A director cannot be prosecuted under Section 141 without specific averments of responsibility for the company’s business.

The complainant alleged that Abhijata Construction Pvt. Ltd. agreed to sell him a flat for ₹2.5 crore on 5 June 2015 but failed to deliver possession. The company allegedly issued five cheques towards refund, including Cheque No. 680589 for ₹51 lakh dated 10 April 2022, which was dishonoured on 16 June 2022 for insufficiency of funds. After issuance of the statutory demand notice dated 30 June 2022, the complainant instituted Complaint Case No. C/3213/2022 under Section 138 of the Negotiable Instruments Act, 1881, before the Additional Chief Judicial Magistrate, Bidhannagar

The petitioner, Pranab Biswas, contended that he was neither the drawer nor the signatory of the cheque and had no involvement in the underlying transaction, issuance of the cheque, or alleged refund. He had served only as an Independent Director from 30 March 2018 until his resignation on 1 August 2018, whereas the cheque was issued and dishonoured in 2022

He sought quashing of the proceedings on the ground that the complaint contained no specific averment showing that he was in charge of, or responsible for, the conduct of the company’s business at the relevant time

Despite service, the opposite party/complainant did not appear before the High Court

1. Whether a Director who was neither the drawer nor the signatory of the dishonoured cheque can be prosecuted under Sections 138 and 141 of the Negotiable Instruments Act in the absence of specific averments that he was in charge of and responsible for the conduct of the company’s business at the time of the offence?

2. Whether continuation of the complaint proceedings against the petitioner, an erstwhile Independent Director who had resigned nearly four years before the cheque’s issuance and dishonour, amounted to abuse of the process of law?

The Court applied Sections 138 and 141 of the Negotiable Instruments Act, 1881. Section 141 requires specific factual averments that the accused, at the time of commission of the offence, was “in charge of” and “responsible to” the company for the conduct of its business; mere designation as a Director or a general assertion that a person managed the company is insufficient

The Court relied on Pawan Kumar Goel v. State of U.P., holding that a complaint under Section 141 must contain the necessary factual allegations against the particular accused and that there is no deemed liability merely from directorship; Shaleen Khemani v. State of West Bengal, holding that mere directorship and unparticularised allegations do not establish liability; Sunil Todi v. State of Gujarat, reiterating that vicarious criminal liability cannot be automatically imputed to Directors; Sunita Palita v. Panchami Stone Quarry, recognising that Independent/Non-Executive Directors are ordinarily not responsible for the day-to-day affairs of a company and require specific averments when they are not cheque signatories; N. Harihara Krishnan v. J. Thomas, requiring disclosure of the identity of the cheque drawer; and Ashok Shewakramani v. State of Andhra Pradesh, holding that the expressions “in charge of” and “responsible to the company” must be read conjunctively and cannot be satisfied by vague allegations

The Court found that the complaint contained only general allegations regarding the accused Directors and did not identify which accused had signed or issued the cheque

There was no specific assertion that the petitioner negotiated the transaction, authorised issuance of the cheque, participated in the underlying agreement, controlled the company’s affairs, or was responsible for the cheque’s dishonour

The petitioner’s undisputed position as an Independent Director who had resigned in 2018 was also inconsistent with imposing liability for a cheque issued and dishonoured in 2022

Applying Section 141 and the cited Supreme Court authorities, the Court held that the foundational averments necessary to invoke vicarious liability were absent. Continuing the proceedings against the petitioner would therefore amount to an abuse of the process of law

The connected applications were disposed of, any interim order was vacated, and the judgment was directed to be transmitted to the trial court for compliance