Mere directorship cannot attract Section 141 liability absent specific averments of responsibility for company business.

The petitioner, Sanjeeva Shukla, a director of Accused No. 1, Credforce Asia Limited, challenged the continuation of Case No. CS/104372 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Metropolitan Magistrate, 11th Court, Calcutta, invoking Section 482 of the Code of Criminal Procedure, 1973.

He contended that he had been impleaded only because of his designation as a director and that the complaint did not allege that he was in charge of, or responsible for, the conduct of the company’s business, nor did it attribute any specific role to him in the transaction, issuance of the cheque, or its dishonour.

The complainant remained unrepresented despite service, and the matter was heard in full.

On examining the complaint, the Court found only general allegations against the directors and no identification of the person who had signed or drawn the cheque.

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

Whether the absence of specific allegations regarding the petitioner’s role in the transaction, issuance or dishonour of the cheque rendered continuation of the criminal proceeding an abuse of the process of law.

The Court applied Sections 138 and 141 of the Negotiable Instruments Act, 1881, under which vicarious criminal liability arises only where the accused person was, at the time of the offence, both “in charge of” and “responsible to” the company for the conduct of its business; these expressions are conjunctive and cannot be read disjunctively.

Mere designation as a director does not create deemed liability, and the complaint must contain clear, specific and factual averments concerning the director’s role.

A Managing Director or Joint Managing Director is ordinarily presumed to be in charge of the company’s business by virtue of office, and a cheque signatory is liable for the incriminating act; however, other directors require specific pleadings.

The complaint must also disclose the identity of the person who drew or signed the dishonoured cheque, since an offence under Section 138 is person-specific.

The High Court may quash proceedings under Section 482 CrPC where the foundational requirements of Section 141 are absent and continuation would constitute abuse of process.

The complaint described the petitioner and the other directors in general terms as being involved in the company’s management and day-to-day affairs, but did not state how the petitioner was in charge of, and responsible to, the company for the conduct of its business at the time of the alleged offence.

It also failed to attribute to him any specific participation in the underlying transaction, authority for issuing the cheque, signing of the cheque, or responsibility for its dishonour.

Applying the conjunctive requirement under Section 141(1), the Court held that general assertions regarding management or day-to-day affairs were legally insufficient.

The absence of any averment identifying the cheque’s drawer or signatory further undermined the prosecution, as the offence under Section 138 is person-specific.

Consequently, the complaint lacked the foundational pleadings necessary to establish a prima facie case of vicarious liability against the petitioner, and continuation of the proceeding would amount to abuse of the process of law.

It held that mere directorship, without specific averments establishing that the petitioner was in charge of and responsible for the company’s business and without attribution of a role in the cheque transaction, was insufficient to attract Section 141 liability.

The revisional application was allowed, and Case No. CS/104372 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act was quashed insofar as it concerned Sanjeeva Shukla @ Sanjiv Shukla.

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