Smt Archana Singhal And 3 Others Vs State of U.P. and Another (Allahabad High Court)
Summary: Allahabad High Court granted interim protection to four applicants challenging criminal proceedings and the summoning order dated 23.05.2024 in a complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The applicants contended that the cheque in question had been issued on behalf of M/s R.M. Dairy Products and signed by Ravi Singhal, stated to be the active partner of the firm.
According to them, the complaint contained no averment that they were involved in the day-to-day affairs or business of the firm when the cheque was issued. They further asserted, relying upon the LLP form, that they had already retired on 26.04.2019 and 01.07.2020, much before issuance of the disputed cheque. Reliance was placed on the Supreme Court ruling in Rajesh Viren Shah Vs Redington (India) Limited, where liability was considered in respect of directors who had resigned before issuance of the cheques, and S.M.S. Pharmaceuticals Ltd. Vs Neeta Bhalla And Another, concerning the requirement that a person sought to be made vicariously liable must have been in charge of and responsible for the conduct of the company’s business when the offence was committed.
The High Court found that the matter required consideration and permitted the respondents to file counter affidavits. Pending further consideration, it directed that no coercive action be taken against the applicants, while expressly allowing the court below to proceed against the other co-accused if there was no legal impediment.
Cases Discussed
- Rajesh Viren Shah Vs Redington (India) Limited, (2024) 4 SCC 305 (Supreme Court) — Relied upon by the applicants for the proposition that a director who had resigned before issuance of the cheque cannot be held liable for a cheque subsequently issued by the company.
- S.M.S. Pharmaceuticals Ltd. Vs Neeta Bhalla And Another, (2005) 8 SCC 89 (Supreme Court) — Relied upon for the requirement under Section 141 of the N.I. Act that, to fasten vicarious liability, the accused person must have been in charge of and responsible for the conduct of the company’s business at the time the offence was committed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Supplementary affidavit filed by Shri Mohd. Afzal, learned counsel for the applicant today in the Court, is taken on record.
1A. Heard Shri Mohd. Afzal, learned counsel for the applicants and Sri Mohd. Shoeb Khan, learned AGA for the State.
2. The present application under Section 482 Cr.P.C. has been filed by applicants to quash the entire proceedings as well as summoning order dated 23.05.2024 passed by A.C.J.M., Court No.2, Agra in Complaint Case No.313 of 2023 (M/s Rameshwar Das Murari Lal Vs. M/s R.M. Dairy Products and others), under Section-138 of Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the Act, 1881’), Police Station- Chatta, District- Agra, pending in the court of Additional Chief Judicial Magistrate, Court No.2, Agra.
3. Contention of learned counsel for the applicants is that even as per the complaint, the cheque in question was issued on behalf of the firm M/s R.M. Dairy Products which was signed by Ravi Singhal, who is the active partner of the firm and there is no averment in the complaint that at the time of issuance of the cheque in question, the present applicants were involved in day to day affairs in business of the firm in question. Therefore, proceeding is barred by Sections 138 and 141 of the Act, 1881. It is further submitted that present applicants have already retired on 26.04.2019 and 01.07.2020 which is much prior to the issuance of cheque in question. In support of her averment, LLP form was also annexed. In support of her contention, learned counsel for the applicants has relied upon the judgement of the Apex Court in Rajesh Viren Shah Vs. Redington (India) Limited reported in (2024) 4 SCC 305 in which Apex Court observed that the Director who has resigned cannot be held liable for the cheque issued after their resignation. Learned counsel for the applicant has also relied upon another judgement of the Apex Court in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla And Another reported in (2005) 8 SCC 89 in which Apex Court observed that for making the Director vicariously liable or other Officer for bouncing of the cheque issued on behalf of the company, it is necessary that at the time the offence was committed, the person accused was incharge of and responsible for the conduct of business of the company.
4. Matter requires consideration.
5. All the respondents may file counter affidavit within two weeks. Rejoinder affidavit, if any, may be filed within one week.
6. List this case in the week commencing 13.01.2025 along with Application U/S No.29864 of 2024.
7. Till the next date of listing, no coercive action shall be taken against the applicants in the aforesaid case.
8. However, it is made clear that the court below is free to proceed against other co-accused persons, if there is no legal impediment.
