Summoning Of Company In Cheque Bounce Cases Shall Be Presumed If Signatory Director Has Been Summoned: Allahabad HC
The Allahabad High Court held that in the cases under Section 138 of the Negotiable Instruments Act, 1881 ('the N.I. Act') if the trial court has summoned the signatory director of a company, the summoning of the company shall be presumed.
The Bench of Justice Anish Kumar Gupta held, “Therefore, once the company has been arrayed as an accused alongwith the signatory Director and if the trial court summons the signatory Director the sufficient summoning of the company shall be presumed. Therefore, the submission of learned counsel for the applicant is that the company has not been summoned is not sustainable.”
Advocate Santosh Yadav appeared for the Applicant, whereas Advocates Anura Singh and Prateek Dwivedi appeared for the Respondents.
Applications under Section 482 of the Code of Criminal Procedure, 1973, were filed seeking to quash the summoning orders passed by the Trial Court in cases arising out of the proceedings under Section 138 of the N.I. Act.
It was the case of the Applicant that the trial court, while passing the summoning orders, had only summoned the Applicant and not the Company.
The Court also relied on the judgments of the Supreme Court in S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla and Anr. (2005), K.K. Ahuja vs. V.K. Vora, (2009), National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal (2010) and Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) and said that as regards Section 141 of the N.I. Act it makes out an exception and holds that if a person is able to prove that when the offence was committed, he was not in charge of the day-to-day affairs of the company or such offence was committed without his knowledge, despite he has exercised all due diligence to prevent the commission of such offence, such person cannot be punished for the offence. It added that once the High Court had quashed the summons against the company, the proceedings against the Director cannot continue.
“Thus, from above judgements it is crystal clear that when the offence is committed under Section 138 of the N.I. Act by the companies, then, the Joint Managing Director and signatory of the cheque are liable for the offence alongwith the company. So far as the other Directors are concerned it is required to be stated in the complaint that they were in-charge of the day-to-day affairs of the company and this is, if such assertion is made in the complaint, then, the Magistrate is competent to summon them for the trial and during the trial they can prove otherwise.”, it added.
The Court referred to Section 63 of the CrPC, which deals with the service of summons on the corporate bodies and the societies. The Court held that the summoning of the company was also presumed, as the company was also being prosecuted through the applicant herein, and, therefore, there was no illegality in the summoning order.
Accordingly, the Court dismissed the application.
Cause Title: Kishore Shankar Signapurkar v. State of U.P. and Anr. (Neutral Citation:2024:AHC:152334)
Appearances:
Applicant: Advocate Santosh Yadav
Opposite Party: Advocates Anura Singh, Prateek Dwivedi