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Visionaries Media Network & Anr. Petitioners v. Star India Pvt. Ltd.
Judgment Summary — Pradeep Nandrajog, J.
Factual and Procedural Background
The matter was heard on 8.8.2007 but judgment was reserved because learned counsel for the respondent failed to search and cite relevant case law. The complaint under Section 138 read with Section 141 of the NI Act (also referred to as the NI Act 1938 in the opinion) arose from a bounced cheque. The complaint was prosecuted against two petitioners: petitioner no. 1 (a company) and petitioner no. 2 (described as the Managing Director of petitioner no. 1). With respect to petitioner no. 1, after serving a notice of dishonour no complaint was filed within the prescribed period of limitation; the cheque was re-presented, a second notice served, and then the complaint was filed. The respondent conceded that, in view of Prem Chand Vijay Kumar v. Yashpal Singh ((2005) 4 SCC 417), the complaint against the company (petitioner no. 1) was barred by limitation. As regards petitioner no. 2, no notice of dishonour was served on him when the cheque first bounced; only one notice was served upon a second presentation, and it was not in dispute that the complaint against petitioner no. 2 was within limitation. The complaint alleges that petitioner no. 2 was in charge and responsible for the conduct of the company's business.
Legal Issues Presented
- Whether the complaint under Section 138 read with Section 141 of the NI Act is barred by limitation as regards petitioner no. 1 (the company), having regard to the timeline of notice(s) and re-presentation of the cheque (as addressed in Prem Chand Vijay Kumar v. Yashpal Singh ((2005) 4 SCC 417)).
- Whether a complaint under Section 138 read with Section 141 of the NI Act is maintainable against petitioner no. 2 (the Managing Director) where the company (the primary issuer of the cheque) is not prosecuted — i.e., whether the director can be proceeded against when liability is alleged to be vicarious.
Arguments of the Parties
Respondent's Arguments
- Conceded, relying on (2005) 4 SCC 417 Prem Chand Vijay Kumar v. Yashpal Singh, that the complaint against the first petitioner (the company) was barred by limitation.
- Contended that the complaint was within limitation and maintainable against the second petitioner (the Managing Director).
Petitioners' Arguments
- Urged that the cheque was issued by petitioner no. 1 (a company) and thus primary responsibility and liability rested with the company; the second petitioner's liability was vicarious.
- Argued that in the absence of prosecution of the main accused (the company), a co-accused whose liability is vicarious (the director) could not be prosecuted.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| (2005) 4 SCC 417 Prem Chand Vijay Kumar v. Yashpal Singh | The principle concerning limitation for complaints under Section 138 read with Section 141 of the NI Act (used to address whether the complaint was time-barred as to the company). | The respondent conceded, in view of this authority, that the complaint against petitioner no. 1 (the company) was barred by limitation; the court accepted that concession for petitioner no. 1. |
| (2000) 1 SCC 1 Anil Handi v. Indian Acrylic Ltd. | Held that a complaint under Section 138 read with Section 141 of the NI Act 1938 is maintainable if only the Director of the Company is impleaded as an accused; a company need not be a co-accused. | The court treated the issue as not res integra and relied on this decision to support the proposition that a director may be proceeded against even if the company is not prosecuted, i.e., maintainability against petitioner no. 2. |
Court's Reasoning and Analysis
The court recorded that the hearing had to be reserved because the respondent's counsel did not cite the relevant authorities. Relying on the Supreme Court decision in (2005) 4 SCC 417 Prem Chand Vijay Kumar v. Yashpal Singh, learned counsel for the respondent conceded that the complaint was time-barred against petitioner no. 1. The factual timeline showed that, as to petitioner no. 1, a notice of dishonour was served but no complaint was filed within the prescribed limitation period; the cheque was re-presented, a second notice served, and a complaint thereafter filed. Applying Prem Chand, the court accepted that the complaint against the company was barred by limitation.
With respect to petitioner no. 2, the court noted that no notice of dishonour was served on him when the cheque bounced on first presentation; only one notice was served when the cheque bounced on second presentation, and it was not disputed that the complaint against petitioner no. 2 fell within the period of limitation. The complaint specifically described petitioner no. 2 as the Managing Director and alleged he was in charge and responsible for the conduct of the company's business. The court observed that the issue was not res integra and relied on (2000) 1 SCC 1 Anil Handi v. Indian Acrylic Ltd., which held that a complaint under Section 138 read with Section 141 of the NI Act 1938 is maintainable against a director even if the company is not impleaded as an accused. On that basis, the court concluded that the summoning order as to the company should be quashed for being time-barred, while the summoning order as to the director should be maintained because the complaint against him was within limitation and alleged managerial responsibility.
Holding and Implications
Holding: The petition is disposed of with a partial result: the summoning order is quashed as to petitioner no. 1 (the company) and is affirmed as to petitioner no. 2 (the Managing Director).
Implications:
- Direct effect: The complaint against the company (petitioner no. 1) is time-barred and the summoning order in respect of the company is quashed; the proceedings remain viable against the Managing Director (petitioner no. 2), since the complaint as to him is within limitation and specific allegations of managerial responsibility exist.
- Broader implications: The court applied existing Supreme Court authorities (Prem Chand and Anil Handi) to resolve the matter; the opinion does not announce a new precedent beyond applying those authorities.
Administrative note in the order: The court directed that the LCR be returned.
Pradeep Nandrajog, J.:— A short matter which could have been disposed of at the hearing held on 8.8.2007 was required to be reserved for judgment for the reason learned counsel for the respondent failed to search the relevant case law. A matter which is clearly covered in favour of the respondent viz-a-viz petitioner no. 2 could have been disposed of on relevant judgment been cited.
2. It is expected from members of the bar to research and cite latest judgments on a point in issue.
3. In view of the decision of the Supreme Court reported as (2005) 4 SCC 417 Prem Chand Vijay Kumar v. Yashpal Singh, learned counsel for the respondent conceded that the complaint filed under Section 138 read with Section 141 of the NI Act was barred by limitation viz-a-viz first petitioner. It was however urged that the complaint was within limitation and was maintainable against the second petitioner.
4. Learned counsel for the petitioners had responded by urging that since the cheque in question was issued by the first petitioner, a company registered under the Companies Act, primary responsibility and liability being that of first petitioner, second petitioner's liability being vicarious, in the absence of the main accused, a co-accused whose liability was vicarious could not be prosecuted.
5. The issue is no longer res integra. In the decision reported as (2000) 1 SCC 1 Anil Handi v. Indian Acrylic Ltd. it was held that a complaint under Section 138 read with Section 141 of the NI Act 1938 was maintainable if only Director of the Company was impleaded as an accused. It was held that a company need not be a co-accused.
6. On facts I may note that whereas viz-a-viz first petitioner after serving a notice of dishonour of the cheque forming the basis of the complaint no complaint was filed within the prescribed period of limitation. The cheque was represented for payment and a second notice was served demanding payment and thereupon the complaint was filed. In view of the decision in Prem Chand Vijay Kumar (supra) the complaint against the company was conceded by learned counsel for the complainant to be barred by limitation. But, viz-a-viz second petitioner, no notice of dishonour was served when the cheque bounced at the first presentation. Only one notice was served to second petitioner, when cheque bounced on second presentation.
7. It is not in dispute that qua petitioner no. 2 the complaint is within limitation.
8. I may note that as per the complaint second petitioner is described as the Managing Director of accused no. 1 i.e petitioner no. 1 and there are specific allegations that he is incharge and was responsible for the conduct of the business of the accused no. 1 company.
9. Petition accordingly stands disposed of quashing the summoning order but viz-a-viz petitioner no. 1 only. The summoning order is affirmed viz-a-viz second petitioner.
10. LCR be returned.
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