Prashant Kushe and Others vs State of Uttaranchal and Others

Sudhanshu Dhulia, J.—This Criminal Misc. Application has been filed u/s 482 Cr.P.C. challenging the summoning order dated 16.4.2004 passed by the Special Judicial Magistrate Ist, Dehradun in Complaint Case No. 218 of 2005 u/s 138 of the Negotiable Instruments Act, 1881 (from hereinafter referred to as the "Act").

Heard Sri A.S. Gill, learned Counsel for the applicants, Sri Nandan Arya, learned Assistant Government Advocate for the State of Uttarakhand and Sri S.K. Jain, learned Counsel for respondent No. 3.

The brief facts of the case are that a cheque of Rs. 7,50,000/- was drawn by one Vinod Sharma one of the Directors of the Company known as M/s Newton M.P. Technologies Ltd., Bangaloreand was given to the complainant which was subsequently dishonoured. Hence, the application u/s 138 read with Section 141 of the Act was moved before the Special Judicial Magistrate Ist, Dehradun. The learned Judicial Magistrate after proceeding under Sections 200 and 202 Cr.P.C. issued summons to the applicants who are the Directors of the Company. One of the main contentions of the learned Counsel for the applicants before this Court is that the applicants are only Directors of the Company and are not in the control of the day to day affairs of the Company. They have neither drawn the cheque nor were aware that such cheque was drawn and hence they have not committed any offence u/s 138 of the Act. In order to free themselves of any liability in the matter as Directors of the Company the applicants have heavily relied upon a decision of the Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. 2005 SCC (Cri) 1975 wherein it has been held that merely because one is a Director of the Company it cannot be held that he is also incharge of the affairs of the Company. To make a Director liable the fact that this Director was in control of the affairs of the Company must be specifically alleged in the complaint. The complaint filed by the complainant, however, has been perused. A specific averment has been made in paragraph 3 of the complaint that the accused persons were the Directors and in-charge of the Company and were responsible for the conduct of the business of the Company. Therefore the law laid down by the Supreme Court in S.M.S. Pharmaceuticals Ltd.''s case (supra) is squarely against the applicants. Moreover this position has further elaborated by the Supreme Court in N. Rangachari Vs. Bharat Sanchar Nigam Ltd., where relying upon its earlier judgment in S.M.S. Pharmaceuticals Ltd. case (supra) the Supreme Court has held that whether the Directors of the Company were in-charge of the Company and were responsible for conduct of the business of the Company at the relevant period of time is a matter which has to be determined at the time of trial. Consequently it can be said that in a complaint the averment that a particular Director or Managing Director of the Company is in control of the affairs of the Company must be clearly stated and then it is enough for the trial court to issue summons to the accused u/s 138/141 of the Act. It is, however, open to the accused persons to disclose and prove before the court that they are not in control of the affairs of the Company. In short it now becomes a matter for the examination of the trial court. This fact cannot be determined by this Court u/s 482 Cr.P.C. In Monaben Ketanbhai Shah and Another Vs. State of Gujarat and Others, the Hon''ble Apex Court had this to observe in a matter relating to Section 138 of the Negotiable Instruments Act:

The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind.

The objects for which the enactment of Sections 138 and 141 was made in the Negotiable Instruments Act will totally get frustrated if this Court interferes on mere technicalities u/s 482 Cr.P.C. All the points raised by the applicants before this Court can well be raised before the trial Court. This Court therefore finds no infirmity in the impugned summoning order dated 16.4.2004 passed by the Special Judicial Magistrate Ist, Dehradun in Complaint Case No. 218 of 2005. Consequently, there is no scope for this Court to interfere u/s 482 Cr.P.C. The present C-482 applications are therefore liable to be dismissed and are hereby dismissed.

No order as to costs.

The Registry is directed to send a copy of this order to the court concerned for necessary compliance.