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

The petitioner, Sanjeeva Shukla, was arraigned as one of the directors of Accused No. 1, Credforce Asia Limited, in Case No. CS/104374 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Metropolitan Magistrate, 11th Court, Calcutta.

He sought quashing of the proceedings under Section 482 of the Code of Criminal Procedure, 1973, contending that the complaint merely described him as a director and contained no specific allegation that he was in charge of, or responsible for, the conduct of the company’s business at the relevant time.

The complaint did not identify which accused had signed the dishonoured cheque or attribute to the petitioner any role in the transaction, issuance of the cheque, or its dishonour.

Despite service, the complainant did not appear before the High Court.

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, at the time of commission of the offence, in charge of and responsible to the company for the conduct of its business.

Whether the general allegations in the complaint, without identifying the cheque signatory or attributing a specific role to the petitioner in the transaction, satisfy the requirements of Section 141 of the Negotiable Instruments Act.

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 jurisdiction under Section 482 of the Code of Criminal Procedure.

The Court applied Sections 138 and 141 of the Negotiable Instruments Act, 1881, holding that vicarious criminal liability under Section 141 is exceptional and cannot be imposed merely because a person is a director.

The complaint must specifically aver that, at the time of commission of the offence, the accused was both “in charge of” and “responsible to” the company for the conduct of its business; these requirements are conjunctive and must be pleaded as facts.

A Managing Director, Joint Managing Director, or cheque signatory may ordinarily attract liability by virtue of office or conduct, but other directors require specific allegations concerning their role and responsibility.

The Court relied on Pawan Kumar Goel v. State of U.P., N. Harihara Krishnan v. J. Thomas, Shaleen Khemani v. State of West Bengal, Sunil Todi v. State of Gujarat, Sunita Palita v. M/s Panchami Stone Quarry, and Ashok Shewakramani v. State of Andhra Pradesh, which establish that mere designation, general allegations of managing day-to-day affairs, or a bald assertion of responsibility is insufficient under Section 141.

The complaint contained only general statements that the accused directors were involved in managing the company’s day-to-day affairs and were jointly and severally liable.

It did not state how the petitioner was in charge of, and responsible to, the company for the conduct of its business, nor did it attribute any specific act to him in relation to the underlying transaction or dishonoured cheque.

The Court further noted that the complaint failed to identify the person who had drawn or signed the cheque, which was a necessary factual allegation in a prosecution under Section 138.

Applying the rule that Section 141 requires specific and conjunctive averments, the Court held that the allegations did not disclose the statutory foundation for fastening vicarious liability upon the petitioner.

In these circumstances, allowing the prosecution to continue would constitute an abuse of the process of law.

It held that the complaint did not satisfy the mandatory requirements of Section 141 of the Negotiable Instruments Act and that the petitioner could not be prosecuted solely because he was described as a director.

CRR 2618 of 2024 was allowed, and the proceedings in Case No. CS/104374 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act were quashed insofar as they concerned Sanjeeva Shukla @ Sanjiv Shukla.

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