Arun vs. Vimal Industries

Held

The Court held that the proceedings against the petitioner, Arun, S/o. Baburao Amidwar, under Section 138 of the Negotiable Instruments Act should be quashed. The Court perused the documents filed, including the memo of complaint, affidavit, and the copy of the cheque. It noted that the cheque was signed by Nikhil Amidwar, describing himself as the authorized signatory/proprietor of Arun Laminates. Furthermore, the GST certificate filed as Annexure P-2 indicated that Arun Laminates is a proprietorship firm owned by Nikhil Arun Amidwar. Based on these documents, the Court found that the petitioner, Arun, S/o. Baburao Amidwar, is prima facie not connected in any way with Arun Laminates. Consequently, the Court quashed the proceedings against the petitioner and directed the parties to appear before the trial court on June 16, 2022. The petitions were disposed of accordingly.

Facts

The petitioner, Arun, S/o. Baburao Amidwar, a senior citizen and director of Arun Laminates, challenged proceedings initiated against him under Section 138 of the Negotiable Instruments Act. The proceedings were filed by Vimal Industries, the complainant. The petitioner argued that he had no involvement in the business transactions between Arun Laminates and Vimal Industries, was not a signatory to the cheque, and no account was maintained in his name. He contended that Arun Laminates is a proprietorship firm, as evidenced by the cheque and GST certificate, and that his son, Nikhil Amidwar, is the proprietor and authorized signatory. The complainant argued that the petitioner had appeared through counsel after the complaint was filed and had not raised this objection earlier, making it difficult for the complainant to ascertain the petitioner's role.

Key Issues

1. Whether the petitioner, Arun, S/o. Baburao Amidwar, can be held liable under Section 138 of the Negotiable Instruments Act for dishonor of a cheque issued by Arun Laminates, despite not being a signatory and having no direct involvement in the business transactions, particularly when Arun Laminates is a proprietorship firm. Petitioner's Arguments: The petitioner contended that he is a senior citizen and has no connection with the business transactions between Arun Laminates and Vimal Industries. He argued that he is neither a signatory to the cheque nor does he maintain any account in his name. He relied on documents, including the cheque and GST certificate, to establish that Arun Laminates is a proprietorship firm and that his son, Nikhil Amidwar, is the proprietor and authorized signatory, thus absolving him of liability. Respondent's (Complainant's) Arguments: The complainant argued that the petitioner appeared through his counsel after the complaint was filed and did not initially raise any objection regarding his non-involvement or lack of signatory status. Therefore, it was not immediately apparent to the complainant who the directors or responsible individuals of the firm were.