Defence under section 138 of negotiable instruments act
Aakanksha
(Querist) 25 February 2013
This query is : Resolved
I would like to know from this esteemed panel of experts in law, regarding a query on Section 138 of NI Act
A is director of Company ABC.
X Bank raised loans to Company ABC.
Upon default in monthly repayments of such loan amount, X Bank sent SCN to Company ABC and to its dircetor A as well.
If Company XYZ (another non related party) is willing to take over Campany ABC's loan and X Bank is willing to provide loan closure document to company ABC, can director A of Company ABC be absolved from any liability if the loan stands transferred to Comapny XYZ?
R Trivedi
(Expert) 26 February 2013
Criminal liability cannot be transferred.
Once the notice is sent and subsequent to that if X Bank has made an agreement with XYZ for loan transfer of ABC and does not pursue the case, then ABC is completely out of picture along with its directors, subsequent dishonor is XYZ problem. ABC must ensure that all the blank or EMI cheques it issued, should be made cancelled with the Bank agreement. Terms of agreement should be clearly stated keeping ABC completely out.
Aakanksha
(Querist) 26 February 2013
Thank you for responding Mr. Trivedi. My next query regarding the above is, that if the bank is only willing to provide a loan closure document, is that enough to show in court that loan against company ABC stands cancelled as the bank is not willing to give in writing that it is withdrawing the court case or absolving company ABC from repayment of loan.
R Trivedi
(Expert) 26 February 2013
Once the case under S.138 is started, then the bank has to specifically withdraw the same (compound). Please understand that offense of dishonor was committed prior to this loan transfer agreement, so that case would continue until and unless compounded. If Bank has gotten sufficient surety with XYZ, then ideally they should withdraw. If Bank does not withdraw, then this agreement can only help you to the extent of lesser punishment (if convicted), it cannot absolve you of offense.
Aakanksha
(Querist) 26 February 2013
Mr. Trivedi, thank you so much for your learned advice. Your promptness is much appreciated.
Regards
Aakanksha
DEFENSE ADVOCATE.-firmaction@g
(Expert) 26 February 2013
1) Supreme court in the case-
CRIMINAL APPEAL NOS. 1870-1909 OF 2012
decided ; November 27, 2012,
has closed many options of defense and is of the view that that cheque bouce is genus and all other reasons are species of genus.
2) However still the directors can come out of personal liability criminal as well as civil but it is an expert job based on facts and law.
3) In the given case please contest the case with expert help who has handled such cases for accused and you can come out of it easily, surely and simply since power of defense is immense.
Nadeem Qureshi
(Expert) 27 February 2013
141.
(1) Offences by companies. If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub- section shall render any person liable to punishment if he proves that the offence Was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub- section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly, Explanation.- For the purposes of this section,-
(a) " company" means any body corporate and includes a firm or other association of individuals; and
(b) " director", in relation to a firm, means a partner in the firm.
Aakanksha
(Querist) 28 February 2013
Thank Mr. Qureshi
Regards
