NILESH C VAISHNAV Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The petitioner, a chartered accountant, has invoked the provisions of Section 482 of the Code of Criminal Procedure, 1973 (for short, Sthe Code ) for a direction to quash the criminal proceedings in Criminal Cases No.3837,3382,3056 and 3057 of 2002 pending in the Court of learned Metropolitan Magistrate, Court No.4, Ahmedabad. He was joined as one of the accused persons in the complaints filed by respondent No.2-Bank exclusively alleging offence under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 (for short, Sthe Act ). It is alleged in each complaint that accused No.1 was a Company incorporated under the Companies Act, 1956, accused No.2 was Manging Director and accused Nos.3 to 9 were Directors of the said company. It is alleged that the accused had given cheques in favour of the complainant towards payment of its dues. The earliest cheque, according to the complaint, is dated 29.06.2002 for Rs.12,04,679/-. Thereafter, the following cheques were given to the complainant;

(2.) It is specifically averred on oath in the petitions by the petitioner that he was a practising Chartered Accountant who was inducted in accused No.1-Company in the year 1995 as a Professional Director to meet one of the requirements of sanction of the loan of IDBI and was never responsible for day-to-day affairs of the company or the business of the company. As against the financial assistance extended by the complainant, six cheques drawn on State Bank of India and handed over towards principal amounts and five cheques drawn towards interest were signed by the authorised signatory of the company and issued to the complainant. Thereafter, by letter dated 25.06.2002, the company cancelled earlier cheques and issued new cheques on 25.06.2002 which were returned with the memo dated 24.10.2002. It is averred that notice dated 31.10.2002 issued to the petitioner pursuant to return of the cheques was not served upon him but served at the address of the company and not received by him. It is also stated in the complaint itself that notice issued to accused Nos.5 to 9 were returned with postal remarks SNot available and Left

(3.) On the basis of the above facts and pleading, it was argued by learned counsel Mr.B.B. Naik, appearing for the petitioner, that the criminal cases, as far as the petitioner was concerned, were required to be quashed, in absence of any specific averment in the complaint about involvement of the petitioner in the alleged offence and in view of the clear and un-controverted factual position of the petitioner not being a Director at the relevant time. It was further submitted that in absence of any other averment or allegation in the complaint, the petitioner was implicated in the criminal cases only on the basis that he was a member of the Board of Directors and once it was established that he was not holding such position at the relevant time or even at the time when the cheques were issued, criminal proceedings against him would be unsustainable and would amount to abuse of the process of law. Learned counsel Mr.Naik relied upon the judgment of the Hon'ble Supreme Court in K. Srikanth Singh V/s. M/s. North East Securities Ltd. & Anr. [JT 2007(9)SC 449] wherein it was contended that at the relevant point of time, the petitioner was not the Director of the company. After reference to the judgment of three Judges Bench of the Supreme Court in S.M.S. Pharmaceuticals Ltd. V/s. Neeta Bhalla and Another, it is observed in paragraph 5 that negotiation for obtaining financial assistance on behalf of the company by its Directors itself would not be an ingredient for the purpose of constituting an offence under Section 138 of the Act. Furthermore, vicarious liability on the part of a person must be pleaded and proved. It cannot be a subject matter of mere inference. Thus, in similar circumstances, the order taking cognizance of offence was quashed, according to the submission.