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Case Title: SHIKHA SHAH versus RENU PROMOTERS PVT LTD

Case No.: CRL.M.C. 456/2022 & CRL.M.A. 2059/2022

Dated on: FEBRUARY 29, 2024

Coram: NAVIN CHAWLA, J

Facts:

In the case “Shikha Shah vs. Renu Promoters Pvt Ltd,” the petitioner, Shikha Shah, challenged the summoning order issued by the Metropolitan Magistrate and upheld by the Principal District and Sessions Judge. The case originated from a complaint filed by Renu Promoters Pvt Ltd under Section 138 of the Negotiable Instruments Act (NI Act), 1881, alleging that Govind Radhe Real Estate Pvt Ltd (accused no.1), through its Director, Narsingh Shah (accused no.2 and Shikha Shah’s husband), sought and received a loan of Rs. 1.85 crore from the respondent. A cheque for Rs. 2.35 crore issued to repay the loan was dishonored due to the account being blocked. The petitioner, also a director in the accused company, was implicated based on her alleged consent to the issuance of the cheque. The Trial Court summoned her, and her subsequent revision petition was dismissed, prompting the current petition under Section 482 of the Cr.P.C. to challenge the summoning order.

Issues framed by the Court:

1. Whether the complaint filed by Renu Promoters Pvt Ltd contains the basic and essential averments required to summon Shikha Shah as an accused under Section 138 read with Section 141 of the NI Act.
2. Whether the mere allegation that the cheque was issued with the consent of Shikha Shah is sufficient to charge her with the offence under Section 138 of the NI Act.
3. Whether the averments in the complaint meet the requirements outlined in the precedents for summoning a director of the company.

Legal Provisions:

Section 482 of the Cr.P.C: It states about the inherent powers of the High Court.

Section 141 of the NI Act:  Deals with the liability of the persons when the offence under section 138 is committed by a company.

Section 138 of the NI Act: It states about the offence of dishonouring a cheque for insufficiency of funds or exceeding the arranged amount.

Contentions of the Appellant:

The appellant, Shikha Shah, contends that the complaint against her lacks the essential averments required to summon her as an accused under Section 138 read with Section 141 of the Negotiable Instruments Act (NI Act). Specifically, she argues that the complaint does not state that she was in charge of or responsible for the conduct of the business of the accused company, Govind Radhe Real Estate Pvt Ltd. She asserts that the mere allegation that the cheque was issued with her consent is insufficient to hold her liable under the NI Act. Shikha Shah relies on the Supreme Court’s judgment in “S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr.” to support her argument that the complaint must explicitly mention her role and responsibility in the company’s affairs to substantiate the charges against her.

Contentions of the Respondent:

The respondent, Renu Promoters Pvt Ltd, contends that the complaint adequately states that Shikha Shah, as a director of the accused company, was in charge of and responsible for its business conduct. They argue that the complaint also specifies that the dishonored cheque was issued with Shikha Shah’s consent, satisfying the requirements of Section 141 of the NI Act. The respondent relies on the Supreme Court’s judgment in “S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan,” which distinguishes between liability under Sub-section (1) and Sub-section (2) of Section 141. They maintain that these averments justify the Trial Court’s decision to summon Shikha Shah and that the legal notice sent to the accused was jointly replied to without any denial from Shikha Shah regarding her consent to the cheque issuance.

Court’s Analysis and Judgement:

The Hon’ble HC analyzed and noted that the complaint lacked specific allegations that Shikha Shah was in charge of or responsible for the conduct of the company’s business, which is a necessary requirement as per the Sc’s ruling in “S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr.” The Court also considered the judgment in “S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan,” emphasizing that a director can be held liable if the offense was committed with their consent, connivance, or due to their neglect. However, the complaint only vaguely mentioned Shikha Shah’s consent without detailed assertions of her role or responsibility. Consequently, the Court found the complaint deficient in meeting the statutory requirements and quashed the summoning order against Shikha Shah.

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Judgement Reviewed By- Shramana Sengupta

Click here to read the judgement