[Cites 14, Cited by 0]
Delhi High Court
Manish Goyal vs S P Realtors on 25 March, 2026
Author: Prateek Jalan
Bench: Prateek Jalan
$~P-1 to 6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 28.01.2026
Pronounced on: 25.03.2026
Uploaded on: 25.03.2026
+ CRL.M.C. 2398/2019 & CRL.M.A. 9511/2019
MANISH GOYAL .....Petitioner
versus
S P REALTORS .....Respondent
+ CRL.M.C. 5769/2019 & CRL.M.A. 40220/2019
MANISH GOYAL .....Petitioner
versus
HARLEEN KAUR SACHDEVA & ANR .....Respondents
+ CRL.M.C. 621/2020 & CRL.M.A. 2574/2020
MANISH GOYAL .....Petitioner
versus
GAGAN PREET SINGH & ANR. .....Respondents
+ CRL.M.C. 644/2020 & CRL.M.A. 2689/2020
MANISH GOYAL .....Petitioner
versus
S.P. REALTORS .....Respondent
+ CRL.M.C. 668/2020 & CRL.M.A. 2766/2020
Signature Not Verified
Signed By:SOMYA
SATIJA CRL.M.C. 2398/2019 and connected matters Page 1 of 13
Signing Date:25.03.2026
18:14:19
MANISH GOYAL .....Petitioner
versus
HARLEEN KAUR SACHDEVA & ANR. .....Respondents
+ CRL.M.C. 669/2020 & CRL.M.A. 2768/2020
MANISH GOYAL .....Petitioner
versus
GAGAN PREET SINGH & ANR. .....Respondents
Appearance:
Mr. Kunal Kher, Advocate for petitioner.
Mr. Ashok K. Goyal, Mr. Bhupender M. Sharma and Ms. Prerna Goyal,
Advocates for respondents.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
JUDGMENT
1. By way of these petitions filed under Section 482 of the Code of
Criminal Procedure, 1973, the petitioner seeks quashing of summoning
orders dated 22.05.2017 in Complaint Case Nos. 4849/2017, 4850/2017
and 4852/2017 [subject matter of CRL.M.C 621/2020, CRL.M.C
5769/2019, CRL.M.C 2398/2019 respectively], as well as summoning
orders dated 01.07.2017 in Complaint Case Nos. 2814/2017, 2815/2017
and 2819/2017 [subject matter of CRL.M.C 669/2020, CRL.M.C
668/2020, CRL.M.C 644/2020 respectively], passed by the Magistrate's
Court, Rohini Courts, Delhi. The petitioner also seeks quashing of all
criminal proceedings against him emanating from the impugned
summoning orders.
A. FACTS
2. The relevant facts giving rise to the present petitions are as follows:
A. The petitioner was appointed as an Additional Director in M/S
Piyush Colonisers Limited ["the Company"] on 19.02.2015.
B. The petitioner's designation was changed to an Independent
Director [Non-Executive Director] on 30.09.2015.
C. The Company entered into three separate agreements to lease dated
10.03.2016, 07.11.2017, and 09.11.2017. Under these agreements,
three units bearing Nos. 101, 104, and 106 at a building named
M/S Piyush Global, First Floor, Plot No. 5, YMCA Chowk, Main
Mathura Road, Faridabad, Haryana - 121006, were let out to the
Company at a fixed monthly rent. The Company issued multiple
cheques to pay the rent, but they were dishonoured when presented.
Details of the concerned cheques are tabulated as follows:
Sr. Case No. Cheque Cheque Amount Date of
No. No. Date dishonour
1. CRL.M.C. 229812 07.02.2017 Rs.68,400/- 24.03.2017
2398/2019 229813 07.03.2017 Rs.68,400/- 03.04.2017
2 CRL.M.C. 229842 10.12.2016 Rs.28,800/- 08.03.2017
5769/2019 229844 10.02.2017 Rs.28,800/- 24.03.2017
229845 10.03.2017 Rs.28,800/- 03.04.2017
229852 10.02.2017 Rs.19,800/- 24.03.2017
229853 10.03.2017 Rs.19,800/- 03.04.2017
3. CRL.M.C. 621/2020 229820 09.02.2017 Rs.32,400/- 24.03.2017
229821 09.03.2017 Rs.32,400/- 24.03.2017
229826 09.12.2016 Rs.32,400/- 08.03.2017
229828 09.02.2017 Rs.32,400/- 24.03.2017
229829 09.03.2017 Rs.32,400/- 03.04.2017
4. CRL.M.C. 644/2020 412878 20.01.2017 Rs.68,400/- 18.04.2017
229814 07.04.2017 Rs.68,400/- 02.05.2017
229815 07.05.2017 Rs.68,400/- 09.05.2017
5. CRL.M.C. 668/2020 412874 20.01.2017 Rs.28,800/- 18.04.2017
412875 20.01.2017 Rs.28,800/- 18.04.2017
412881 20.01.2017 Rs.28,800/- 18.04.2017
229846 10.04.2017 Rs.28,800/- 02.05.2017
229847 10.05.2017 Rs.28,800/- 12.05.2017
412873 20.01.2017 Rs.19,800/- 18.04.2017
229854 10.04.2017 Rs.19,800/- 02.05.2017
229855 10.05.2017 Rs.19,800/- 12.05.2017
6. CRL.M.C.669/2020 229822 09.04.2017 Rs.32,400/- 02.05.2017
229823 09.05.2017 Rs.32,400/- 12.05.2017
412872 20.01.2017 Rs.32,400/- 18.04.2017
412877 20.01.2017 Rs.32,400/- 18.04.2017
412879 20.01.2017 Rs.32,400/- 18.04.2017
229830 09.04.2017 Rs.32,400/- 02.05.2017
229831 09.05.2017 Rs.32,400/- 10.05.2017
D. Pursuant to the dishonour, the respondents issued separate legal
notices dated 07.04.2017 and 17.05.2017, but no response was
received. Consequently, the respondents filed complaints under
Section 138 read with Section 141 of the Negotiable Instruments
Act, 1881 ["NI Act"], against the Company and its directors,
including the petitioner herein.
E. The Magistrate's Court took cognizance of the offences and issued
the impugned summoning orders dated 22.05.2017 and 01.07.2017.
B. SUBMISSIONS OF LEARNED COUNSEL FOR THE PARTIES
3. I have heard Mr. Kunal Kher, learned counsel for the petitioner,
and Mr. Ashok Kumar Goyal, learned counsel for the respondents.
4. The principal ground taken by Mr. Kher is that the complaint filed
by the respondents does not make out the necessary grounds under
Section 141 of the NI Act to hold the petitioner vicariously liable for the
Company's offences under Section 138 of the NI Act. Mr. Kher submits
that the complaints only contain vague and general assertions, and are
devoid of specific averments required to show that the offence was within
the knowledge/consent of the petitioner. To this effect, he relies upon a
judgment of the Supreme Court in K.S. Mehta v. Morgan Securities and
Credits Pvt. Ltd.1, and a judgment of a coordinate Bench of this Court in
Rahul Sood v. Government of NCT of Delhi2.
5. Mr. Kher further submits that, when the offences were allegedly
committed, the petitioner was an Independent Director, and was not
concerned with the day-to-day affairs of the Company. He draws my
attention to the Form DIR-12, which shows the petitioner's change in
designation to Independent Director [Non-executive Director] with effect
from 30.09.2015. The same is also reflected in the Form DIR-11, annexed
to the petition, which reflects his resignation from the Company with
effect from 15.06.2017, and shows the date of appointment to the post of
2025 SCC OnLine SC 492 [hereinafter, "KS Mehta"].
2025 SCC OnLine Del 2155 [hereinafter, "Rahul Sood"].
Independent Director on 30.09.2015. Mr. Kher submits that the
Magistrate's Court has erred in passing the impugned summoning orders,
as it failed to appreciate that the petitioner was not connected to the
alleged offence. He submits that the petitioner is neither a signatory to the
agreement, nor to the cheques, and had no dealings with the respondents.
6. Although Mr. Goyal accepts the position that the petitioner was
not, in fact, the signatory to the cheques, he submits that the petitioner's
name appeared as a director in the Company at the relevant time, and was
therefore presumed to be involved in the Company's affairs.
C. ANALYSIS
7. The principal issue which requires consideration is whether the
petitioner, who was an Independent Director when the Company
defaulted on its payment obligations, can be held vicariously liable under
Section 141 of the NI Act for the dishonour of the Company's cheques.
8. The present case thus turns on an interpretation of Section 141 of
the NI Act, which is reproduced hereinbelow:
"141. Offences by companies.--(1) If the person committing an offence
under section 138 is a company, every person who, at the time the
offence was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable
to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any
person liable to punishment if he proves that the offence was
committed without his knowledge, or that he had exercised all due
diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of a
company by virtue of his holding any office or employment in the
Central Government or State Government or a financial corporation
owned or controlled by the Central Government or the State
Government, as the case may be, he shall not be liable for prosecution
under this Chapter.]
(2) Notwithstanding anything contained in sub-section (1), where any
offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation.--For the purposes of this section, --
(a) "company" means any body corporate and includes a firm or other
association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm."
9. The principles governing vicarious liability under Section 141 of
the NI Act have recently been reiterated by the Supreme Court in KS
Mehta. In the said judgment, the Supreme Court has considered its earlier
decisions3, in order to trace and examine the interpretation of the said
provision over the years, as follows:
"15. This Court has consistently held that non-executive and independent
Director(s) cannot be held liable under Section 138 read with Section 141
of the NI Act unless specific allegations demonstrate their direct
involvement in affairs of the company at the relevant time.
16. This Court in National Small Industries Corpn. Ltd. v. Harmeet Singh
Paintal observed:
"13. Section 141 is a penal provision creating vicarious
liability, and which, as per settled law, must be strictly
construed. It is therefore, not sufficient to make a bald cursory
statement in a complaint that the Director (arrayed as an
accused) is in charge of and responsible to the company for
the conduct of the business of the company without anything
more as to the role of the Director. But the complaint should
spell out as to how and in what manner Respondent 1 was in
charge of or was responsible to the accused Company for the
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [(2005) 8 SCC 89]; N.K. Wahi vs. Shekhar Singh
[(2007) 9 SCC 481]; National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal [(2010) 3 SCC
330]; Pooja Ravinder Devidasani v. State of Maharashtra [(2014) 16 SCC 1]; Ashok Shewakramani v.
State of A.P [(2023) 8 SCC 473]; Hitesh Verma v. Health Care at Home (India) (P) Ltd. [(2025) 7 SCC
623].
conduct of its business. This is in consonance with strict
interpretation of penal statutes, especially, where such statutes
create vicarious liability.
***
22. Therefore, this Court has distinguished the case of persons
who are in charge of and responsible for the conduct of the
business of the company at the time of the offence and the
persons who are merely holding the post in a company and are
not in charge of and responsible for the conduct of the business
of the company. Further, in order to fasten the vicarious liability
in accordance with Section 141, the averment as to the role of
the Directors concerned should be specific. The description
should be clear and there should be some unambiguous
allegations as to how the Directors concerned were alleged to
be in charge of and were responsible for the conduct and affairs
of the company.
***
39. From the above discussion, the following principles emerge:
(i) The primary responsibility is on the complainant to make
specific averments as are required under the law in the
complaint so as to make the accused vicariously liable. For
fastening the criminal liability, there is no presumption that
every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the
offence. The criminal liability can be fastened only on those
who, at the time of the commission of the offence, were in
charge of and were responsible for the conduct of the business
of the company.
(iii) Vicarious liability can be inferred against a company
registered or incorporated under the Companies Act, 1956 only
if the requisite statements, which are required to be averred in
the complaint/petition, are made so as to make the accused
therein vicariously liable for the offence committed by the
company along with averments in the petition containing that
the accused were in charge of and responsible for the business
of the company and by virtue of their position they are liable to
be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded
and proved and not inferred.
(v) If the accused is a Managing Director or a Joint Managing
Director then it is not necessary to make specific averment in
the complaint and by virtue of their position they are liable to be
proceeded with.
(vi) If the accused is a Director or an officer of a company who
signed the cheques on behalf of the company then also it is not
necessary to make specific averment in the complaint.
(vii) The person sought to be made liable should be in charge of
and responsible for the conduct of the business of the company
at the relevant time. This has to be averred as a fact as there is
no deemed liability of a Director in such cases."
(emphasis in original)
17. In N.K. Wahi v. Shekhar Singh, this Court in para 8 observed:
"8. To launch a prosecution, therefore, against the alleged
Directors there must be a specific allegation in the complaint
as to the part played by them in the transaction. There should
be clear and unambiguous allegation as to how the Directors
are in-charge and responsible for the conduct of the business of
the company. The description should be clear. It is true that
precise words from the provisions of the Act need not be
reproduced and the court can always come to a conclusion in
the facts of each case. But still, in the absence of any averment
or specific evidence the net result would be that complaint
would not be entertainable."
18. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, this Court laid down that
mere designation as a Director is not sufficient; specific role and responsibility
must be established in the complaint.
19. In Pooja Ravinder Devidasani v. State of Maharashtra, this Court while
taking into consideration that a non-executive Director plays a governance
role, they are not involved in the daily operations or financial management of
the company, held that to attract liability under Section 141 of the NI Act, the
accused must have been actively in charge of the company's business at the
relevant time. Mere Directorship does not create automatic liability under the
Act. The law has consistently held that only those who are responsible for the
day-to-day conduct of business can be held accountable.
20. In Ashok Shewakramani v. State of A.P., this Court held:
"20. After having considered the submissions, we are of the
view that there is non-compliance on the part of the second
respondent with the requirements of sub-section (1) of Section
141 of the NI Act. We may note here that we are dealing with the
appellants who have been alleged to be the Directors of Accused
1 company. We are not dealing with the cases of a Managing
Director or a whole-time Director. The appellants have not
signed the cheques. In the facts of these three cases, the cheques
have been signed by the Managing Director and not by any of
the appellants."
21. In Hitesh Verma v. Health Care at Home (India) (P) Ltd., this Court held:
"3. As the appellant is not a signatory to the cheque, he is not
liable under Section 138 of the 1881 Act. As it is only the
signatory to the cheque is liable under Section 138, unless the
case is brought within the four corners of Section 141 of the
1881 Act, no other person can be held liable. ...
4. There are twin requirements under sub-section (1) of Section
141 of the 1881 Act. In the complaint, it must be alleged that the
person, who is sought to be held liable by virtue of vicarious
liability, at the time when the offence was committed, was in
charge of, and was responsible to the company for the conduct
of the business of the company. A Director who is in charge of
the company and a Director who was responsible to the
company for the conduct of the business, are two different
aspects. The requirement of law is that both the ingredients of
sub-section (1) of Section 141 of the 1881 Act must be
incorporated in the complaint. Admittedly, there is no assertion
in the complaints that the appellant, at the time of the
commission of the offence, was in charge of the business of the
company. Therefore, on a plain reading of the complaints, the
appellant cannot be prosecuted with the aid of sub-section (1) of
Section 141 of the 1881 Act." "
After analysing the provision, the Supreme Court observed that the
accused persons had neither issued nor signed the cheques in question,
and that their role in the company was purely non-executive, not
extending to the financial decision-making or day-to-day affairs of the
company. The Court further noted that the complaints did not contain
specific allegations establishing a direct nexus between the accused
persons and the financial transactions in question. In the absence of such
foundational averments, the Supreme Court held that the requirements for
fastening vicarious liability under Section 141 of the NI Act were not
satisfied, and accordingly quashed the criminal proceedings against the
accused persons.
10. Mr. Kher also relied upon a judgment of a coordinate Bench in
Rahul Sood. In that case, on facts similar to the present matters, this Court
considered the aforesaid judgments, including K.S. Mehta, and observed
that the complaint did not contain any specific averments detailing the
role of the accused in the conduct of the business of the company. It was
further noted that the accused was neither a signatory to the dishonoured
cheques nor involved in the financial decision-making of the company.
Additionally, the accused had resigned from his position, which was duly
notified through Forms DIR-11 and DIR-12, albeit after the issuance of
the summoning orders. This Court thus held that the petitioner therein
could not be vicariously liable under Section 141 of the NI Act, and set
aside the summoning order.
11. The Supreme Court and this Court have thus consistently held that
mere designation as a director is not sufficient to establish vicarious
liability under section 141 of the NI Act. The complaint must contain
specific averments as to the role of the director specifically at the time of
the commission of the offence.
12. It is therefore necessary to examine the specific averments made
against the petitioner in the complaints. For this purpose, the relevant
extracts from the complaints are reproduced hereinbelow5:
"5. Since the cheques mentioned, above were dishonoured, therefore
the complainants have sent a notice dated 07.04.2017 to the accused
Emphasis supplied.
These paragraphs have been extracted from the complaint in CRL.M.C. 5769/2019. It may be noted
that similar averments are also contained in the complaints filed in the other connected matters.
persons calling upon them to make payment against the above
mentioned dishonoured cheques within 15 days. The notice was duly
served upon the accused persons between 08.04.2017 and 11.04.2017.
The accused no.1 Company was served on 08.04.2017 itself therefore
accused no. 2 to 4 also stand served on 08.04.2017 though they have
been separately also served.
xxx xxx xxx
7, Accused nos. 2, 3 and 4 are the Directors of accused no.l and are
personally responsible for the day to day management and are in
control of all the affairs of accused no.l company. Time and again,
there have been interactions with the accused persons relating to the
transaction in question. As such, they are liable to be tried and
punished for the offence committed by accused no.l under section 138
of the Negotiable Instruments Act in their personal capacity as well."
13. It is thus evident that the complaints do not contain any specific
averments regarding the role of the petitioner, and instead merely make
general and vague assertions that the petitioner, being a director of the
Company, was "personally responsible for the day-to-day management of
the Company". The record further reflects that the petitioner was, in fact,
serving as a non-executive Independent Director at the relevant time, as is
evident from Form DIR-12. It is also an admitted position that the
petitioner is not a signatory to the dishonoured cheques. Moreover, the
petitioner had resigned from the position of Independent Director on
15.06.2017.
14. In view of the above, the petitioner cannot be held to be vicariously
liable under Section 141 of the NI Act.
D. CONCLUSION
15. For the aforesaid reasons, the summoning orders dated 22.05.2017
in Complaint Case Nos. 4849/2017, 4850/2017 and 4852/2017, as well as
summoning orders dated 01.07.2017 in Complaint Case Nos. 2814/2017,
2815/2017 and 2819/2017 are set aside qua the petitioner, and the
criminal proceedings arising therefrom are quashed.
16. The petitions stand disposed of.
PRATEEK JALAN, J
MARCH 25, 2026
SS/Ainesh/
