Safiya Malik

The High Court of Calcutta Single Bench of Justice Ajay Kumar Gupta quashed the criminal proceedings initiated under Sections 138 and 141 of the Negotiable Instruments Act, 1881, against the Company Secretary of a registered company. The court found that the complainant failed to disclose any specific role played by the petitioner in the alleged offence and held that continuation of the proceedings against the petitioner would amount to gross abuse of the process of law. The bench directed that the criminal proceedings pending before the Learned Metropolitan Magistrate, 15th Court at Calcutta, insofar as they relate to the petitioner, stand quashed. The judgment also disposed of the connected applications.

The petitioners filed a criminal revisional application under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of Complaint Case No. C-6501 of 2013 initiated under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The complaint was pending before the Learned Metropolitan Magistrate, 15th Court at Calcutta.

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Petitioner no. 1 is a company registered under the Companies Act, 1956, and petitioner no. 2 was its Company Secretary. It was submitted that petitioner no. 2 had no role in policy-making or day-to-day business affairs and was discharging only the statutory duties as defined under the Companies Act. The cheque in question was issued by Mr. Amitabh Arun Parekh, who died on 06.01.2013. Petitioner no. 2 asserted she had no involvement in the issuance of the cheque or in the underlying transaction. She retired from the company on 31.03.2013.

The complaint, however, made a general averment that petitioner no. 2 and other accused were in control of the company’s affairs. The petitioner submitted that she had no control over the business, and the issuance of process by the trial court was without compliance with the mandatory provisions of Section 202 CrPC. It was further contended that the petitioner resided outside the court’s territorial jurisdiction.

Two other non-executive directors, Kiran Kumar Chandulal Parekh and Devanshu Pravinbhai Desai, had already obtained orders quashing proceedings against them from the Sessions Court, Calcutta, on the ground that they were not involved in day-to-day affairs.

The petitioners argued that the Learned Trial Court issued summons in a mechanical manner, without applying its judicial mind or conducting a preliminary inquiry, especially given the petitioner’s residence was beyond its jurisdiction. The complaint lacked any specific allegation against petitioner no. 2 beyond vague claims of control over the company.

It was further submitted that the petitioner was not involved in financial transactions, not a signatory to the dishonoured cheque, and merely held a statutory position as Company Secretary. Judgments cited in support included:

1. Susela Padmavathy Amma Vs. Bharti Airtel Limited (2024 SCC OnLine SC 311)
2. Sunita Palita and Ors. Vs. Panchami Stone Quarry ((2022) 10 SCC 152)
3. Gunmala Sales Private Limited and Others Vs. Navkar Promoters Private Limited and Others
4. S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Anr. ((2005) 8 SCC 89)

Despite service of summons, no one appeared on behalf of the opposite party. The matter proceeded ex parte.

Justice Ajay Kumar Gupta observed: "It reveals the Opposite party has initiated a proceeding under Section 200 of the CrPC for commission of the offence punishable under Section 138/141 of the N.I. Act against the Company and others, who were associated with the company."

The court noted that the petitioner placed on record Form 32 from the Ministry of Corporate Affairs, indicating she ceased to be associated with the company from 31.03.2013.

"According to the petitioner no. 2, she is innocent and not involved in the offence as alleged by the complainant. In addition, the complainant has not disclosed any ingredients or role played by the petitioner no. 2 in the offence punishable under Sections 138/141 of the N.I Act."

The court found no indication that petitioner no. 2 was a director or shareholder. She was not involved in any transaction or business affairs, and not a signatory to the cheque. Her role as a non-executive Company Secretary carried limited liability and did not include management of day-to-day affairs.

Citing binding precedent, the court stated: "A Director of a company who was not in charge or responsible for the conduct of the business of the company at the relevant time, will not be liable for offence punishable under Section 138/141 of the N.I.Act... It would be a travesty of justice to drag directors, who may not even be connected with the issuance of a cheque or dishonour thereof... into Criminal Proceedings under the N.I. Act, only because of their designation."

"The petitioner no. 2 was mere by a Company Secretary, who was neither in charge nor responsible for the conduct of the business of the company at the relevant point of time."

The court recorded that the trial court failed to determine how petitioner no. 2 could be held responsible, especially as she resided outside its jurisdiction. "There is mandatory provision to postpone the issue of process under Section 202 of the CrPC for the purpose of deciding whether or not there is sufficient ground for proceeding against the petitioner no.2 but the Ld. Trial court ignored and neglected to do so and mechanically issued process against her."

"Opposite party/complainant has not produced anything before the court where from it would be evident that the Petitioner No. 2 was in any manner responsible for day-to-day business affairs of the company and was involved in business transaction and issuance of cheque, which was dishonoured."

Justice Ajay Kumar Gupta concluded: "In view of the above circumstances, this court is of the view that process which has been issued against the Petitioner no.2 is not commensurate with the position of petitioner no. 2 held as Company Secretary."

"Accordingly, if such proceeding is allowed to be continued against the petitioner no. 2 it would be gross abuse of process of law."

"Consequentially, this Court can exercise its inherent power under Section 482 of the Cr.PC to prevent the abuse of the process of Court or otherwise to secure the end of justice."

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"The proceedings being Complaint Case No. C/6501 of 2013 filed under Sections 138/141 of the Negotiable Instruments Act, 1881 pending before the Court of the Learned Metropolitan Magistrate, 15th Court at Calcutta should not be allowed to be continued insofar as the Petitioner no.2 is concerned and, accordingly, the same stands quashed."

"Consequently, CRR 3048 of 2015 is, thus, allowed. Connected applications being CRAN 3 of 2016 (Old No. 1336 of 2016) and CRAN 4 of 2016 (Old No. 4841 of 2016) are also, thus, disposed of."

"Case Diary, if any, is to be returned to the learned Advocate for the State."

"Let a copy of this judgment and order be sent to the Learned Court below for information."

"Interim order, if any, stands vacated."

Advocates Representing the Parties:

For the Petitioners: Mr. Tarique Quasimuddin, Advocate; Ms. Sanchita Chaudhuri, Advocate; Ms. Syed Khafiz Zamar, Advocate

Case Title: Parekh Aluminex Ltd. & Anr. v. Venus Orchards Private Limited

Case Number: C.R.R. 3048 of 2015

Bench: Justice Ajay Kumar Gupta

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