Delhi High Court held that A person cannot be found guilty of offence u/s 138 NI Act, merely being a signatory to the cheque.
The Single Judge Bench of the Delhi High Court comprising Justice Anup Jairam Bhambhani was hearing Petitions on NI Act and held section 141 NI Act would not apply to the petitioner, since he was no longer in charge of the affairs of the respondent company on the date that the offence defined in section 138 was committed.
Learned counsel appearing on behalf of the petitioner submitted that though the petitioner was one of the signatories to the cheques that were the subject matter of the criminal complaint, at the time when these were signed and issued, the cheques were post post-dated for 30.07.2018 and 30.08.3018, and had been issued on behalf of M/s. Ortel Communication Ltd./respondent No.2, where the petitioner was employed as Chief Technology Officer, at the time of signing of the cheques. Counsel submitted however that the petitioner retired from employment w.e.f. 06.01.2018. The learned counsel further submitted that as is evident from the cheque return memos, the subject cheques were presented for encashment and returned for insufficient funds on 25.10.2018; but the petitioner was in no way engaged with the business or affairs of respondent No.2 on that date since he had retired more than 9 months earlier.
It was also argued that along with the criminal complaint, the complainant/respondent No.1 has filed the List of Signatories of respondent No.2 company, as derived from the Company Master Data available with the Registrar of Companies, which does not reflect the petitioner’s name at all. The Petitioner's counsel argued that however, none of the foregoing aspects was considered by the learned Metropolitan Magistrate at the time of summoning the petitioner to vide order dated 19.09.2019; and the learned Metropolitan Magistrate has proceeded to summon the petitioner only for the reason that he was one of the authorized signatories who co-signed the cheques.
The High Court observed that section 141 of the NI Act would clearly apply in the present case, that if the person committing the offence under section 138 is a company, “… every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company … shall be liable to be proceeded against and punished accordingly…”
Thus, in a prima facie view, merely being a signatory to a cheque does not, in and of itself, make a person guilty of the offence under section 138 of the NI Act. The offence is triggered at the stage when a cheque is returned unpaid by the bank inter-alia for insufficiency of funds. For guilt to be imputed to an officer of a company, at the very least, the officer should have been responsible for the business and affairs of the company and for honouring the cheque on the date that the cheque was returned unpaid.
In the present case, it is clear that though the petitioner co-signed the cheques in question, he had retired from the company more than 09 months before the cheques came to be presented; and could not, therefore, have ensured sufficient funds in the bank account of the company to honour the cheques, even if he had so desired.
The High Court noted, "On a first blush, therefore, the deeming provision contained in section 141 NI Act would not apply to the petitioner, since he was no longer in charge of the affairs of the respondent company on the date that the offence defined in section 138 was committed."
High Court stayed further proceedings until further orders and the case was listed for 29 March 2022.
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