JYOTI RAJENDRA SHARMA DIRECTOR OF KHUSHI FOOD LIMITED vs STATE OF GUJARAT

R/SCR.A/12527/2026 (GJHC240455392026) JUDGMENT DATED:
02/09/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 12527 of 2026
With
R/SPECIAL CRIMINAL APPLICATION NO. 12542 of 2026

FOR APPROVAL AND SIGNATURE:


HONOURABLE MRS. JUSTICE M. K. THAKKER

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Approved for Reporting Yes No
✔
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JYOTI RAJENDRA SHARMA DIRECTOR OF KHUSHI FOOD LIMITED
Versus
STATE OF GUJARAT & ANR.
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Appearance:
KULDEEP K ADESARA(9222) for the Applicant(s) No. 1
MR.JAY MEHTA, APP for the Respondent(s) No. 1
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CORAM: HONOURABLE MRS. JUSTICE M. K. THAKKER

Date : 02/09/2026

JUDGMENT
1. The present application is filed for quashment of the
complaint lodged before the learned Chief Judicial
Magistrate Court, Ahmedabad being Criminal Complaint
No. 110464 of 2018 under the N.I. Act alleging that the
cheque which was issued by accused no.1 signed by
accused no.2 and the present applicant who is accused
no.3 is whole time Director in the accused no.1-Company
and was involved in the day to day affairs of accused
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no.1 company in the capacity of Director and authorized
signatory.
2. Heard learned advocate Mr.Kuldeep Adesara for the
applicant.
2.1. Learned advocate Mr.Kuldeep Adesara submits that
though applicant was stated to be Director of the
company but neither she was Joint Director/ Managing
Director of the accused no.1- Company nor she was
signatory or drawer of the cheque. It is submitted by
learned advocate that in that background it cannot be
said that applicant is involved in the offence which is
committed and was having the knowledge of the
issuance of the cheque which was dishonoured. Learned
advocate Mr.Kuldeep Adesara has relied on the decision
rendered by the Apex Court in the case of Susela
Padmavathy Amma Vs Bharti Airtel Ltd. reported in
MANU/SC/0202/2024 as well as the order passed by
this Court in Unique Dehydrates Ltd & Ors. Vs State
of Gujarat & Anr. in Special Criminal Application
No. 3292 of 2013 and the judgment rendered by the
Apex Court in the case of P.J. Agro Tech Ltd. And Ors
Vs Water Base Ltd reported in
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MANU/SC/0526/2010 and has submitted that in
absence of any involvement of the present applicant
being the Managing Director or Joint Director, the
impugned prosecution requires to be set aside and the
present application deserves to be allowed.
3. This Court has considered the submissions made by
learned advocate Mr.Kuldeep Adesara and referred the
allegations made in the complaint more particularly,
paragraphs 2 and 3, which are reproduced hereinbelow:
2. The Complainant say and submit that Accused No.1 "Khushi Foods
Limited" (for sake of brevity hereafter called as "Khushi") is a
Company incorporated under the Companies Act, 1956 and having its
Corporate Office at 808, 8th Floor, Parshwanath Business Park,
Survey No. 836. Final Plot No.1/2, Near Prahaladnagar AUDA
Garden, Prahaladnagar, Ahmedabad - 380 051, Gujarat, India.
Further, the Complainant say and submit that as per the information
available with the Complainant, the Accused No.2 to 4 are the
Directors of Accused No.1, who are carrying on business in the name
and style of Accused No. 1 Company and managing the day to day
affairs of Accused No.1 in capacity of being Director and authorised
signatory. The photocopy of the Company Master Data showing
directors names and signatory details acquired from the
www.inca.gov.in of the Accused No.1 Company is produced herewith
by way of separate list of document as Item No.2.
3. The Complainant say and submit that all the Accused No.2 to 4
were desirous to avail "Starch Powder" (hereinafter referred to as
"materials" (for the sake of brevity) for Accused No.1 Company for
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which the Accuseds had telephonically placed the Purchase Order
(hereinafter referred to as "PO" for the sake of brevity) to the
Complainant. Further, the Complainant had agreed to supply all the
materials to all the Accuseds as per the terms and conditions agreed
upon in the various invoices/bills raised by the Complainant.
4. As per the allegations made in the above paragraphs,
accused no.2 to 4 including present applicant herein,
who has been arraigned as accused no.3 are carrying
out the business in the name and style of accused no.1,
managing day to day affairs of accused no.1 Company in
the capacity of Company Director and authorized
signatory. In support of the contention, the company
master data was placed on record showing that
applicants are whole time Director of accused no.1
Company. It is also contended in the complaint that
accused no.2 to 4 were desirous to avail starch power
material for accused no.1 company for which purchase
order was placed to the complainant Company and on
supplying said material, for payment of outstanding
dues, the claim was raised before the learned NCLT
Tribunal by way of filing the petition being Company
Petition C.P (I.B) No.204/9/NCLT/AHM/2017 wherein,
the settlement was arrived between the complainant and
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the accused Company and accused no.2 had filed an
undertaking before the learned NCLT Tribunal admitting
the dues of the complainant and issuing the cheques
towards payment of outstanding amount. The cheques
which are issued were dishonoured and the same was
subject matter of filing the complaint before the learned
Magistrate Court. It is not in dispute that cheque was
signed by accused no.2 however, all the accused were
the Directors of the accused no.1 Company as per the
Company’s Master Data. As per the averments of the
complaint, all the accused are Directors and involved in
the day to day affairs of accused no.1 Company.
5. This Court has referred the decision which is relied by
the learned advocate in the case of Susela (supra)
wherein, Apex Court has held as under:
9. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was
considering the question as to whether it was sufficient to make the
person liable for being a director of a company Under Section 141 of
the Negotiable Instruments Act, 1881. This Court considered the
definition of the word "director" as defined in Section 2(13) of the
Companies Act, 1956. This Court observed thus:
8. There is nothing which suggests that simply by being a director in
a company, one is supposed to discharge particular functions on
behalf of a company. It happens that a person may be a director in a
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company but he may not know anything about the day-to-day
functioning of the company. As a director he may be attending
meetings of the Board of Directors of the company where usually
they decide policy matters and guide the course of business of a
company. It may be that a Board of Directors may appoint sub-
committees consisting of one or two directors out of the Board of the
company who may be made responsible for the day-to-day functions
of the company. These are matters which form part of resolutions of
the Board of Directors of a company. Nothing is oral. What emerges
from this is that the role of a director in a company is a question of
fact depending on the peculiar facts in each case. There is no
universal Rule that a director of a company is in charge of its
everyday affairs. We have discussed about the position of a director
in a company in order to illustrate the point that there is no magic
as such in a particular word, be it director, manager or secretary. It
all depends upon the respective roles assigned to the officers in a
company.
10. It was held that merely because a person is a director of a
company, it is not necessary that he is aware about the day-to-day
functioning of the company. This Court held that there is no
universal Rule that a director of a company is in charge of its
everyday affairs. It was, therefore, necessary, to aver as to how the
director of the company was in charge of day-to-day affairs of the
company or responsible to the affairs of the company. This Court,
however, clarified that the position of a managing director or a joint
managing director in a company may be different. This Court further
held that these persons, as the designation of their office suggests,
are in charge of a company and are responsible for the conduct of
the business of the company. To escape liability, they will have to
prove that when the offence was committed, they had no knowledge
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of the offence or that they exercised all due diligence to prevent the
commission of the offence.
11. In the case of Pooja Ravinder Devidasani v. State of Maharashtra
and Anr. MANU/SC/1177/2014: 2014:INSC: 880: (2014) 16 SCC 1 this
Court observed thus:
17....... Every person connected with the Company will not fall into
the ambit of the provision. Time and again, it has been asserted by
this Court that only those persons who were in charge of and
responsible for the conduct of the business of the Company at the
time of commission of an offence will be liable for criminal action. A
Director, who was not in charge of and was not responsible for the
conduct of the business of the Company at the relevant time, will not
be liable for an offence Under Section 141 of the NI Act. In National
Small Industries Corpn. [National Small Industries Corpn. Ltd. v.
Harmeet Singh Paintal, MANU/SC/0112/2010: 2010:INSC:98: (2010) 3
SCC 330: (2010) 1 SCC (Civ) 677: (2010) 2 SCC (Cri) 1113] this Court
observed: (SCC p. 336, paras 13-14)
13. Section 141 is a penal provision creating vicarious liability, and
which, as per settled law, must be strictly construed. It is therefore,
not sufficient to make a bald cursory statement in a complaint that
the Director (arrayed as an Accused) is in charge of and responsible
to the company for the conduct of the business of the company
without anything more as to the role of the Director. But the
complaint should spell out as to how and in what manner
Respondent 1 was in charge of or was responsible to the Accused
Company for the conduct of its business. This is in consonance with
strict interpretation of penal statutes, especially, where such statutes
create vicarious liability.
14. A company may have a number of Directors and to make any or
all the Directors as Accused in a complaint merely on the basis of a
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statement that they are in charge of and responsible for the conduct
of the business of the company without anything more is not a
sufficient or adequate fulfilment of the requirements Under Section
141.
(emphasis in original)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H.
Mehta, MANU/SC/0487/1971: (1971) 3 SCC 189: 1971 SCC (Crl) 279:
AIR 1971 SC 2162), this Court observed that a person "in charge of a
business" means that the person should be in overall control of the
day-to-day business of the Company.
19. A Director of a company is liable to be convicted for an offence
committed by the company if he/she was in charge of and was
responsible to the company for the conduct of its business or if it is
proved that the offence was committed with the consent or
connivance of, or was attributable to any negligence on the part of
the Director concerned (see State of Karnataka v. Pratap Chand [State
of Karnataka v. Pratap Chand, MANU/SC/0237/1981: 1981:INSC:63:
(1981) 2 SCC 335: 1981 SCC (Cri) 453]).
20. In other words, the law laid down by this Court is that for
making a Director of a company liable for the offences committed by
the company Under Section 141 of the NI Act, there must be specific
averments against the Director showing as to how and in what
manner the Director was responsible for the conduct of the business
of the company.
21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha
Ramamurthy v. R.B.S. Channabasavaradhya, MANU/SC/8486/2006 :
2006:INSC:601: (2006) 10 SCC 581: (2007) 1 SCC (Cri) 621], it was
held by this Court that: (SCC pp. 584-85, para 7)
7.... it is not necessary for the complainant to specifically reproduce
the wordings of the Section but what is required is a clear statement
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of fact so as to enable the court to arrive at a prima facie opinion
that the Accused is vicariously liable. Section 141 raises a legal
fiction. By reason of the said provision, a person although is not
personally liable for commission of such an offence would be
vicariously liable therefor. Such vicarious liability can be inferred so
far as a company registered or incorporated under the Companies
Act, 1956 is concerned only if the requisite statements, which are
required to be averred in the complaint petition, are made so as to
make the Accused therein vicariously liable for the offence committed
by the company.
(emphasis supplied)
By verbatim reproducing the words of the Section without a clear
statement of fact supported by proper evidence, so as to make the
Accused vicariously liable, is a ground for quashing proceedings
initiated against such person Under Section 141 of the NI Act.
12. It could thus clearly be seen that this Court has held that merely
reproducing the words of the Section without a clear statement of
fact as to how and in what manner a director of the company was
responsible for the conduct of the business of the company, would
not ipso facto make the director vicariously liable.
13. A similar view has previously been taken by this Court in the
case of K.K. Ahuja v. V.K. Vora and Anr. MANU/SC/1111/2009: 2009:
INSC: 859: (2009) 10 SCC 48.
14. In the case of State of NCT of Delhi through Prosecuting Officer,
Insecticides, government of NCT, Delhi v. Rajiv Khurana
MANU/SC/0533/2010: 2010:INSC:460 (2010) 11 SCC 469, this Court
reiterated the position thus:
17. The ratio of all these cases is that the complainant is required to
state in the complaint how a Director who is sought to be made an
Accused, was in charge of the business of the company or responsible
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for the conduct of the company's business. Every Director need not
be and is not in charge of the business of the company. If that is the
position with regard to a Director, it is needless to emphasise that in
the case of non- Director officers, it is all the more necessary to state
what were his duties and responsibilities in the conduct of business of
the company and how and in what manner he is responsible or
liable.
15. In the case of Ashoke Mal Bafna (supra), this Court observed
thus:
9. To fasten vicarious liability Under Section 141 of the Act on a
person, the law is well settled by this Court in a catena of cases that
the complainant should specifically show as to how and in what
manner the Accused was responsible. Simply because a person is a
Director of a defaulter Company, does not make him liable under the
Act. Time and again, it has been asserted by this Court that only the
person who was at the helm of affairs of the Company and in charge
of and responsible for the conduct of the business at the time of
commission of an offence will be liable for criminal action. (See
Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder
Devidasani v. State of Maharashtra, MANU/SC/1177/2014:
2014:INSC:880 : (2014) 16 SCC 1: (2015) 3 SCC (Civ) 384: (2015) 3
SCC (Cri) 378: AIR 2015 SC 675].)
10. In other words, the law laid down by this Court is that for
making a Director of a Company liable for the offences committed by
the Company Under Section 141 of the Act, there must be specific
averments against the Director showing as to how and in what
manner the Director was responsible for the conduct of the business
of the Company.
16. A similar view has been taken by this Court in the case of
Lalankumar Singh and Ors. v. State of Maharashtra
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MANU/SC/1301/2022: 2022:INSC:1061 to which one of us (B.R.
Gavai, J.) was a party.
17. In the light of this settled legal position, let us examine the
averments made in the complaints.
18. It will be relevant to refer to para 16 of the complaint bearing
No. CC 3151/2017 filed by the Respondent before the Court of XVIII
Metropolitan Magistrate, Saidapet, Chennai dated 30th November
2016, which reads thus:
16. The Complainant states that the Accused has an intention of
cheating the Complainant. The 2nd and 3rd Accused herein has no
intention to pay the dues that they owe to the Complainant. Instead,
making the complainant believe that the same would be paid and
through which trying to push the liability to future. It is also
pertinent to note that the 2nd and 3rd of the Accused herein are the
Directors, promoters of the 1st Accused being the Company. The 2nd
of the Accused herein is the authorized signatory, who is in-charge of
and responsible for the day to day affairs of the Company, the 1st
Accused.
19. It can thus be seen that the only allegation against the present
Appeliant is that the present Appellant and the Accused No. 2 had no
intention to pay the dues that they owe to the complainant. It is
stated that the 2nd Accused and the 3rd Accused (Appellart herein)
are the Directors, promoters of the 1st Accused being the Company.
It is further averred that the 2nd Accused is the authorized signatory,
who is in-charge of and responsible for the day-to-day affairs of the
Company, i.e., the 1st Accused.
20. It can thus be clearly seen that there is no averment to the effect
that the present Appellant is in-charge of and responsible for the day-
to-day affairs of the Company. It is also not the case of the
Respondent that the Appellant is either the Managing Director or the
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Joint Managing Director of the Company.
21. It can thus clearly be seen that the averments made are not
sufficient to invoke the provisions of Section 141 of the N.I. Act qua
the Appellant.
22. In the result, we find that the present appeals deserve to be
allowed. It is ordered accordingly. The judgment and order passed by
the High Court dated 26th April, 2022 is quashed and set aside. The
proceedings in CC Nos. 3151 and 3150 of 2017 on the file of learned
XVIII Metropolitan Magistrate, Saidapet, Chennai (now transferred to
the learned Metropolitan Magistrate, Fast Track Court-III, Saidapet,
Chennai) in connection with the offence punishable Under Section
138 read with Section 142 of the N.I. Act are quashed and set aside
qua the present Appellant.
6. It is true that merely by stating that the applicant is
Director of the Company would not necessarily mean
that they would be aware about the day to day
functioning of the company however, when the specific
averments are made in the complaint that the applicants
were in charge of day to day affairs or responsible for
the affairs of the company then to escape from the
liability the burden is on the applicant to prove that
when the offence was committed they had no knowledge
of the offence or that they had exercised all due
diligence to prevent commission of that offence. At this
stage, reference of the decision rendered by the Apex
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Court in the case of Gunmala Sales Pvt. Ltd. & Ors.
Vs Anu Mehta & Ors. reported in (2015) 1 SCC 103
is required to be made wherein, the Apex Court has held
as under:
31.When in view of the basic averment process is issued the
complaint must proceed against the Directors. But, if any Director
wants the process to be quashed by filing a petition under Section
482 of the Code on the ground that only a bald averment is made in
the complaint and that he is really not concerned with the issuance
of the cheque, he must in order to persuade the High Court to quash
the process either furnish some sterling incontrovertible material or
acceptable circumstances to substantiate his contention. He must
make out a case that making him stand the trial would be an abuse
of process of court. He cannot get the complaint quashed merely on
the ground that apart from the basic averment no particulars are
given in the complaint about his role, because ordinarily the basic
averment would be sufficient to send him to trial and it could be
argued that his further role could be brought out in the trial.
Quashing of a complaint is a serious matter. Complaint cannot be
quashed for the asking. For quashing of a complaint it must be
shown that no offence is made out at all against the Director.
7. Having considered the above ratio and on examining the
factual background involved in the application, it
transpires that the applicant has not furnished any
independent evidence which is made to be in the nature
of some sterling incontrovertible material or acceptable
circumstances to substantiate his claim that though the
averments are made in the complaint with regard to
involvement in the day to day affairs of the business of
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the company but the particulars placed on record
suggests contrary. The complaint cannot be quashed for
asking unless the applicant has placed on record the
material to suggest that the applicant does not have any
involvement in the affairs of the company.
8. The reliance which was placed by the learned advocate
in the case of Unique Dehydrates Ltd & Ors. Vs State
of Gujarat & Anr. in Special Criminal Application
No. 3292 of 2013 as well as P.J. Agro Tech Ltd. And
Ors Vs Water Base Ltd were on different facts.
Therefore, same would not render any help to the
applicant in the present prosecution. In view of above
observations, no case is made out for interference at this
stage therefore, this application deserves to be
dismissed.
9. Resultantly, these applications are dismissed.
(M. K. THAKKER,J)
ARCHANA S. PILLAI
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