Madhya Pradesh High Court
Kantilal Chaganlal Securities ... vs The State Of Madhya Pradesh on 31 August, 2015
MCRC-10695-2009 ( KANTILAL CHAGANLAL SECURITIES PVT.LTD. Vs THE STATE OF MADHYA PRADESH) 31-08-2015 Mr.Manish Datt, learned senior counsel with Mr.Nishant Datt, Advocate for the petitioners. Mr.Vaibhav Tiwari, learned Panel Lawyer for the respondent No.1.
None for respondent No.2, even though the matter was called up for hearing in second round.
Heard.
In this petition under section 482 of the Code of Criminal Procedure the petitioners seek quashment of order dated 15.06.2009 passed by Judicial Magistrate First Class, by which, cognizance of offence under section 138 of Negotiable Instruments Act, 1881 against the petitioners has been taken.
I have considered the submissions made by learned senior counsel and have perused the record. From perusal of record it is evident that M/s.Kantilal Chhaganlal Securities Pvt. Ltd. (for short the "company") is a company registered under the provisions of Companies Act, 1956 and is situated at Mumbai. A memoranum of understanding was recorded on 16.08.2004 between the company and Sandeep Kumar Shukla, an individual. Under the aforesaid memonrandum of understanding Sandeep Kumar Shukla is appointed as a Sub Broker for company for Jabalpur, Korba and Bilaspur. As per the memorandum of understanding Sandeep Kumar Shukla and one Sharad Kumar Shukla are authorizied to open the Bank account to facilitate banking operations of ISC and both were authorised to operate the bank account. It is pertinent to mention that Sharad Kumar Shukla and Sandeep Kumar Shukla are real brothers. The memorandum of understanding also contains an arbitration clause. Since Sharad Kumar Shukla did not discharge the duties properly under Memorandum of Understanding, -2- therefore, his authority was cancelled on 25.2.2008 and the memorandum of understanding was cancelled. After the cancellation of authority, Sandeep Kumar Shukla issued a cheque in the name of his own brother Sharad Kumar Shukla to the tune of Rs.20 lacs. The cheque was presented on 30.3.2009 and the same was not honoured by the Bank on account of insufficiency of funds. Thereupon, a complaint under section 138 of Negotiable Instruments Act, 1881 was filed against the petitioners which was registered by the Magistrate vide order dated 15.6.2009.
From perusal of the record it is axomatic that the cheque was issued neither in respect of any debt nor any liability. The person in whose favour cheque has been issued is not the holder in due course. The cheque was issued by Sandeep Kumar Shukla in the name of his own brother. Both the brothers were given the authority to open the Bank accound under the memorandum of undertstanding. The cheque was admittedly issued after the authority of Sharad Kumar Shukla was revoked. It is well settled in law that it must be pleaded and shown that the Director of a company was responsible for the conduct of business of the company at the time of commission of the offence. Only being a director is not enough to cast a criminal liability. The vicarious liability is requied to be pleaded and proved and the same cannot be merely inferred. [See:K.Srikanth Singh vs. North East Securities Limited and another, (2007) 12 SCC 788 and Green Earth Asphalt and Power Pvt. Ltd. vs. State of Maharashtra and others, (2008) 8 SCC 278] From the allegations made in the complaint, it is evident that no such averment has been made in so far as petitioners No.2 to 7 are concerned to hold them vicariously liable for the alleged criminal liability. The petitioners No.2 to 7 -3- have not signed the cheque. The continuance of the proceeding against the petitioners No.2 to 7, in the fact situation of the case, amounts to abuse of process of law. Accordingly, the proceeding initiated against the petitioners No.2 to 7 by order dated 15.6.2009 is hereby quashed.
Let a copy of this order be sent to the trial Court by FAX. In the result, the petition is partly allowed.
(ALOK ARADHE) JUDGE