Mere directorship cannot attract Section 141 liability absent specific averments of charge and responsibility.

The petitioner, a director of Accused No. 1, Credforce Asia Limited, was prosecuted in Complaint Case No. 649 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Judicial Magistrate, 5th Court, Barrackpore.

He sought quashing of the complaint proceedings under Section 482 of the Code of Criminal Procedure, 1973, contending that he had been impleaded merely because of his designation as a director and that the complaint contained no specific averment that he was in charge of, and responsible for, the conduct of the company’s business at the relevant time.

The complainant alleged generally that the accused directors managed the company’s day-to-day affairs, but did not attribute any specific act to the petitioner or 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 138/141 of the Negotiable Instruments Act solely 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 time of the alleged offence.

Whether general allegations that the directors managed the company’s day-to-day affairs satisfy the requirements of Section 141(1) of the Negotiable Instruments Act.

Whether continuation of the complaint proceedings against the petitioner, in the absence of such foundational averments, would amount to an abuse of the process of law warranting exercise of jurisdiction under Section 482 CrPC.

The Court applied Sections 138 and 141 of the Negotiable Instruments Act, 1881, and Section 482 of the Code of Criminal Procedure, 1973.

Section 141 creates an exception to the general rule against vicarious criminal liability and requires that, at the time of commission of the offence, the accused person was both “in charge of” and “responsible to” the company for the conduct of its business; these requirements are conjunctive and must be specifically pleaded.

Mere designation as a director, or a general assertion that a director managed the company’s affairs, is insufficient.

The Court relied on Pawan Kumar Goel v. State of U.P., Ashok Shewakramani v. State of Andhra Pradesh, Siby Thomas v. Somany Ceramics Ltd., Sunil Todi v. State of Gujarat, Sunita Palita v. Panchami Stone Quarry, Shaleen Khemani v. State of West Bengal, and N. Harihara Krishnan v. J. Thomas.

These authorities establish that a complaint must contain clear and specific allegations regarding the accused director’s role, including the necessary factual allegations identifying the drawer or signatory of the cheque.

The Court found that the complaint contained only general allegations concerning the directors’ management of the company’s day-to-day affairs and did not specify the petitioner’s individual role in the transaction, his participation in the issuance of the cheque, or his responsibility for its dishonour.

It was also not stated which accused had signed or drawn the cheque, although identification of the drawer is a necessary factual component of a prosecution under Section 138.

Applying the conjunctive requirements of Section 141(1), the Court held that the complaint failed to establish that the petitioner was both in charge of and responsible to the company for the conduct of its business when the alleged offence was committed.

His prosecution could not therefore be sustained merely because he was a director.

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