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PART II-QUESTION 2
(SAMPLE ANSWER)
RESEARCH MEMORANDUM
This memorandum addresses the following questions that arise in the present case:
a. Whether the complaint filed by Ms Tripti Thakur, on 31.12.2020, is maintainable against Mr Amit
Hingorani and Mrs Namita Hingorani?
b. Whether pursuing the remedy of filing a Petition under Section 482 of the Criminal Procedure Code,
1973, is appropriate in the present case?
a. On Maintainability
In this instance, there are two counts on which the maintainability of a complaint under Section
138 of the Negotiable Instruments Act, 1881 (Henceforth, the ‘NI Act’) may be examined:
[Link] first, whether the statutory timelines prescribed under Section 138 of the NI Act are met in
the present instance?
Section 138 of the NI Act prescribes that:
• the cheque should be presented within time (six months or within the period of its
validity, whichever is earlier)
• the payee makes a demand for payment by giving a notice in writing to the drawer within
thirty days of receiving information from the bank regarding return of the cheque.
• the drawer of the cheque fails to make the payment within 15 days of the receipt of the
notice
In the present instance these conditions are met, and the complaint is maintainable on this count.
The second aspect is whether the complaint meets the requirements of Section 141 of the NI Act.
In the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla reported in (2005) 8 SCC 89, the
Hon’ble Supreme Court held that the requirement under Section 141 is that at the time of the
commission of the offence, the person sought to be made liable must be in charge of and
responsible to the company for the conduct of its business. The complaint is also required to
contain a specific averment to this effect. (The explanation to Section 141 provides that ‘director’,
in relation to a firm, means a partner in the firm). SMS Pharmaceuticals (Supra) also held while
the Managing Director and the Signatory to the cheque may generally be covered under Section
141 of the NI Act, there is no such presumption with respect to other Directors/ officials of the
company. In K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48 the Hon’ble Supreme Court, in the
context of a company, reiterated that mere reproduction of the wording under Section 141 of the
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NI Act was not adequate to attract liability, if the person did not meet the legal requirement of
being a person responsible to the company for the conduct of its business. In Pooja Ravinder
Devidasani v. State of Maharashtra & Anr., (2014) 16 SCC 1), the Hon’ble Supreme Court
reiterated the law laid down in SMS Pharmaceuticals (Supra), and held that the High Court erred
in not quashing a complaint where a person had resigned as director of a company, and was not
even a director at the relevant time, and there were no particulars whatsoever, in the complaint
that would justify fastening of vicarious liability. Applying these decisions to the present case,
Mr Amit, having retired, was not a partner of the firm on the date of the commission of the
alleged offence. He gave notice of his retirement to the public in terms of Section 32 of the Indian
Partnership Act, 1932. Though Ms. Namita holds the job title of Director Sales, she was merely
an employee at the time of the commission of the alleged offence, and was not a Managing
Partner or even a partner of the firm. Neither Mr. Amit nor Ms Namita are signatories to the
cheque. The averment in the complaint, that “all the accused persons were and are in charge of
and responsible for the conduct of business of the Firm”, being vague, may not meet the rigors
of Section 141 of the NI Act.
b. On whether the remedy of filing a Petition under Section 482 CrPC, 1973 may be pursued.
In the case of Gunamala Sales Private Limited v. Anu Mehta and Ors. reported in (2015)1SCC
103 the Hon’ble Supreme Court held that even when the complaint contains the basic averment
in terms of Section 141 of the NI Act, the High Court may quash the complaint, if- in the totality
of the facts -the complaint amounts to an abuse of process. An illustration of abuse of process
given in Gunamala Sales was that of a terminally ill bed-ridden director or a director who had
resigned being roped in as an accused. In the case of Pooja Ravinder Devidasani (supra), the
Hon’ble Supreme Court observed that setting criminal law in motion was not a matter of course,
and the rigors of Section 141 were to be strictly complied with.
While it is well settled that the Hon’ble High Courts exercise their powers under Section 482
CrPC sparingly, given the totality of the circumstances, namely:
• Mr Amit retired from the firm before the issuance of the cheque in question, gave a
public notice of the retirement, and was subsequently bed-ridden.
• Ms. Namita is an employee holding the job title of Director of sales, and is not a
Managing Partner or even a partner of the firm.
• Neither persons were signatories to the cheque.
• The complaint contains no details or particulars of the manner in which Mr. Amit
and Ms. Namita were in charge of and responsible for conduct of the affairs of the
firm at the time of the commission of the offence.
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• The phrase in the complaint “all the accused persons were and are in charge of and
responsible for the conduct of business of the Firm”, being vague may not even meet
the requirements of Section 141 of the NI Act, which requires an averment that the
persons were in charge of and responsible for the conduct of the business of the Firm,
at the time of the commission of the offence.
The present case is an appropriate case to seek quashing of the complaint.
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