New Delhi, Aug 4 Observing that a company is a ‘juristic person’, the Supreme Court has quashed criminal proceedings against a woman in a cheque bounce case, saying that a complaint is not maintainable against a director or authorised signatory if the company itself is not made a party (an accused) in the case.
A bench of Justices Manoj Misra and Vijay Bishnoi set aside an order passed by the Himachal Pradesh High Court, which asked the trial court to implead the company.
The top court took note of the submission made by advocate Ashwani Kumar Dubey, appearing for the accused, that when a company commits an offence punishable under Section 138 of the Negotiable Instruments ( NI) Act, the complaint against the director is not maintainable without impleading the company as an accused.
Dubey contended that the HC committed a manifest error in declining the prayer to quash the complaint and all consequential proceedings.
"We are of the view that the high court clearly exceeded its jurisdiction by directing the magistrate/ trial court to suo motu arraign the company as an accused.
"In consequence, and having regard to the finding that the complaint suffered from a fatal defect, we have no hesitation in holding that the complaint and all consequential proceedings arising therefrom are liable to be quashed and are hereby quashed," the bench said.
The top court said a company is a ‘juristic person’ and can maintain an account with the bank.
"Thus, if the cheque concerned is drawn on the account maintained by the company, subject to fulfilment of other ingredients of Section 138 of the NI Act, it would be the company which would commit the offence," the bench said.
The top court said the complaint suffered from a fatal defect in its failure to implead the company as an accused on whose account the cheque was drawn.
"In such circumstances, no cognisance on that complaint could have been taken in view of the decision in Aneeta Hada (supra). Hence, all further proceedings on the complaint were bad in law," it said.
In this case, a complaint was filed under Section 138 of the NI Act against the accused alleging that the company owed Rs 5 lakh to him in lieu of services rendered.
The accused, being one of the directors and authorised signatories of the company, issued a Rs 5 lakh cheque to the complainant, which was returned unpaid with the remark ‘payment stopped by drawer’.
Thereafter, the complainant served a notice of demand on the accused. However, despite service of the notice, she failed to make the requisite payment.
The Judicial Magistrate took cognizance of the complaint and summoned the appellant under Section 138 of the NI Act.
When the proceedings were at the stage of recording the accused’s statement, she filed a petition before the high court for quashing the proceedings on the ground that the cheque in question was drawn on the account maintained by the company and, therefore, without impleading the company as an accused, the complaint was liable to be quashed.
The high court said that since from the evidence led in the course of trial, it appeared that the company committed the offence, the trial court could have taken recourse to the powers under Section 319 of CrPC to arraign the company as accused No.2.
The High Court directed the trial court to implead the company.
