A director cannot face Section 138 prosecution absent specific Section 141 averments of responsibility.

The petitioner, a Director of Accused No. 1, Credforce Asia Limited, sought quashing under Section 482 of the Code of Criminal Procedure, 1973, of Case No. CS/104373 of 2021 pending before the Metropolitan Magistrate, 11th Court, Calcutta, under Sections 138 and 141 of the Negotiable Instruments Act, 1881 (“NI Act”).

He contended that he had been impleaded merely because of his designation as a Director and that the complaint contained no specific allegation that he was in charge of, or responsible for, the conduct of the company’s business, nor attributed any role to him in the transaction, issuance of the cheque, or its dishonour.

The complaint made only general allegations against the company and its three Directors and did not identify which accused had signed or issued the dishonoured cheque.

Despite service, the complainant was not represented before the High Court.

Whether a Director can be prosecuted under Sections 138 and 141 of the NI Act merely on the basis of his designation, without specific averments that he was in charge of and responsible to the company for the conduct of its business at the relevant time.

Whether the general allegations in the complaint, without attributing a specific role to the petitioner or identifying the cheque’s signatory, satisfied the requirements of Section 141 of the NI Act.

Whether continuation of the criminal proceedings against the petitioner amounted to an abuse of the process of law warranting exercise of the High Court’s inherent jurisdiction under Section 482 CrPC.

The Court applied Sections 138, 141 and 142 of the NI Act and Section 482 CrPC.

Section 141 creates an exception to the general rule against vicarious criminal liability and requires a specific averment that, at the time of commission of the offence, the accused was “in charge of, and responsible to, the company for the conduct of its business”; the expressions must be read conjunctively, and mere directorship is insufficient (*Pawan Kumar Goel v. State of U.P.*, relying on *S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla*).

Managing Directors, Joint Managing Directors and cheque signatories may ordinarily attract liability by virtue of their office or conduct, but other Directors require clear and specific pleadings regarding their role and responsibility.

General assertions that Directors managed the company’s day-to-day affairs or were jointly and severally liable do not satisfy Section 141 (*Ashok Shewakramani v. State of Andhra Pradesh*).

The Court also relied on *Shaleen Khemani v. State of West Bengal*, *Sunil Todi v. State of Gujarat*, *Sunita Palita v. Panchami Stone Quarry* and *N. Harihara Krishnan v. J. Thomas* for the principles that liability depends on the role played, not designation, and that the complaint must disclose the identity of the cheque drawer and the foundational facts constituting the offence.

The Court found that the complaint contained only general statements concerning the petitioner and the other Directors’ involvement in the company’s affairs.

It did not state how the petitioner was in charge of and responsible for the conduct of the company’s business, identify any participation by him in the underlying transaction, or attribute to him the issuance, execution or dishonour of the cheque.

The complaint also failed to identify which accused had signed or drawn the cheque, although disclosure of the drawer’s identity is a necessary factual allegation in a prosecution under Section 138.

Applying the strict requirements of Section 141 and the principle that vicarious liability cannot be inferred merely from designation, the Court held that the complaint did not disclose the foundational facts necessary to proceed against the petitioner.

Continuing the prosecution in those circumstances would constitute an abuse of the process of law.

It held that the complaint failed to satisfy the mandatory requirements of Section 141 of the NI Act and did not establish a prima facie basis for prosecuting the petitioner merely as a Director.

CRR 2615 of 2024 was allowed, and the proceedings in Case No. CS/104373 of 2021 under Sections 138 and 141 of the NI Act were quashed insofar as they concerned Sanjeeva Shukla @ Sanjiv Shukla.

Connected applications were disposed of, any interim order was vacated, and the judgment was directed to be communicated to the trial court for compliance.