Non-Compliance with Section 202 CrPC: High Court Sets Aside Summoning Order in Cheque Bounce Case Involving Non-Executive Directors
In a significant ruling, the Punjab and Haryana High Court has set aside the summoning order against several petitioners, including Non-Executive Independent Directors of M/s Housing Development Infrastructure Limited (HDIL), in a case pertaining to the dishonour of cheques under Section 138 of the Negotiable Instruments Act, 1881.
Justice Harpreet Singh Brar, while delivering the judgment, emphasized the crucial aspect of jurisdiction and procedural compliance, particularly highlighting the non-compliance with Section 202 of the Code of Criminal Procedure (CrPC) by the trial court.
The petitioners had approached the High Court seeking quashing of the summoning order dated 25.11.2019, passed by the Judicial Magistrate Ist Class, Ludhiana. They argued that as Non-Executive Independent Directors, they were not involved in the day-to-day business of the accused company and had even resigned before the cheques were presented for encashment.
In his observation, Justice Brar stated, “Most of the petitioners are senior citizens and reside in Mumbai, and the drill of Section 202 of the Cr.P.C. was not followed.” This was a critical point as the mandatory requirements of Section 202 were not fulfilled before issuing the process against the accused residing outside the local jurisdiction of the trial court.
The court relied on several precedents from the Supreme Court to support its decision, including the judgments in the cases of SMS Pharmaceuticals Ltd v. Neeta Bhalla and Girdhari Lal Gupta v. D.H. Mehta and another, which discuss the liability of directors not involved in the day-to-day operations of a company.
Ultimately, the High Court directed the Judicial Magistrate Ist Class, Ludhiana, to consider the matter afresh in accordance with the law, by taking recourse to Section 202 Cr.P.C. The Court also made it clear that its observations should not influence the trial court, which is to proceed uninfluenced by the High Court’s observations.
Date of decision: 19.01.2024
LALIT MOHAN MEHTA AND OTHERS VS STATE OF PUNJAB AND ANOTHER
