perusing Section 168, the High Court opined that the said provision make it abundantly clear that, the Director who wishes to resign from his office, has to give notice in writing to the company and the Board shall on receipt of such notice, take note of the same and company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place fact of such resignation in the report of the directors laid in the immediately following general meeting of the company provision.

Considering the record of the case, it was noted that although the applicants had forwarded their resignation from the office of Director, however, the same was not yet approved by the Board as contemplated by the section discussed above.

Holding that the documents produced by the applicants cannot be considered as uncontroverted or of unimpeachable character, the Court was of the view that the order of issuance of process against the applicants passed by the Magistrate needs no interference.

In such view of the matter, the Court held the instant criminal application to be devoid of merits and rejected the same. [Kulwant Chauhan v. State of  Maharashtra, 2019 SCC OnLine Bom 2280, decided on 23-09-2019]