V.K. Saxena vs State and Another

A.K. Sikri, J.—Respondent No. 2 has filed proceedings u/s 138 of the Negotiable Instruments Act against M/s. Morepen Laboratories Ltd. Other persons are arraigned as the co-accused on the ground that they are the Directors of the accused company and in charge of the said company. Summons have been issued to all the accused persons. Petitioner is accused No. 9 in the said complaint. He has filed this petition seeking quashing of summoning orders against him. Plea raised is that he is the General Manager of IDBI and since IDBI had extended financial assistance to the accused company, the petitioner was nominated as Director of the accused company. It is further submitted that in that capacity he remained Director till 31.5.2002 whereas the cheque in question which was bounced and on the basis of which present complaint is filed is dated 20.10.2003.

Second proviso to Sub-section (1) of Section 141 clearly stipulates that "where a person is nominated as a Director of a company by virtue of his holding any office or employed in Central Government, State Government or Financial Corporation owned or controlled by the Central Government or State Government, as the case may be, he shall not be liable for prosecution" under the said Chapter. IDBI is a financial institution which is controlled by the Central Government. It is a statutory body which was created by Industrial Development Bank of India Act. It is not in dispute that the petitioner was working as General Manager in the said Bank when in that capacity, he was nominated as a Director of the accused company. Therefore, the case of the petitioner shall be squarely covered by the aforesaid proviso and he cannot be dragged into these proceedings. Summoning orders as well as the proceedings against the petitioner are hereby quashed.

The petition as well as the application are disposed of.