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

The petitioner, a Director of Accused No. 1, Credforce Asia Limited, was prosecuted along with the company and other directors in Case No. AC-2373 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Judicial Magistrate, 2nd Court, Alipore.

He invoked the High Court’s jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the complaint and all consequential proceedings.

His case was 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 to, the company for the conduct of its business at the relevant time.

The complainant did not appear despite service, and the matter was heard in his absence.

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 pleadings regarding his role in the conduct of the company’s business.

Whether the complaint satisfied the mandatory requirement of averring that the petitioner was, at the time of commission of the offence, both “in charge of” and “responsible to” the company for the conduct of its business.

Whether the absence of a specific allegation identifying the person who signed or drew the dishonoured cheque rendered continuation of the proceedings against the petitioner an abuse of process.

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 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 must be read conjunctively.

Mere directorship or participation in the day-to-day affairs of a company is insufficient. A complaint must contain clear and specific averments explaining the accused’s role and responsibility.

A Managing Director, Joint Managing Director, or signatory of the dishonoured cheque may attract liability by virtue of office or conduct, but every Director does not automatically become liable.

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

Liability depends on the role played in the company’s affairs, not designation or status alone.

The Court found that the complaint contained only general allegations that the accused Directors were involved in managing the company’s day-to-day business and regular affairs.

It did not identify any specific act, omission, participation in the underlying transaction, involvement in issuing the cheque, or responsibility for its dishonour attributable to the petitioner.

The complaint also failed to identify which accused had signed or drawn the cheque.

Applying Section 141 and the precedents requiring conjunctive and particularised averments, the Court held that statements based solely on directorship or general management did not establish that the petitioner was both in charge of and responsible to the company for the conduct of its business.

The absence of foundational pleadings meant that no prima facie case of vicarious liability under Section 141 was disclosed, and continuation of the prosecution would amount to abuse of the process of law.

It held that the complaint failed to satisfy the mandatory requirements of Section 141 of the Negotiable Instruments Act and that the petitioner could not be prosecuted merely because he was a Director.

CRR 2579 of 2024 was allowed, and the proceedings in Case No. AC-2373 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act were quashed insofar as they 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.