Section 141 NI Act requires specific averments; directorship alone cannot establish vicarious liability.

The petitioner, a Director of Credforce Asia Limited (Accused No. 1), challenged the continuation of Complaint Case No. CS/104370 of 2021 under Sections 138 and 141 of the Negotiable Instruments Act, 1881, pending before the Metropolitan Magistrate, 11th Court, Calcutta.

He contended that he had been impleaded solely 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 complaint allegedly did not attribute to him any role in the underlying transaction, issuance of the cheque, or its dishonour.

Despite service, the complainant/opposite party was unrepresented 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 in charge of and responsible for the conduct of the Company’s business at the time of the offence.

Whether the complaint satisfied the requirement of identifying the person who drew or signed the dishonoured cheque and attributing a specific role to the petitioner.

Whether, in the absence of the foundational averments required under Section 141, continuation of the criminal proceeding against the petitioner amounted to an abuse of the process of law warranting exercise of jurisdiction under Section 482 of the Code of Criminal Procedure, 1973.

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, but liability arises only where the accused was, at the time of the offence, “in charge of, and responsible to, the company for the conduct of its business”; the expressions are conjunctive and must both be satisfied.

Mere directorship or participation in the company’s day-to-day affairs does not automatically attract liability.

The Court relied on Pawan Kumar Goel v. State of U.P., S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, Sunil Todi v. State of Gujarat, Sunita Palita v. Panchami Stone Quarry, Shaleen Khemani v. State of West Bengal, Ashok Shewakramani v. State of Andhra Pradesh, and N. Harihara Krishnan v. J. Thomas.

These authorities establish that a complaint must contain clear and specific averments regarding the accused Director’s role and responsibility, and must disclose the identity of the person who drew or signed the cheque.

The Court examined the complaint and found that the allegations against the petitioner and the other Directors were general and identical, namely that they managed the Company’s day-to-day business and affairs.

No specific act, role, or responsibility was attributed to the petitioner; nor did the complaint state which accused had signed or issued the cheque.

Applying the conjunctive requirements of Section 141, the Court held that statements merely describing the accused as Directors, managers, or persons in charge of the Company did not establish that they were also responsible to the Company for the conduct of its business.

Since the complaint lacked the essential foundational averments required to invoke vicarious liability and did not identify the cheque’s drawer or signatory, no prima facie case under Section 141 was disclosed against the petitioner.

Continuing the prosecution in those circumstances would therefore constitute an abuse of the process of law.

It held that mere designation as a Director was insufficient to attract liability under Section 141 and that the complaint failed to contain the necessary specific averments or identify the cheque signatory.

The revisional application was allowed, and Complaint Case No. CS/104370 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 the judgment was directed to be sent to the Trial Court for compliance.