Page 1 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.2604-2610 OF 2014

ARISING OUT OF

SPECIAL LEAVE PETITION (CRL) NOs. 9133-9139 OF 2010

POOJA RAVINDER DEVIDASANI … APPELLANT

VERSUS

STATE OF MAHARASHTRA & ANR. … RESPONDENTS

JUDGMENT

N.V. RAMANA, J.

Leave granted.

2.These appeals by special leave are filed by the appellant

challenging the impugned judgment and order dated 6

th

October,

2010 passed by the High Court of Judicature at Bombay in Writ

Petition Nos. 614-620 of 2010 whereby the High Court dismissed the

writ petitions filed by the appellant seeking quashing of the

complaints filed by the Respondent No.2 under Section 138 read with

Page 2 2

Section 141 of the Negotiable Instruments Act, 1881 (hereinafter

referred to as “the N.I. Act”).

3.The brief facts of these appeals are that Respondent No. 2, a

finance Company, filed seven complaints under the N.I. Act against

the appellant and others viz., (1) Complaint No. 3370/SS/2008

claiming Rs.1,64,69,801-14 (2) Complaint No. 3641/SS/2008 claiming

Rs.1,06,55,289-91 (3) Complaint No. 3368/SS/2008 claiming Rs.

1,41,95,806-40 (4) 3640/SS/2008 claiming Rs. 85,21,294/- (5)

3369/SS/2008 claiming Rs. 1,88,12,292/- (6) 3642/SS/2008 claiming

Rs. 1,69,95,353-50 and (7) Complaint No. 4086/SS/2009 for a claim

of Rs. 8,08,973-25. In all the complaints the allegation was that the

Respondent No. 2 Company had extended trade finance facility to

M/S Elite International Pvt. Ltd. to which the appellant was a Director

at the relevant time and several Cheques (119 in number) issued by

M/S Elite International Pvt. Ltd. aggregating to Rs.8,64,58,810-16, in

discharge of its liability towards part payment, stood dishonoured with

the banker’s remarks “insufficient funds”. According to the

complainant, at the material time, the accused (appellant) was in

charge and at the helm of affairs of M/S Elite International Pvt. Ltd.

and therefore she is vicariously liable for the default of the Company

Page 3 3

as she is responsible for the conduct of its business. Metropolitan

Magistrate, 12

th

Court, Bandra, Mumbai took cognizance of the

complaints and issued process against the accused (appellant) for

the offence punishable under Section 138 of the N.I. Act.

4.The aggrieved appellant filed Criminal Writ Petitions before the

High Court under Section 482, Cr.P.C. seeking quashing of the

criminal proceedings pending before the Metropolitan Magistrate. The

High Court initially by an interim order dated 28

th

July, 2010 granted

stay of the criminal proceedings qua the appellant and directed the

trial to be proceeded against the other accused. Finally, by the

impugned order, the High Court dismissed the writ petitions filed by

the appellant. Challenging the said order of dismissal, the appellant

has preferred these appeals before this Court.

5.The main contention advanced by the learned counsel for the

appellant is that the appellant is merely a housewife who was

appointed as a Non-Executive Director of M/s Elite International

Private Ltd. and had no active role in the conduct of business of the

Company, particularly in the issuance of the cheques in question. As

a matter of fact, the appellant had resigned as the Director much

Page 4 4

before the issuance of the cheques in question, her resignation was

also approved by the Board of Directors in the meeting held on 17

th

December, 2005. The resignation of the appellant as Director of M/S

Elite International Pvt. Ltd. has also been informed to the Registrar of

Companies by Form No. 20B under Section 159, Schedule V, Part II

of the Companies Act, 1956 when the annual return for the year

ending on 31

st

March, 2006 was filed. The trade facility was

sanctioned by the Respondent No. 2 on 19

th

January, 2005 as per the

Letter of Guarantee executed by the appellant on the same date.

The effective date of resignation of the appellant as Director of the

Company was 17

th

December, 2005. With the result of approval of

her resignation by the Board of Directors, the appellant ceased to

play any role in the activities of the Company. The Cheques in

question were issued by the Company in the year 2008 i.e. about two

and half years after resignation of the appellant as Director. This fact

itself emphasizes that the appellant was not involved in the affairs of

the Company when the Cheques were issued and had no role either

in the conduct of the business of the Company or in issuing the

Cheques.

Page 5 5

6.After resignation of the appellant as a Director, Form 32 under

the Companies Act, 1956, pursuant to Section 303(2), was filed by

M/S Elite International Pvt. Ltd. on 20

th

December, 2005 with the

Registrar of Companies indicating the appointments and changes

among Directors. In the said Form 32, the names of two Directors

who were newly appointed were shown with remarks “appointed as a

Director-Operations” and against the name of the appellant the

remarks “resigned as a Director” were shown. Taking note of this

Form 32, Respondent No. 2 arrayed the newly appointed Directors as

accused Nos. 4 & 5 in the complaints. It is thus clear that the

Respondent No. 2 is well aware of the fact that the appellant was no

longer a part of M/S Elite International Pvt. Ltd, yet initiated criminal

proceedings fastening vicarious liability on the appellant.

7.Learned counsel submitted that to fasten vicarious liability it is

necessary under Section 141 of the N.I. Act that the complainant

must aver and prove how and in what manner the appellant was

responsible in the conduct of the business of the Company. The

complainant shall also state in the light of proviso to Section 141(1),

in what capacity the appellant was in charge of day to day affairs of

the default Company at the relevant time, particularly when cheques

Page 6 6

were issued. Respondent No. 2 (complainant) did not fulfill these

prerequisites contemplated by the Act but sought to impute the

appellant with vicarious liability only on account of the fact that the

appellant had attended the Board Meeting of M/S Elite International

Pvt. Ltd. held on 14

th

August, 2004. In that meeting, the Board of

Directors authorized another Director to execute necessary

documents in connection with trade finance facility from Respondent

No. 2. The mere presence of the appellant in the Board Meeting on

14

th

August, 2004 would not amount to an offence punishable under

Section 138 of the N.I. Act. Merely arraying a Director of a Company

as an accused in the Complaint and making a bald or cursory

statement without attributing any specific role, that the Director is

responsible for the conduct of the business would not make a case of

vicarious liability against a Director of the company under Section 141

of the N.I. Act. Similarly, simply stating that the appellant was in

charge of the affairs of the Company would not be sufficient to justify

the allegation under Section 138 of the N.I. Act. In other words, the

complainant must explain the role specifically attributable to the

appellant in the commission of the offence. Placing reliance on this

Court’s judgment in National Small Industries Corporation Vs.

Page 7 7

Harmeet Singh Paintal & Anr. (2010) 3 SCC 330 learned counsel

submitted that the law is well settled by this Court in a catena of

cases that the complainant should specifically show as to how and in

what manner the accused was responsible.

8.Despite Respondent No. 2 has knowledge of the resignation of

the appellant as Director of the Company and she has no role in the

issuance of cheques in question, yet as an arm twisting measure, the

complainant arrayed the appellant in the complaint as a defaulter and

initiated criminal proceedings against her. Knowing fully well about

the change of Directors, Respondent No. 2 unnecessarily dragged

the name of appellant into the litigation in a casual and callous

manner and initiated criminal proceedings against her along with the

existing Directors of the Company which is untenable under the law.

The Metropolitan Magistrate without proper application of mind issued

process and the High Court also erred in construing the penal

provision enunciated under the N.I. Act, and wrongfully dismissed the

Criminal Writ Petitions filed by the appellant under Section 482,

Cr.P.C.

Page 8 8

9.In support of his contention that the appellant was no more a

Director of the Company and responsible for the conduct of its

business at the relevant time, learned counsel relied upon the

following:

(i)Agenda item 4 of the Minutes of the Board meeting dated 17

th

December, 2005 which reads as under:

“4. RESIGNATION OF DIRECTOR

Chairman placed before the Members of the Board a

letter received from Ms. Pooja Devidasani tendering her

resignation as a Director of the Company.

Members of the Board noted the same and then they

unanimously resolved as under:

RESOLVED THAT resignation tendered by Ms. Pooja

Devidasani be and is hereby accepted from the

conclusion of this Board Meeting”.

(ii)Form 32 submitted to the Registrar of Companies in pursuance

of requirements of provisions of the Companies Act, 1956 in which

against the name of appellant, it was shown as “resigned as a

Director”. Whereas against the names of Mr. Hitesh Haria and Mr.

Parag Tejani, the words “appointed as a Director-Operations” were

shown. Against the column “Date of appointment or change” the

dates against all the above three persons were shown as 17

th

December, 2005. Taking note of these changes, Respondent No. 2

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arrayed the newly added Directors as defaulters, but not omitted the

appellant who has resigned as a Director which is specified in the

very Form 32.

(iii)The Annual Return filed by the Company for the year ending

31

st

March, 2006 which also showed that the appellant was no longer

a Director of the Company. In Column IV of the Annual Return

against the name of appellant, it was clearly mentioned as “Date of

ceasing : 17-12-2005”.

(iv)A letter dated 5

th

February, 2009 issued by the default

Company in favour of Respondent No. 2. In the said letter, while

forwarding certain details/information, a list of Directors was also

sent. The said list did not contain name of the appellant.

Learned counsel for the appellant submitted that in the light of

the above Respondent No. 2 was fully aware that appellant was

ceased to be a Director of the Company (a) prior to the issuance of

cheques (b) prior to the dishonor of cheques (c) prior to the date of

issuance of legal notice (d) prior to the expiry of 15 days period after

issuance of legal notice after which cause of action to file criminal

complaints arose and (e) prior to the filing of the criminal complaints.

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10.Learned counsel finally submitted that the allegations set out in

the complaint do not constitute any offence against the appellant and

the High Court committed a manifest error in interpreting Section 141

of the N.I. Act in its proper perspective, which led to travesty of

justice. He therefore urged for setting aside the impugned judgment

and quash the criminal proceedings against the appellant.

11.Learned senior counsel appearing for the respondents, on the

other hand, supported the impugned judgment of the High Court and

submitted that by dismissing the writ petitions of the appellant the

High Court had neither committed any illegality nor misinterpreted the

provisions of the N.I. Act. Vehemently contending that the resignation

of the appellant itself is a disputed fact, he submitted that no certified

copy of Form 32 was produced by the appellant and only a certified

copy of Annual Return has been filed before this Court. Under

Section 79 of the Evidence Act, 1872, a Court can presume

genuineness of a document only when a certified copy is filed. Even if

certified copy of Form 32 is produced by the appellant to contend that

at the time of issuance of cheques, she had already resigned, when

such Form 32 is disputed by the complainant, it shall be the bounden

duty of the appellant to prove such Form 32 by leading evidence in

Page 11 11

the trial. Only supplying a copy of Form 32, without proving its

contents, would not be sufficient to quash a complaint under Section

138 read with Section 141 of the N.I. Act.

12.In support of his contention that when the Form 32 furnished by

the appellant was disputed by the Respondent No. 2 the High Court

cannot draw an inference on the basis of such disputed document,

learned counsel relied on decisions of this Court in Chand Dhawan

Vs. Jawahar Lal (1992) 3 SCC 317, Malwa Cotton and Spinning

Mills Ltd. Vs. Virsa Singh Sidhu (2008) 17 SCC 147. Therefore, the

High Court was right in dismissing the writ petitions preferred by the

appellant. Hence the appellant cannot take the plea of her resignation

to escape from legal liability that too when the resignation itself is a

disputed fact. Unless and until trial takes place, it cannot be held that

the appellant is no more a Director and not liable. At the material time

relating to the financial transaction between Respondent No. 2 and

the accused Company, the appellant was a Director and looking after

the day to day affairs of the Company as a Director and hence she is

liable to be prosecuted since she had connived in the commission of

offence.

Page 12 12

13.Learned counsel further submitted that apart from the

averments made in the complaint, the appellant has also executed an

irrevocable Letter of Guarantee on 19

th

January, 2005 in favour of

Respondent No. 2—Complainant, for availing trade finance facility. In

the said Letter of Guarantee, the appellant categorically undertook

that in the event of the Company failing or neglecting or refusing to

pay the amount remaining unpaid, the same would be payable by

her. She further agreed that her liability and obligation under the

Guarantee shall be continuing, absolute, unconditional and

irrevocable until the borrower is fully discharged from all liabilities,

irrespective of any disputes or differences between the parties. The

binding clause of the guarantee reads:

“I, the Guarantor, expressly, irrevocably and

unconditionally agree that your Company shall be entitled

to enforce this Guarantee without making any demand on

or taking any proceedings against the Client for all the

amounts due and payable by the Client to your Company

under and in relation to the Agreement”.

The cheques in question were issued on the basis of the said

Guarantee given by the appellant and on the simple ground of

resignation she cannot deviate from vicarious liability as per the

assurance given by her in the Letter of Guarantee.

Page 13 13

14.Learned counsel for the respondents made a reference to the

Judgment of this Court in Gunmala Sales Private Ltd. Vs. Anu

Mehta & Ors. (Criminal Appeal No. 2228 of 2014) decided on

October 17, 2014 and submitted that once in a complaint filed under

Section 138 read with Section 141 of the N.I. Act, the basic averment

is made that the Director was in charge of and responsible for the

conduct of the business of the Company at the relevant time when

the offence was committed, the Magistrate can issue process against

such Director and the basic averment is sufficient to make out a case

against the Director. Hence, learned senior counsel concluded that

there is no illegality in issuing process against the appellant.

15.We have given our thoughtful consideration to the arguments

advanced by the counsel on either side at length. The questions that

arise for determination are (i) whether the appellant is liable for

prosecution under Section 138 read with Section 141 of the N.I. Act

for the alleged offence of dishonor of cheques committed by the

default Company?; (ii) whether the High Court was right in dismissing

the writ petitions filed by the appellant seeking quashing of the

criminal proceedings initiated against her by the Respondent No. 2?

Page 14 14

16.Before delving into the merits of the case, it would be apt to

take note of relevant portions of the complaints filed by Respondent

No. 2 which read thus:

“I say that the accused No. 2 to 5 on behalf of accused

No. 1 have approached us with request for trade finance

facility and accordingly the said facility has been granted

by us to the accused as per their request and

requirement.

I say that accused No. 1 is private limited Company of

which accused No. 2, 3 & 5 are Directors and accused

No. 4 is the Director & authorized signatory of accused

No. 1 M/S Elite International Pvt. Ltd.—Imprest. At all

material time relevant and relating to the complaint,

accused No. 2 to 5 were and are in charge of and

responsible for the conduct of business of accused No. 1

and are also looking after day to day affairs of accused

No. 1. It is further submitted that accused No. 2 to 5 with

accused No. 1 are liable to be prosecuted and / or

connived in the commission of the present offence, in

their capacity as a Director/signatory of the said private

limited Company.

I say that as narrated in para 4 accused No. 2 to 5 being

responsible for the affairs of accused No. 1 i.e. private

limited Company are liable to be prosecuted for having

committed a criminal offence in the event of failure on

their part to comply with the requisitions contained in the

statutory notice dated 03-11-08, which was sent to them

both under R.P.A.D. & U.P.C. on 06/11/08. I say that

notice was received by all the accused on or about

08/11/08 and notice sent through U.P.C. are deemed to

have been served. However, accused have failed and

neglected to make our payment under the above said

dishonored cheques”.

Page 15 15

17.There is no dispute that the appellant, who was wife of the

Managing Director, was appointed as a Director of the Company—

M/S Elite International Pvt. Ltd. on 1

st

July, 2004 and had also

executed a Letter of Guarantee on 19

th

January, 2005. The cheques

in question were issued during April, 2008 to September, 2008. So far

as the dishonor of Cheques is concerned, admittedly the cheques

were not signed by the appellant. There is also no dispute that the

appellant was not the Managing Director but only a non-executive

Director of the Company. Non-executive Director is no doubt a

custodian of the governance of the Company but does not involve in

the day-to-day affairs of the running of its business and only monitors

the executive activity. To fasten vicarious liability under Section 141

of the Act on a person, at the material time that person shall have

been at the helm of affairs of the Company, one who actively looks

after the day-to-day activities of the Company and particularly

responsible for the conduct of its business. Simply because a person

is a Director of a Company, does not make him liable under the N.I.

Act. Every person connected with the Company will not fall into the

ambit of the provision. Time and again, it has been asserted by this

Court that only those persons who were in charge of and responsible

Page 16 16

for the conduct of the business of the Company at the time of

commission of an offence will be liable for criminal action. A Director,

who was not in charge of and was not responsible for the conduct of

the business of the Company at the relevant time, will not be liable for

an offence under Section 141 of the N.I. Act. In National Small

Industries Corporation (supra) this Court observed:

“Section 141 is a penal provision creating vicarious

liability, and which, as per settled law, must be strictly

construed. It is therefore, not sufficient to make a bald

cursory statement in a complaint that the Director

(arrayed as an accused) is in charge of and responsible

to the company for the conduct of the business of the

company without anything more as to the role of the

Director. But the complaint should spell out as to how and

in what manner Respondent 1 was in charge of or was

responsible to the accused Company for the conduct of

its business. This is in consonance with strict

interpretation of penal statutes, especially, where such

statutes create vicarious liability.

A company may have a number of Directors and to make

any or all the Directors as accused in a complaint merely

on the basis of a statement that they are in charge of and

responsible for the conduct of the business of the

company without anything more is not a sufficient or

adequate fulfillment of the requirements under Section

141.

18.In Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC

189, this Court observed that a person ‘in charge of a business’

Page 17 17

means that the person should be in overall control of the day to day

business of the Company.

19.A Director of a Company is liable to be convicted for an offence

committed by the Company if he/she was in charge of and was

responsible to the Company for the conduct of its business or if it is

proved that the offence was committed with the consent or

connivance of, or was attributable to any negligence on the part of the

Director concerned [See: State of Karnataka Vs. Pratap Chand &

Ors. (1981) 2 SCC 335].

20.In other words, the law laid down by this Court is that for

making a Director of a Company liable for the offences committed by

the Company under Section 141 of the N.I. Act, there must be

specific averments against the Director showing as to how and

in what manner the Director was responsible for the conduct of

the business of the Company.

21.In Sabitha Ramamurthy & Anr. Vs. R.B.S.

Channbasavaradhya (2006) 10 SCC 581, it was held by this Court

that it is not necessary for the complainant to specifically reproduce

the wordings of the section but what is required is a clear statement

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of fact so as to enable the court to arrive at a prima facie opinion that

the accused is vicariously liable. Section 141 raises a legal fiction.

By reason of the said provision, a person although is not

personally liable for commission of such an offence would be

vicariously liable therefor. Such vicarious liability can be

inferred so far as a company registered or incorporated under

the Companies Act, 1956 is concerned only if the requisite

statements, which are required to be averred in the complaint

petition, are made so as to make the accused therein vicariously

liable for the offence committed by the company. By verbatim

reproducing the wording of the Section without a clear statement of

fact supported by proper evidence, so as to make the accused

vicariously liable, is a ground for quashing proceedings initiated

against such person under Section 141 of the N.I. Act.

22.As held by this Court in Pepsi Foods Ltd. & Anr. Vs. Special

Judicial Magistrate & Ors. (1998) 5 SCC 343, summoning of an

accused in a criminal case is a serious matter. Criminal law cannot be

set into motion as a matter of course. The order of the Magistrate

summoning the accused must reflect that he has applied his mind to

the facts of the case and the law applicable thereto. He has to

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examine the nature of allegations made in the complaint and the

evidence both oral and documentary in support thereof and would

that be sufficient for the complainant to succeed in bringing charge

home to the accused. It is not that the Magistrate is a silent spectator

at the time of recording of preliminary evidence before summoning of

the accused. The Magistrate has to carefully scrutinise the evidence

brought on record and may even himself put questions to the

complainant and his witnesses to elicit answers to find out the

truthfulness of the allegations or otherwise and then examine if any

offence is prima facie committed by all or any of the accused.

23.In Gunmala Sales Private Ltd. (supra) on which learned

counsel for the respondents has heavily relied, this Court at Para

33(c) held :

“In the facts of a given case, on an overall reading of the

complaint, the High Court may, despite the presence

of the basic averment, quash the complaint because

of the absence of more particulars about role of

the Director in the complaint. It may do so

having come across some unimpeachable,

uncontrovertible evidence which is beyond suspicion

or doubt or totally acceptable circumstances which

may clearly indicate that the Director could not

have been concerned with the issuance of cheques

and asking him to stand the trial would be abuse of

Page 20 20

the process of the court. Despite the presence of

basic averment, it may come to a conclusion that no

case is made out against the Director. Take for

instance a case of a Director suffering from a

terminal illness who was bedridden at the relevant

time or a Director who had resigned long before

issuance of cheques. In such cases, if the High

Court is convinced that prosecuting such a Director

is merely an arm-twisting tactics, the High Court may

quash the proceedings. It bears repetition to state that

to establish such case unimpeachable, uncontrovertible

evidence which is beyond suspicion or doubt or some

totally acceptable circumstances will have to be brought

to the notice of the High Court. Such cases may be few

and far between but the possibility of such a case being

there cannot be ruled out”.

24.In the light of the law laid down by this Court, the present case

be examined. It is not in dispute that two persons, namely, Parag

Tejani and Hitesh Haria, were inducted as Director-Operations of the

Company w.e.f. 17

th

December, 2005 by virtue of a resolution passed

by the Company on the same date. It is on the same date the

appellant had ceased to be a Director as per the Annual Report which

is not disputed by the Respondent No. 2. A perusal of the Complaint

shows that Respondent No. 2 has made the newly appointed

Directors-Operations Parag Tejani and Hitesh Haria also as accused

stating that all the accused approached him with a request for trade

Page 21 21

finance facility and accordingly the said facility was granted as per

their request. It thus gives an impression that Respondent No. 2 is

well aware of the change of Directors in the accused Company. In

spite of knowing the developments taken place in the Company that

the appellant was no longer a Director of the Company and two new

Directors were inducted, the Respondent No. 2 has chosen to array

all of them as accused in the Complaints. Moreover, Respondent No.

2 had not disputed this fact emphatically in the proceedings before

the High Court. We have gone though the reply affidavit filed by

Respondent No. 2 before the High Court of Bombay.

25.A bare reading of the averment of Respondent No. 2 before the

High Court, suggests that his case appears to be that the appellant

has not proved her resignation in unequivocal terms and it is a

disputed question of fact. It is noteworthy that the respondent No. 2

except making a bald statement and throwing the burden on the

appellant to prove authenticity of documents, has not pleaded

anywhere that the public documents Form 32 and Annual Return are

forged and fabricated documents. Curiously, respondent No. 2 on

the one hand raises a doubt about the genuineness of Form 32, a

public document, through which the default Company had

Page 22 22

communicated the change of Directors to the Registrar of the

Companies with the effect of resignation of the appellant and

induction of two Directors-Operations and on the other hand, he has

arrayed the two newly appointed Directors-Operations as accused

whose names were communicated to the Registrar of Companies by

the very same Form 32. The respondent/complainant cannot be

permitted to blow hot and cold at the same time. When he denies the

genuineness of the document, he cannot act upon it and array the

newly appointed Directors as accused.

26.We have also perused the copy of Annual Return filed by M/S

Elite International Pvt. Ltd. for the year 2006, on 31

st

March, 2006

furnished in Form 20B as per Section 159 of the Companies Act,

1956. Column IV of Schedule V – Part II of the Annual Return,

requires information regarding Directors/Manager/Secretary (Past

and Present) in which against the name of Devidasani Ravinder

Pooja—appellant it was mentioned “Date of ceasing : 17-12-2005”.

Admittedly, a certified copy of the Annual Return became part of

record. Hence, we are of the considered opinion that the factum of

appellant resigning from the Board of Directors is established.

Page 23 23

27.Unfortunately, the High Court did not deal the issue in a proper

perspective and committed error in dismissing the writ petitions by

holding that in the Complaints filed by the Respondent No. 2, specific

averments were made against the appellant. But on the contrary,

taking the complaint as a whole, it can be inferred that in the entire

complaint, no specific role is attributed to the appellant in the

commission of offence. It is settled law that to attract a case under

Section 141 of the N.I. Act a specific role must have been played by a

Director of the Company for fastening vicarious liability. But in this

case, the appellant was neither a Director of the accused Company

nor in charge of or involved in the day to day affairs of the Company

at the time of commission of the alleged offence. There is not even a

whisper or shred of evidence on record to show that there is any act

committed by the appellant from which a reasonable inference can be

drawn that the appellant could be vicariously held liable for the

offence with which she is charged.

28.In the entire complaint, neither the role of the appellant in the

affairs of the Company was explained nor in what manner the

appellant is responsible for the conduct of business of the Company,

was explained. From the record it appears that the trade finance

Page 24 24

facility was extended by the Respondent No. 2 to the default

Company during the period from 13

th

April, 2008 to 14

th

October,

2008, against which the Cheques were issued by the Company which

stood dishonored. Much before that on 17

th

December, 2005 the

appellant resigned from the Board of Directors. Hence, we have no

hesitation to hold that continuation of the criminal proceedings

against the appellant under Section 138 read with Section 141 of the

N.I. Act is a pure abuse of process of law and it has to be interdicted

at the threshold.

29.So far as the Letter of Guarantee is concerned, it gives way for

a civil liability which the respondent No. 2—complainant can always

pursue the remedy before the appropriate Court. So, the contention

that the cheques in question were issued by virtue of such Letter of

Guarantee and hence the appellant is liable under Section 138 read

with Section 141 of the N.I. Act, cannot also be accepted in these

proceedings.

30.Putting the criminal law into motion is not a matter of course.

To settle the scores between the parties which are more in the nature

of a civil dispute, the parties cannot be permitted to put the criminal

Page 25 25

law into motion and Courts cannot be a mere spectator to it. Before a

Magistrate taking cognizance of an offence under Section 138/141 of

the N.I. Act, making a person vicariously liable has to ensure strict

compliance of the statutory requirements. The Superior Courts should

maintain purity in the administration of Justice and should not allow

abuse of the process of the Court. The High Court ought to have

quashed the complaint against the appellant which is nothing but a

pure abuse of process of law.

31.For all the foregoing reasons, we are of the view that this is a fit

case for quashing the complaint, and accordingly allow these appeals

by setting aside the impugned judgment passed by the High Court

and quash the criminal proceedings pending against the appellant

before the Trial Court.

.….…………………………………………...J.

(SUDHANSU JYOTI MUKHOPADHAYA)

…………… .....………………………………J.

(N.V. RAMANA)

NEW DELHI

DECEMBER 17, 2014