SUNITA PALITA & OTHERS versus M/S PANCHAMI STONE QUARRY

SUNITA PALITA & OTHERS versus M/S PANCHAMI STONE QUARRY

The High Court erred in refusing to quash proceedings under Section 482 Cr.P.C. as against the appellants because the record established they were independent non-executive directors who were not Managing Directors/Joint Managing Directors, were not signatories of the dishonoured cheque, and the complaint lacked specific averments showing they were "in charge of and responsible" for the conduct of the company's business at the relevant time; accordingly the proceedings under Sections 138/141 NI Act were quashed insofar as the appellants were concerned.

Parties
Appellants: SUNITA PALITA & OTHERS; Respondent: M/S PANCHAMI STONE QUARRY
Jurisdiction
India
Judgment Date
01 August 2022
Procedural Posture
Criminal Appeal No. 1105 of 2022 / Appeal Against Judgment and Order Dated 11.09.2019 of the Calcutta High Court Dismissing CRR No.2835 of 2018 Under Section 482 Cr.p.c.
Outcome
Appeal allowed; judgment and order of the Calcutta High Court dated 11.09.2019 set aside
Legal Topics
Quashing of Criminal Proceedings, Section 482 Cr.p.c., Section 138 NI Act, Vicarious Liability Under Section 141 NI Act, Liability of Independent/non Executive Directors, Dispensing With Personal Appearance Under Section 205 Cr.p.c.
Criminal Procedure Negotiable Instruments Act Companies Act Insolvency and Bankruptcy Code Quashing of Criminal Proceedings Section 482 Cr.p.c. Section 138 NI Act Vicarious Liability Under Section 141 NI Act +2 more

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Parties

SUNITA PALITA & OTHERS

Appellants

M/S PANCHAMI STONE QUARRY

Respondent

Procedural Posture

Criminal Appeal No. 1105 of 2022 / Appeal Against Judgment and Order Dated 11.09.2019 of the Calcutta High Court Dismissing CRR No.2835 of 2018 Under Section 482 Cr.p.c.

Legal Issues

  1. 1 Whether proceedings under Sections 138/141 of the Negotiable Instruments Act could be sustained against independent non-executive directors who were not Managing Directors/Joint Managing Directors and were not signatories of the dishonoured cheque
  2. 2 Whether the High Court ought to have exercised its inherent jurisdiction under Section 482 Cr.P.C. to quash proceedings as against the appellants
  3. 3 Whether mere averment that directors were "in charge of and responsible" without particulars satisfies requirements of Section 141 NI Act

Ratio Decidendi

The High Court erred in refusing to quash proceedings under Section 482 Cr.P.C. as against the appellants because the record established they were independent non-executive directors who were not Managing Directors/Joint Managing Directors, were not signatories of the dishonoured cheque, and the complaint lacked specific averments showing they were "in charge of and responsible" for the conduct of the company's business at the relevant time; accordingly the proceedings under Sections 138/141 NI Act were quashed insofar as the appellants were concerned.

Court Disposition

Appeal allowed; judgment and order of the Calcutta High Court dated 11.09.2019 set aside

Orders

  • Criminal Case No. AC/121/2017 (Section 138/141 NI Act) pending in the Court of Judicial Magistrate, 2nd Court, Suri, Birbhum is quashed insofar as the appellants (Accused Nos.3,4 and 5) are concerned
  • Proceedings may continue against the other accused including the Accused Company, its Managing Director/Additional Managing Director and/or the signatory of the cheque