Absence Of Specific Averment That Accused Was In-charge Of & Responsible For Conduct Of Company’s Business: SC Quashes Cheque Bounce Cases
The Supreme Court quashed five criminal cases initiated against the accused under Sections 138 and 142 of the Negotiable Instruments Act, 1881 after finding no specific averment against him that he was in-charge of and responsible for conduct of the company’s business.
The Apex Court was considering a set of appeals by special leave arising from a common judgment of the Delhi High Court dismissing the Criminal Miscellaneous Cases filed by the appellant under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of the proceedings and the summoning orders in five complaint cases instituted under Sections 138 and 142 of the Negotiable Instruments Act, 1881. All the complaints were filed by the same complainant viz., M/s Pinnacle Capital Solution Pvt. Ltd. (respondent No.2).
The Division Bench comprising Justice C.T. Ravikumar and Justice Sanjay Karol said, “...on perusing the said complaints, we have no hesitation to hold that the aforesaid mandatorily required averments to attract an offence under Section 138 of the NI Act are conspicuously absent in all the complaint(s).”
Senior Advocate Vikas Singh represented the Appellant while ASG Aishwarya Bhati represented the Respondents.
The second respondent-company was engaged in the business of rendering financial services as a registered Non-Banking Financial Company (NBFC) and admittedly, the appellant was the authorised signatory of the accused company, namely, M/s Silverstar Fashions Private Limited that engaged in the business of manufacturing and exporting ready-made garments. The loan transaction(s) between the aforesaid companies and the subsequent issuance of cheques and their dishonour ultimately led to the filing of the complaint cases alleging commission of offence under Section 138, NI Act.
One of the main contentions of the appellant was that complaint lacks the mandatorily required averment to maintain a complaint for commission of offence under Section 138. To buttress the said contention, reliance was also placed upon the decision in Ashok Shewakramani & Ors. v. State of Andhra Pradesh & Anr. (2023).
It was noticed by the Bench that the law enunciated in the decision in Ashok Shewakramani’s case (supra) is that to maintain a complaint and to frame a charge under Section 138 of the NI Act, there must be a specific averment against the person concerned that he was in-charge of, and responsible for the company concerned in the matter of conduct of its business.
Taking note of this precedent, the Bench carefully perused the complaints. Though, the counsel appearing for the second-respondent in all these cases submitted that the complaint concerned carried necessary averments required statutorily to maintain them however, on perusing the said complaints, the Bench held that the aforesaid mandatorily required averments to attract an offence under Section 138 of the NI Act were conspicuously absent in all the complaints.
“To make the appellant to stand the trial, in such circumstances, would be nothing but abuse of the process of the Court. When that be the position, they are liable to be set aside in the light of Ashok Shewakramani’s case (supra)”, it added.
Thus, noting that the appellant made out a case warranting quashment, the Bench allowed the appeal and quashed all the cases on the files of the Metropolitan Magistrate and the summoning orders issued in the said cases.
Cause Title: Ravi Dhingra v. State of Nct of Delhi & Anr. (Neutral Citation: 2024 INSC 1013)
Appearance:
Appellant: Senior Advocate Vikas Singh, AOR Ankur Bansal, Advocates Deepeika Kalia, Sidhant Dhingra, Siddhartha Jain, Sadre Alam, Vasudha Singh, Sudeep Chandra
Respondents: A.S.G. Aishwarya Bhati, Senior Advocate R Bala, AOR Mukesh Kumar Maroria, Advocates Nidhi Khanna, Akshay Amritanshu, Vimla Sinha, Preeti Rani, Rukmini Bobde, Raman Yadav, Murari Kumar, Animesh Kumar, Shiv Shankar, AOR Neeraj Shekhar, AOR