Rajasthan High Court – Jodhpur
Arjun Baljee vs State Of Rajasthan on 27 May, 2025
Author: Farjand Ali
Bench: Farjand Ali
[2025:RJ-JD:25574]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Criminal Misc(Pet.) No. 1810/2024
Arjun Baljee S/o Shri Chander Baljee, Aged About 45 Years,
Presently R/o 130/1, 4Th Main Road,defence Colony, Banglore.
----Petitioner
Versus
1. State Of Rajasthan, Through Pp
2. M/s Hotel Rajputana Palace, Through Its Repesentive
Narendra Chouhan S/o Shri Padam Singh Chouhan R/o
19, Shanti Vihar, Panch Batti Chouraha Ratnada, Jodhpur.
----Respondents
For Petitioner(s) : Mr. Madhav Mitra,Ld. Senior Counsel
assisted by Mr. Rishabh Khandelwal
For Respondent(s) : Mr. Vineet Jain ,Ld. Senior Advocate
assisted by Mr. Jog Singh Bhati
Mr. N.S. Chandawat, Dy.G.A.
HON'BLE MR. JUSTICE FARJAND ALI
Order
Reportable
Order Reserved On : 10/03/2025
Order Pronounced On : 27/05/2025
1. The instant criminal misc. petition under Section 482 of the
Cr.P.C. has been preferred by the petitioner being aggrieved by
the order dated 24.01.2014 passed by the Mahanagar Magistrate
(NI Act No. 9, Jodhpur) in Criminal Complaint No. 331/2024
present No. 8144/2015 and the criminal complaint qua the
petitioner filed by the respondent No.2 before the Court of Special
Judicial Magistrate NI Act Cases No.9 presently pending before
Mahanagar Magistrate No.1, Jodhpur City under Section 138 of NI
Act,1881.
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2. Briefly stating the facts of the case are that the petitioner, an
erstwhile Director of Peppermint Hospitality India Pvt. Ltd., has
approached this Court aggrieved by the order dated 24.01.2014
passed by the Learned Magistrate, whereby cognizance was taken
under Section 138 of the NI Act and summons were issued against
him. The petitioner had resigned from the company on
16.11.2021, as evidenced by Form DIR-12 filed with the Registrar
of Companies. The complaint submitted by the respondent-
complainant alleges that the company executed a lease deed
dated 21.07.2010 for certain premises and issued Cheque No.
676527 dated 01.06.2013 for Rs. 87,50,738/- towards alleged
outstanding lease rent, which was dishonoured due to insufficiency
of funds in the account of company.
3. Heard learned counsels for the parties and learned Public
Prosecutor as well as perused the material available on record.
4. Upon a careful perusal of the record and the submissions
made by the learned counsel for the petitioner, this Court finds
merit in the contention that the impugned criminal complaint and
the cognizance order dated 24.01.2014, insofar as they pertain to
the petitioner, are not sustainable in the eyes of law. It is an
admitted fact position that the petitioner was not arrayed as an
accused in the original complaint under Section 138 of the NI Act
and that the said complaint was filed solely against the company,
M/s Peppermint Hospitality India Pvt. Ltd. It is further evident that
the cheque in question was issued from the bank account of the
company and not from the personal account of the petitioner. As
such, the petitioner cannot be regarded as the “drawer” of the
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cheque within the meaning of Section 7 read with Section 138 of
the NI Act.
5. The legal position, as laid down by Hon’ble the Supreme
Court in Aneeta Hada v. Godfather Travels and Tours Pvt.
Ltd. reported in (2012) 5 SCC 661, is that in a prosecution under
Section 138 read with Section 141 of the NI Act, it is imperative to
arraign the company, the principal offender as an accused. It was
also held that vicarious liability of a person under Section 141 can
arise only when the company is prosecuted and that such person
must be specifically impleaded as an accused.
6. This Court also takes note of the fact that Section 141(1) of
the NI Act mandates that the person sought to be made
vicariously liable must be in charge of and responsible to the
company for the conduct of its business at the relevant time.
Section 141(2) further requires proof that the offence was
committed with the consent or connivance of, or is attributable to
the negligence of, such person. However, these statutory
safeguards cannot be invoked or tested unless the person is first
arrained as an accused in the complaint and he is given
opportunity to contest the case. Moreover, the petitioner has
placed on record Form DIR-12 reflecting his resignation as
Director of the company on 16.11.2021, which remains
undisputed. The complaint and the process issued predate his
resignation, but crucially, no attempt was made to implead him in
his personal or official capacity in the original proceedings. This
procedural lapse strikes at the root of maintainability of the
criminal complaint. In light of the expiry of the limitation period
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prescribed under Sections 138 and 142 of the N.I. Act, the
petitioner cannot now be impleaded as an accused at this belated
stage. Even a notice mandated under the law before launching the
prosecution was not served upon him.
7. From a bare perusal of the cheque in question, it is evident that
the petitioner has merely appended his signature as an authorised
signatory on behalf of the company and not in his individual
capacity as the “drawer” or as a Director operating in his personal
domain. A scrutiny of the complaint further reveals a conspicuous
absence of foundational or categorical averments attributing any
direct role, act, or omission on the part of the petitioner either in
the issuance of the cheque or in the conduct of the company’s
business affairs at the material time. This omission is fatal in the
context of fastening vicarious liability under Section 141 of the NI
Act, which mandates specific allegations demonstrating that the
person sought to be prosecuted was in charge of and responsible
for the conduct of the business of the company at the time of
commission of the offence. The complaint is bereft of any such
allegations against the petitioner. Additionally, a closer inspection
of the cheque discloses that it bears the signatures of two
individuals and was drawn on the account maintained in the name
of “Peppermint Hospitality India Pvt. Ltd.”. The nomenclature
explicitly inscribed on the face of the cheque unmistakably
indicates that it was issued not in an individual capacity but by
authorised signatories for and on behalf of the corporate entity.
The presence of dual signatures on the cheque further reinforces
that the instrument was executed in official capacity and in
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representation of the company, thereby negating any inference of
personal liability. Notably, there is complete silence in the
pleadings and record as to the identity of the second signatory.
Neither the complainant nor the company has elucidated or
clarified the authorship of the second signature, which casts a
further shadow on the prosecutorial clarity and evidentiary
robustness required to sustain criminal liability against the
petitioner. In absence of specific attribution or imputation of
culpable conduct and in view of the procedural and substantive
infirmities delineated above, the invocation of criminal process
against the petitioner is manifestly unwarranted and amounts to
an abuse of the process of law.
8.It is also imperative to underscore that in a prosecution under
Section 138 of the Negotiable Instruments Act, the accrual of a
legally sustainable cause of action is not instantaneous, but rather
contingent upon the culmination of a specific sequence of
statutory events. These essential preconditions are as follows: (a)
presentation of the cheque to the bank within the period of 3
months from date on which it was drawn or within its validity
period, whichever is earlier ; (b) dishonour of the cheque either on
account of insufficiency of funds or because it exceeds the
arrangement made with the drawer’s bank; (c) issuance of a
statutory notice in writing by the payee or holder in due course to
the drawer, demanding payment of the cheque amount within
thirty days from the date of receipt of information regarding such
dishonour from the bank; and (d) failure of the drawer to make
payment of the cheque amount to the payee within fifteen days of
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receiving the notice. Only upon the confluence of these events
does the cause of action under Section 138 of the NI Act
crystallise. In the facts of the present case, the cheque in
question was dishonoured on 04.06.2023, and the complainant
received intimation of the same from the bank on 05.06.2023.
Thus, by necessary implication, the chain of events giving rise to a
cause of action could not have commenced prior to 05.06.2023.
Significantly, it stands undisputed on record that the petitioner
had already ceased to be a Director of the company as of
16.11.2021, much prior to the occurrence of any of these
determinative events. Therefore, on the date of accrual of cause of
action, the petitioner was neither in control nor in management of
the affairs of the company and could not, by any stretch of legal
reasoning, be imputed with constructive or vicarious liability. The
very substratum for proceeding against the petitioner is thus
legally extinguished. The absence of any foundational material or
statutory compliance requisite for his prosecution under Sections
138 and 141 of the Act renders the criminal complaint wholly
misconceived insofar as it concerns the petitioner. In this legal
context, there exists no tenable ground for continuation of
proceedings against him, and the attempt to prosecute the
petitioner at this belated juncture appears to be a clear misuse of
the criminal process.
9. Merely stating that the petitioner was a Director or had signed
the cheque, without any further particulars, does not suffice to
invoke criminal liability. It is a well-settled proposition of law, as
held by Hon’ble the Supreme Court in S.M.S. Pharmaceuticals
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Ltd. v. Neeta Bhalla, AIR 2005 SC 3512, that for the purpose
of Section 141, it is not sufficient to merely state that the accused
was a Director of the company, but specific averments must be
made to show that the accused was in charge of and responsible
for the conduct of the company’s business at the relevant time. In
the absence of any such allegation, the complaint as filed does not
disclose any cause of action against the petitioner. This renders
the very initiation of criminal proceedings against him
unsustainable in law and amounts to an abuse of the process of
court. It further bears emphasis that the learned Magistrate, while
taking cognizance of the matter, did not appear to have before
him the complete and relevant material necessary for a judicious
determination of the petitioner’s liability. A careful perusal of the
cause title and the averments contained in the complaint ought to
have prompted the Magistrate to verify whether the petitioner was
impleaded in a legally tenable capacity–as a signatory or as a
Director of the company–and whether the complaint contained
categorical assertions that he was in charge of and responsible for
the conduct of the company’s business at the relevant time. In the
absence of such judicial scrutiny, the cognizance appears to have
been taken in a mechanical and perfunctory manner. Furthermore,
the record unambiguously reflects that the petitioner had tendered
his resignation from the directorship well before the accrual of the
cause of action in favour of the complainant. In such
circumstances, the exercise of inherent powers under Section 482
Cr.P.C. becomes not only justified but essential to prevent the
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perpetuation of manifest injustice and the misuse of the coercive
machinery of criminal law.
10. In view of the above discussion, the instant petition deserves
to be and is hereby allowed. The order dated 24.01.2014 passed
by the Mahanagar Magistrate (NI Act No. 9, Jodhpur) in Criminal
Complaint No. 331/2024 present No. 8144/2015 and the criminal
complaint qua the petitioner filed by the respondent No.2 before
the Court of Special Judicial Magistrate NI Act Cases No.9
presently pending before Mahanagar Magistrate No.1, Jodhpur
City under Section 138 of NI Act,1881 are quashed and set aside.
11. Stay petition stands disposed of.
(FARJAND ALI),J
202-Mamta/-
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