LexGUNMALA SALES PRIVATE LTD. versus ANU MEHTA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2014) 10 S.C.R. 1117
GUNMALA SALES PRIVATE LTD.
v.
ANU MEHTA & ORS.
(Criminal Appeal No. 2228 of 2014 ere.)
OCTOBER 17, 2014.
[RANJANA PRAKASH DESAI AND N.V. RAMANA, JJ.)
Negotiable Instruments Act, 1881:
A
B
s.138 rlw s.141 -
Complaints against Directors on c
dishonour of cheques - Averments made in complaints that
Directors were in-charge and responsible for day-to-day
business of accused company - Complaints quashed by
High Court holding that mere bald assertion was not sufficient
to maintain the complaints - In petitions filed by Directors, no
0
clear case was made out that at the material time Directors
were not in-charge of and were not responsible for the conduct
of business of the company by referring to or producing any
incontrovertible or unimpeachable evidence which is beyond
suspicion or doubt - Order of High Court quashing complaints
E
against Directors set aside, except in respect of an old lady
of 70 years of age, as making her stand the trial would be an
abuse of process of court - Code of Criminal Procedure, 1973
- s.482.
Code of Criminal Procedure, 1973:
F
s. 482 - Exercise of power by High Court to quash
criminal proceedings u/s 138 rlw s.141 of Negotiable
Instrument Act against Directors of accused company -
Principles culled out.
G
Disposing of the appeals, the Court
HELD: 1.1. So far as Directors who are not
signatories to the cheques or who are not Managing
1117
H
1118
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A Directors or Joint Managing Directors are concerned, it
is necessary to aver in the complaint filed u/s 138 read
with s.141 of the NI Act that at the relevant time when the
offence was committed, the Directors were in charge of
and were responsible for the conduct of the business of
B the company. There is no deemed liability of such
Directors. This averment assumes importance because
it is the basic and essential averment which persuades
the Magistrate to issue process against the Director. Thus,
if this basic averment is missing the Magistrate is legally
c justified in not issuing process. [para 26-27] [1114-B-E]
Saroj Kumar Poddar v. State (NCT of Delhi) and anr.
2007 (1) SCR 907 = 2007 (3) SCC 693 - N. Rangachari v.
Bharat Sanchar Nigam Ltd. 2007 (5) SCR 329 = 2007
(5) SCC 108; Paresh P. Rajda v. State of Maharashtra and
D anr. 2008 (8) SCR 1191=2008 (7) SCC 442; Malwa Cotton
and Spinning Mills Ltd. v. Virsa Singh Sidhu and ors. 2008
(12) SCR 68 = 2008 (17) SCC 147; K.K. Ahuja v. V.K. Arora
and anr. 2009 (10) sec 48; Manna/al Chamaria v. State of
West Bengal (2014) 4 SCALE 55 A.K. National Small
E Industries Corporation Limited v. Harmeet Singh Painta/ and
anr. 201 o (2) SCR 805 = 201 o (3) sec 330; SMS
Pharmaceuticals Ltd. (2) v. Neeta Bhalla 2007 (2) SCR 862
= 2007 (4) SCC 70 ("SMS Pharma-(2r Rallis India Limited
v. Poduru Vidya Bhushan and ors. 2011 (5) SCR 289 = 2011
F (13) SCC 88 A.K. Singhania v. Gujarat State Fertilizer
Company Ltd. 2013(12) SCALE 673 - relied on.
Palmer's Company Law 20th Edition, Guide to the
Companies Act by A. Ramaiya 16th Edition and Principles
G of Modern Company Law by Gower and Davies 17th Edition
- referred to.
H
1.2. Inherent power u/s 482 of the Code is to be
invoked to prevent abuse of the process of any court or
otherwise to secure ends of justice. If the requisite
GUNMALA SALES PRIVATE LTD. v. ANU MEHTA 1119
averment is there, High Court need not dismiss the
A
petition as a rule observing that the trial must go on and
the High Court is not precluded from looking into other
circumstances if any. [para 27] [1114-F-G]
SMS Pharmaceuticals Limited v. Neeta Bhalla and anr.
2005 (3) Suppl. SCR 371 = 2005 (8) SCC 89 - relied on.
B
1.3. Just as the complainant is entitled to presume in
view of provisions of the Companies Act that the Director
was concerned with the issuance of the cheque, the
Director is entitled to contend that he was not concerned
C
with the issuance of cheque for a variety of reasons. It is
for the High Court to consider these submissions.
Quashing of a complaint is a serious matter. Complaint
cannot be quashed for the asking. For quashing of a
complaint it must be shown that no offence is made out D
at all against the Director. [para 28 & 30] [1145-G-H; 1146-
A; 1147-A-B]
Anita Malhotra v. Apparel Export Promotion Council and
anr. ; 2011 (13) SCR 76 = 2012 (1) SCC 520, Harshendra
E
Kumar D v. Reba ti/ a ta Kotey & Ors. 2011 (2) SCR 670 = Excerpt shown. Read the full judgment & AI analysis in Lexace.