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Synopsis

The Supreme Court recently said that there must be a specific averment against the person concerned that he was in charge of and responsible for the company in the matter of conduct of business, in order to maintain a complaint and to frame charge under Section 138 of the Negotiable Instruments Act.

A bench of Justices C T Ravikumar and Sanjay Karol allowed an appeal filed by Ravi Dhingra against the Delhi High Court's order rejecting his plea for quashing a batch of complaints filed against him.

The complaint cases were filed in Patiala House court by M/s Pinnacle Capital Solution Pvt Ltd against the appellant, the authorised signatory of the accused company, namely, M/s Silverstar Fashions Private Limited which was engaged in the business of manufacturing and exporting ready-made garments.

The loan transactions between the companies and the subsequent issuance of cheques and their dishonour ultimately led to the filing of the complaint cases alleging commission of offence under Section 138, NI Act.

The appellant approached the Delhi High Court seeking quashment of the summoning orders, and also the orders dismissing the application for discharge in all the said complaint cases. He also sought quashment of the complaint cases and all proceedings emanating therefrom.

Before the apex court, the crux of the contention by the appellant was that the complaint lacked the mandatorily required averment to maintain a complaint for commission of offence under Section 138 of the NI Act. His counsel relied upon the decision of the court in Ashok Shewakramani & Ors Vs State of Andhra Pradesh & Anr (2023).

The court had then said to maintain a complaint and to frame a charge under Section 138 of the NI Act, there must be a specific averment against the person concerned that he was in-charge of, and responsible for the company concerned in the matter of conduct of its business.

"This position is now well settled and is being followed with alacrity," the bench said.

Taking note of the law thus settled by this court, the bench perused the complaints.

"Though, the counsel appearing for the second-respondent (complainant) in all these cases, took pains to convince us that the complaint concerned carried necessary averments required statutorily to maintain them however, on perusing the said complaints, we have no hesitation to hold that the mandatorily required averments to attract an offence under Section 138 of the NI Act are conspicuously absent in all the complaints," the bench said.

The court thus opined that making the appellant to stand the trial, in such circumstances, would be nothing but abuse of the process of the court.

"When that be the position, the complaints are liable to be set aside," the bench said, holding that the appellant had made out a case warranting quashment of the common order of August 21, 2023 by the Delhi High Court.

The court set aside the High Court's order and allowed the appeal, further quashing the summoning orders, complaints and all proceedings in the matter.

Case Title: Ravi Dhingra Vs State of NCT of Delhi & Anr