User asked:
Vicarious liability of Director in Cheque bouncing cases

I want to know as to whether I should seek quashing of complaint and proceedings in the matter of Negotiable Instruments Act inter-alia on grounds that while admittedly I was a director, however I did not sign the cheques in question nor I ever participated in the transactions in question and merely because I was a Director of the company at the relevant time does not make me vicariously responsible for the acts and omissions on the part of the remaining directors or the accused company itself and has no role in the offense



Answers


Vijay Kaushal answered

The prosecution under Section 138 of the Negotiable Instruments Act can be launched for vicarious liability against any person, who at the time of commission of offence was in charge and responsible for the conduct of the business of accused company. Merely because you did not sign the cheque in question is not decisive for launching prosecution against you. The other plea that the offences were committed without your knowledge cannot be considered at this stage considering the fact that the complainant would have specifically averred that negotiations had taken place with you along with other co-accused persons and you were aware about the whole series of transactions. Such a proposition of law came up before Hon’ble Supreme Court of India in the case A.R. Radha Krishna (supra), wherein their Lordships observed that: the issue as to what was the role that was played by the Director in the company or a person in charge of is ultimately a question of fact and no fixed formula can be fixed for the same.” Now, coming to jurisdiction under Section 482 CR PC to be exercised by the Honourable High Court, as per settled law, the Honourable High Court cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed questions of facts. The issues involved in the facts raised by way of defense can be canvassed only by way of evidence before the Trial Court and same will have to be adjudicated on merits of the case and not by way of invoking the jurisdiction under Section 482 CR P C before the Honourable High Court at this stage. It would be advisable for you to take all your pleas before the Trial court as the chances before the Honourable High Court would be quite bleak.

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Ajitpal Singh Sabharwal answered

In your case, the allegations leveled against you would be required to be rebutted by way of leading cogent evidence. You will have to prove your defense by way of cross examination of the complainant and re-calling the witnesses which have already been examined in the Trial Court by moving application for the same. The High Court is not to examine the truth or falsehood of the allegations in the petition under Section 482 of the CR P C. Therefore, it would be appropriate for you to prove your facts in the Trial Court.

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