Cri. P. No. 2239 of 2002

21st October, 2002

Petitioner Counsel: Mr. P. SRINIVASA REDDY
Respondent Counsel: Public Prosecutor

JUDGMENT

JUDGMENT :- This application is filed to quash the proceedings in CC No. 119 of 1999 on the file of the Court of the Additional Munsif Magistrate, Nandyal, instituted on a complaint filed by the 1st respondent under Section 138 of the Negotiable Instruments Act (the Act) against the petitioner who is shown as A4.

2. The contention of the learned Counsel for the petitioner is that since there is no specific averment in the complaint showing the role played by the petitioner in the running of the company, that too when the petitioner resigned from the Directorship of the Company on 25-7-1997, the complaint against the petitioner is liable to be quashed.

3. The averments towards the end of para 3 of the complaint read:

"The 2nd accused has issued the above cheques on behalf of accused No. 1 with the consent and knowledge of accused 3, 4 and 5 and deceased one Kanakaratnam, who was the one of the Directors of the accused No. 1. The complainant submits that all the accused have done the same with fall knowledge and intention that the cheque should not be honoured."

In para 6 it is alleged-

"The accused Nos.2 to 5 are being the Directors of Accused No.1 Company and as Directors they have been in-charge of the affairs of the Accused No. 1 Company, their actions in issuing the cheques was part of their duties and as all of them were aware of the fact that the amounts due to the complainant......."

As per Section 141 of the Act, if the cheque is issued for and on behalf of a company, the company and every person responsible to the company for the conduct of its business, would be deemed to be guilty under Section 138 of the Act. Since above referred averment in the complaint show the petitioner also was incharge of the affairs of the company, i.e., A-l, the contention that there is no specific averment in the complaint against the petitioner cannot be accepted.

4. The contention that the petitioner ceased to be the Director of A-l Company from 25-7-1997 and so he cannot be made liable for offence under Section 138 of the Act cannot be accepted, because out of the two cheques that were dishonoured, the first of the dishonoured cheques was issued on 23-7-1997 i.e., prior to the alleged resignation of the petitioner as Director of A-1 Company.

5. I am unable to agree with the contention of the learned Counsel for the petitioner that the cause of action for initiating the complaint under Section 138 of the Act arises only when the amount claimed under the statutory notice, to be issued as per proviso (b) to Section 138 of the Act, is not paid and so petitioner cannot be proceeded against under Section 138 of the Act because he ceased to be a Director of A-1 Company, even by the date of statutory notice. In fact cause of action for an offence under Section 138 of the Act first arises on the date of drawal of the cheque. Various procedures and times prescribed in Section 138 of the Act are all formalities to be observed , before filing of a complaint. Question of issuance of notice under proviso (b) to Section 138 of the Act arises only if the cheque issued is dishonoured. So issuance of a cheque is first stage of cause of action. By 23-7-1997 petitioner admittedly was a Director of Al Company. So he cannot be heard to say that he is not liable for the offence under Section 138 of the Act. All these apart, the question as to when the resignation was tendered and when it was accepted, and when the accepted resignation was intimated to the Registrar of Companies, are all matters of fact, which have to be gone into and decided at the time of trial, and cannot be decided in a quash proceedings.

6. Therefore, I find no merits in this petition and hence the petition is dismissed.

Petition dismissed.