Legal Question in Banking Law in India

Re: u/s 138 of Negotiable Instrument Act, for discharging the complaint

it is first to be verified that on what ground the cheque was dishonoured and if it is not for shortage of fund there an application for quashing the proceedings definitely can be filed but in any event the signatories to the cheque are to be put under trial under section 138 because though the company is a legal person can not in reality be punished by imprisonment but the liability to pay the amount mentioned in the cheque is upon the company if that sum is really legitimately due. It is well settled that under section 138 the signatories are liable to be put under trial even if they sign on behalf of an artificial person such as the corporation.

Re: u/s 138 of Negotiable Instrument Act, for discharging the complaint

You may file a discharge application but in all likely hood it will be dismissed summarily. Thereafter you can go to High Court u/s section 484 of Cr. P.C. In the alternative directly approach the HIGH COURT FOR QUASHING the complaint on ground that Company is not an accused. Please check SCC & AIR (SC) on the subject and you'll get lot of decisions.

Re: u/s 138 of Negotiable Instrument Act, for discharging the complaint

it is not required as, no notice is served upon the directors, hence no action can be taken against them. So no seprate application is required for discharging them.

Re: u/s 138 of Negotiable Instrument Act, for discharging the complaint

When the offence is committed by a Company, either the Company alone, or the person in charge of the business of the Company alone, or both of them together, can be prosecuted for the offence, mere omission to array the society/company as an accused is not fatal since the liability of the president/director of the society/company is independent, U/S 138.(2001) 105 Comp Cas 632 (Bom);(1995) 82 Comp Cas 726 (Ker); 2000 Cri LJ 2087 (Del); (2001) 105 Comp Cas 210 (Mad). A director having issued the Cheque canot plead that he is not liable in the absence of an allegation about he being personally incharge of the affairs of the Company (2002) 112 Comp Cas 338 (Kar).

Under the Section 141 of N.I.Act do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and third categories. No doubt a finding that the offence was committed by the company is sine qua non for convicting those persons. But if a company is not prosecutes due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape rom the penal liability created through the legal fiction envisaged in section 141 of the Act.However, where the complaint disclose that the accused is sought to be prosecuted for the offence U/s 138 not as director or any officer of the company but in his individual capacity, there being being nothing to show that the accused issued the cheque on an account maintained by him personally, the cheque he signed in his capacity as a director could not not be mulcted with criminal liability on he basis of a chequewhich has been drawn on an account of the company and not on an acount of the accused.

The above being the legal position, you may take a chance in filing a discharge petition before the concerned magistrate or in the alternative file 482 petition before the Hon'ble High Court for quashing of the complaint on the gounds available and not alone on the above ground. There is no specific format in this petition, it varies on case to case based on the grounds.I wish you for the success.

Re: u/s 138 of Negotiable Instrument Act, for discharging the complaint

You can file an application u/s.482 of the Code of Criminal procedure praying for quashing of the process issued to the directors. The Hon'ble High Court of Karnataka last month have passed a landmark judgment holding that u can file a complaint u/s.138 of the N.I.Act against those persons who were directly responsible for the issuanse of the cheque. Kindly peruse the judgment as it will definitely throw some light on the issue.There is no standard proforma available as it differs from case-to-case.