Mere directorship cannot attract Section 141 liability without specific averments of responsibility for company business.

The petitioner, Sanjeeva Shukla, was impleaded as an accused in Case No. CS/104375 of 2021, instituted under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Metropolitan Magistrate, 11th Court, Calcutta.

He was described as one of the directors of Accused No. 1, Credforce Asia Limited, and contended that he had been arraigned merely by virtue of his designation, without any allegation that he was in charge of, or responsible for, the conduct of the company’s business at the relevant time.

The petitioner sought quashing of the complaint proceedings under Section 482 of the Code of Criminal Procedure, 1973, arguing that the complaint did not attribute to him any role in the underlying transaction, issuance of the cheque, or its dishonour.

The complainant/opposite party did not appear despite service, and the matter was heard in its absence.

Whether prosecution of a director under Sections 138 and 141 of the Negotiable Instruments Act can continue where the complaint merely describes him as a director or makes general allegations regarding management of the company, without specifically averring that he was in charge of and responsible to the company for the conduct of its business at the relevant time.

Whether the absence of a specific allegation identifying the person who signed or drew the dishonoured cheque renders the complaint legally deficient against the petitioner.

Whether continuation of the proceedings against the petitioner would amount 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 and 141 of the Negotiable Instruments Act, 1881, holding that vicarious criminal liability under Section 141 is exceptional and must be strictly construed.

A complaint must specifically aver that, at the time of commission of the offence, the accused was “in charge of, and responsible to, the company for the conduct of the business of the company”; the two expressions are conjunctive and cannot be read disjunctively.

Mere designation as a director, participation in the company’s day-to-day affairs, or a general assertion that the accused managed the company is insufficient.

The Court relied on Pawan Kumar Goel v. State of U.P., Ashok Shewakramani v. State of Andhra Pradesh, 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.

It further applied the principle that the complaint must disclose the identity of the person who drew or signed the cheque, since an offence under Section 138 is person-specific.

Section 482 CrPC empowers the High Court to quash proceedings where continuation would constitute an abuse of the process of law.

The Court examined the petition of complaint and found that the allegations against the petitioner and the other directors were general in nature.

Although the complaint stated that the directors were involved in managing the company’s day-to-day business and affairs, it did not specify the petitioner’s individual role, involvement in the transaction, authority to issue the cheque, or responsibility for its dishonour.

Such general statements did not satisfy the statutory requirement that the petitioner was both in charge of and responsible to the company for the conduct of its business, as required under Section 141(1).

The complaint also failed to identify which accused had signed or drawn the cheque, an omission relevant to the person-specific nature of an offence under Section 138.

Applying the principles laid down by the Supreme Court, the Court held that there was no sufficient foundational averment or prima facie case against the petitioner, and that permitting the prosecution to continue would amount to an abuse of process.

It held that mere designation as a director and general allegations concerning the company’s management do not attract vicarious liability under Section 141 of the Negotiable Instruments Act.

The revisional application, CRR 2620 of 2024, was allowed, and the proceedings in Case No. CS/104375 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.