Shelly Narang v. The State (Govt. of NCT of Delhi) and Anr.

1. Petitioner has approached this Court challenging the Order dated 30.03.2019, passed by the learned Metropolitan Magistrate, Rohini Courts, in Complaint Case No.10617/2017, issuing summons against the Petitioner herein.

2. It is pertinent to mention that the present proceedings arise from Complaint Case No.10617/2017, filed by the Respondent No.2 herein under Section 138 NI Act against the Petitioner herein (Accused No.3 in the Complaint) and Respondents No.3 (Accused No.1 in the Complaint) & 4 (Accused No.2 in the Complaint) herein. In the Complaint it is stated that the Accused No.1, i.e. the Respondent No.3 herein/Company, is involved in financial services. It is stated that the Petitioner herein and Respondent No.4 herein are the Directors of the Company. It is stated that after the demise of Mr. Nimit Kumar, who was the signatory director to the cheque in question, the Petitioner herein and the Respondent No.4 are jointly responsible for day to day affairs of the business of the Company and are responsible for all the financial transactions and payments for and on behalf of the company besides being personally involved in making representations to the Complainant for clearing the dues/debts of the Company. It is stated that the Company, acting through its authorized representative had entered into an agreement dated 20.04.2015, whereby the Complainant was induced into disbursing loan of Rs.10,00,000/- to the Company at an interest of 3% per month. It is stated that a cheque bearing No.000621, drawn on HDFC Bank, 3 NRI Complex, Mandakini, Alaknanada, New Delhi, was issued by the Company to the Respondent No.2/Complainant in discharge of its liability. It is stated that it was agreed that the said cheque would be realizable by giving 60 days notice upon failure on the part of the Company to disburse the agreed monthly interest or on failure to return the loan amount as and when demanded by the Complainant. It is stated that in November- December, 2016, there was failure on the part of the Company to return the interest amount and thereby the Complainant was entitled to recall the loan amount as per the loan agreement.

3. It is stated that notice was sent to the Company on 28.12.2016 seeking recall of the loan amount. It is stated that despite the notice, the Company did not return the amount. It is stated that since the amount was not paid as per the terms of the agreement, the cheque in question was presented, however, the same was returned unpaid with endorsement “account blocked”. It is specifically averred in the Complaint that the complainant visited the Petitioner and Respondent No.4 who undertook to take remedial measures. It is stated that on the assurance of the Petitioner and the Respondent No.4, the Respondent No.2 re-presented the cheque in question. However, it was again returned unpaid with endorsement “account blocked”. It is stated that the requisite notice under Section 138 of the NI Act was issued on 27.06.2017 for payment of the loan amount. It is stated that the notice under Section 138 NI Act was sent to the last known addresses of the Petitioner and the Respondents No.3 & 4. However, the notices were returned with remark “left” and “refused” respectively.

4. Thereafter, the Petitioner herein filed the complaint under Section 138 NI Act. Vide Order dated 30.03.2019, summons were issued to the Petitioner herein by the learned Metropolitan Magistrate. It is this Order which is under challenge in the present Petition.

5. The principal contention raised by the Petitioner is that she is the housewife and has never dealt with the affairs of the Company and that the cheque in question was not signed by her and she was not the authorised signatory of the Company. It is stated that Mr. Nimit Sachdeva, the Managing Director of the accused Company, passed away on 07.11.2016 and the Petitioner is not concerned with the Company. It is stated that she is only a Director of the accused Company but has never dealt with the affairs of the Company. The Petitioner also contends that she has also filed a complaint stating that she never gave her digital signatures or any documents for opening a bank account with the OBC Bank and the HDFC Bank. She further states that she has never signed any documents or given her consent to become the Director of the company. Petitioner places reliance on Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1; Ashok Shewakramani v. State of A.P., (2023) 8 SCC 473, National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, etc. to contend that there are no requisite averments in the complaint against the Petitioner and that the Petitioner not being the signatory of the cheque in question cannot be made liable for the offence under Section 138 of the NI Act. It is further stated that specific averments have not been made against the Petitioner in the complaint as to how is she responsible for the conduct and business of the company and in the absence of any specific averments, the Petitioner cannot be held vicariously liable. It is further stated that the Petitioner is not a signatory to any of the Loan documents, Security documents of the transaction in question and the cheque which was dishonoured.

6. Per contra, learned Counsel for the Respondent No.2 states that there are only three Directors in the accused Company and it cannot be said that only two Directors were responsible for the day-to-day affairs of the Company and the Petitioner was not aware of anything. He further states that the fact that the Petitioner herein was not responsible for the conduct of business of the accused Company can only be proved in Trial and the summoning Order cannot be quashed on these averments.

7. Heard the Counsels for the parties and perused the material on record.

8. It is well settled that while exercising its jurisdiction under Section 482 Cr.P.C, the High Court must be extremely cautious and slow in quashing a complaint at an initial stage. It is now well settled that the power of quashing should be exercised sparingly and that too in the rarest of rare cases and courts must not embark upon enquiry as to the reliability or genuineness or otherwise of the allegations made in the Complaint unless the allegations in the complaint are so patently absurd and inherently improbable so that no prudent person can reach such a conclusion.

9. In Zandu Pharmaceutical Works Ltd. v. Mohd. Sharaful Haque, (2005) 1 SCC 122, the Apex Court has held as under:

of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the Act concerned (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the Act concerned, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fides and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” As noted above, the powers possessed by the High Court under Section 482 of the Code are very wide and the very plenitude of the power requires great caution in its exercise. Court must be careful to see that its decision in exercise of this power is based on sound principles. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective without sufficient material. Of course, no hard-and-fast rule can be laid down in regard to cases in which the High Court will exercise its extraordinary jurisdiction of quashing the proceeding at any stage. [See Janata Dal v. H.S. Chowdhary [(1992) 4 SCC 305: 1993 SCC (Cri) 36] and Raghubir Saran (Dr.) v. State of Bihar [AIR 1964 SC 1: (1964) 2 SCR 336: (1964) 1 Cri LJ 1].] It would not be proper for the High Court to analyse the case of the complainant in the light of all probabilities in order to determine whether a conviction would be sustainable and on such premises arrive at a conclusion that the proceedings are to be quashed. It would be erroneous to assess the material before it and conclude that the complaint cannot be proceeded with. In a proceeding instituted on complaint, exercise of the inherent powers to quash the proceedings is called for only in a case where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance has been taken by the Magistrate, it is open to the High Court to quash the same in exercise of the inherent powers under Section 482 of the Code. It is not, however, necessary that there should be meticulous analysis of the case before the trial to find out whether the case would end in conviction or acquittal. The complaint has to be read as a whole. If it appears that on consideration of the allegations in the light of the statement made on oath of the complainant that the ingredients of the offence or offences are disclosed and there is no material to show that the complaint is mala fide, frivolous or vexatious, in that event there would be no justification for interference by the High Court. When an information is lodged at the police station and an offence is registered, then the mala fides of the informant would be of secondary importance. It is the material collected during the investigation and evidence led in court which decides the fate of the accused person. The allegations of mala fides against the informant are of no consequence and cannot by themselves be the basis for quashing the proceedings. [See Dhanalakshmi v. R. Prasanna Kumar [1990 Supp SCC 686: 1991 SCC (Cri) 142], State of Bihar v. P.P. Sharma [1992 Supp (1) SCC 222: 1992 SCC (Cri) 192: AIR 1991 SC 1260], Rupan Deol Bajaj v. Kanwar Pal Singh Gill [(1995) 6 SCC 194: 1995 SCC (Cri) 1059], State of Kerala v. O.C. Kuttan [(1999) 2 SCC 651: 1999 SCC (Cri) 304: AIR 1999 SC 1044], State of U.P. v. O.P. Sharma [(1996) 7 SCC 705: 1996 SCC (Cri) 497], Rashmi Kumar v. Mahesh Kumar Bhada [(1997) 2 SCC 397: 1997 SCC (Cri) 415], Satvinder Kaur v. State (Govt. of NCT of Delhi) [(1999) 8 SCC 728: 1999 SCC (Cri) 1503: AIR 1999 SC 3596] and Rajesh Bajaj v. State NCT of Delhi [(1999) 3 SCC 259: 1999 SCC (Cri) 401].]

10. The Apex Court in S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685, after examining the issue as to who would be held vicariously liable for the offence of the company has held that Section 141 extends such criminal liability in case of a company to every person who at the time of the offence, was in charge of and was responsible for the conduct of the business of the company and such a person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly. The proviso to Section 141 of the NI Act states that the officer who is being accused of committing an offence under Section 138 of the NI Act as being responsible and in-charge of the company can escape the punishment if he/she proves that the offence was committed without his/her knowledge or that he/she was not responsibly for the affairs of the company.

10. In Commr. v. Velliappa Textiles Ltd., (2003) 11 SCC 405, the Apex Court introduced the concept of ego and alter ego in relation to the employee and the employer corporation and has held as under: “56. In order to trigger corporate criminal liability for the actions of the employee (who must generally be liable himself), the actor-employee who physically committed the offence must be the ego, the centre of the corporate personality, the vital organ of the body corporate, the alter ego of the employer corporation or its directing mind. Since the company/corporation has no mind of its own, its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. To this extent there are no difficulties in our law to fix criminal liability on a company. The common law tradition of alter ego or identification approach is applicable under our existing laws.”

11. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581, the Apex Court has held as under: