(ii) who is not related to promoters or directors in the company, its holding,
subsidiary or associate company;
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(c) who has or had no pecuniary relationship, other than remuneration as such
director or having transaction not exceeding ten per cent. of his total income or such
amount as may be prescribed,] with the company, its holding, subsidiary or associate
company, or their promoters, or directors, during the two immediately preceding
financial years or during the current financial year;
(i) is holding any security of or interest in the company, its holding, subsidiary or
associate company during the two immediately preceding financial years or during
the current financial year:
Explanation.--For the purposes of this section, "nominee director" means a director
nominated by any financial institution in pursuance of the provisions of any law for
the time being in force, or of any agreement, or appointed by any Government, or
any other person to represent its interests.
(8) The company and independent directors shall abide by the provisions specified in
Schedule IV.
(9) Notwithstanding anything contained in any other provision of this Act, but
subject to the provisions of sections 197 and 198, an independent director shall not be
entitled to any stock option and may receive remuneration by way of fee provided
under sub-section (5) of section 197, reimbursement of expenses for participation in
the Board and other meetings and profit related commission as may be approved by
the members.
[Provided that if a company has no profits or its profits are inadequate, an
independent director may receive remuneration, exclusive of any fees payable under
sub-section (5) of section 197, in accordance with the provisions of Schedule V.]
(10) Subject to the provisions of section 152, an independent director shall hold
office for a term up to five consecutive years on the Board of a company, but shall be
eligible for reappointment on passing of a special resolution by the company and
disclosure of such appointment in the Board's report.
(11) Notwithstanding anything contained in sub-section (10), no independent director
shall hold office for more than two consecutive terms, but such independent director
shall be eligible for appointment after the expiration of three years of ceasing to
become an independent director:
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II. Role and functions:
III. Duties :
(10) ascertain and ensure that the company has an adequate and functional vigil
mechanism and to ensure that the interests of a person who uses such mechanism are
not prejudicially affected on account of such use;
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(11) report concerns about unethical behavior, actual or suspected fraud or violation
of the company's code of conduct or ethics policy;
(12) acting within their authority, assist in protecting the legitimate interests of the
company, shareholders and its employees;
(13) not disclose confidential information, including commercial secrets,
technologies, advertising and sales promotion plans, unpublished price sensitive
information, unless such disclosure is expressly approved by the Board or required
by law.
15 The roles, functions and the duties of an independent director show that
an independent Director does not indulge in day to day functioning of a
company. Therefore, an independent Director is made liable only in respect of
such acts of omission or commission by a company which had occurred with
his knowledge, attributable through Board processes and with his consent or
connivance or where he had not acted diligently.
16 Learned counsel for the petitioner referring to copy of Form DIR-12
pursuant to Section 7(i)(c), 168, 170(2) of Companies Act, 2013 and Rule 17
of Companies (Incorporation) Rules, 2014 and Sections 8, 15 and 18 of
Company (Appointment and Qualification of Directors) Rules, 2014
( Annexure A-5) submitted that the petitioner Subhojit Dutta has resigned
from M/s Reom Infrastructure and Construction Ltd w.e.f. 10.12.2015 as
Additional Director. Learned counsel further referred to copy of Form No. 32
pursuant to Section 303(2), 264(2), 266(1)(a) and 266 (1)(b)(iii) of
Companies Act, 1956 (Annexure P-4) and submitted that Shubhojit Dutta was
inducted in Omaxe Infrastructure and Construction Ltd. as Additional
Director (independent) w.e.f. 28.03.2013. The above information is verifiable
from the official website of the Ministry of Corporate Affairs. Thus, at the
most, it can be inferred that petitioner Subhojit Dutta was associated with
Omaxe Infrastructure and Construction Ltd. as an independent Additional
Director.
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
17 The respondent did not submit any documents to dispute the above
information. In the case of Anita Malhotra v. Apparel Export Promotion
Council and Another, reported in (2012) 1 SCC 520, the Apex court has held
as under:-
21. Inasmuch as the certified copy of the annual return dated 30-9-1999 is a public
document, more particularly, in view of the provisions of the Companies Act, 1956
read with Section 74(2) of the Evidence Act, 1872, we hold that the appellant had
validly resigned from the Directorship of the Company even in the year 1998 and
she cannot be held responsible for the dishonour of the cheques issued in the year
2004.
22. This Court has repeatedly held that in case of a Director, the complaint should
specifically spell out how and in what manner the Director was in charge of or was
responsible to the accused company for conduct of its business and mere bald
statement that he or she was in charge of and was responsible to the company for
conduct of its business is not sufficient. (Vide National Small Industries Corpn.
Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330). In the case on hand, particularly,
in Para 4 of the complaint, except the mere bald and cursory statement with regard to
the appellant, the complainant has not specified her role in the day-to-day affairs of
the Company. We have verified the averments as regards to the same and we agree
with the contention of Mr Akhil Sibal that except reproduction of the statutory
requirements the complainant has not specified or elaborated the role of the
appellant in the day-to-day affairs of the Company. On this ground also, the
appellant is entitled to succeed.
23. In the light of the above discussion and of the fact that the appellant has
established that she had resigned from the Company as a Director in 1998, well
before the relevant date, namely, in the year 2004, when the cheques were issued, the
High Court, in the light of the acceptable materials such as the certified copy of the
annual return dated 30-9-1999 and Form 32 ought to have exercised its jurisdiction
under Section 482 and quashed the criminal proceedings. We are unable to accept
the reasoning of the High Court and we are satisfied that the appellant has made out
a case for quashing the criminal proceedings. Consequently, Criminal Complaint No.
993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein (A-
3) is concerned, is quashed and the appeal is allowed.
18 In the case of Sabitha Ramamurthy and another v. R.B.S.
Channabasavaradhya, reported in (2006) 10 SCC 581, it has been held that:-
7. A bare perusal of the complaint petitions demonstrates that the statutory
requirements contained in Section 141 of the Negotiable Instruments Act had not
been complied with. It may be true that it is not necessary for the complainant to
specifically reproduce the wordings of the section but what is required is a clear
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
statement of fact so as to enable the court to arrive at a prima facie opinion that the
accused are vicariously liable. Section 141 raises a legal fiction. By reason of the
said provision, a person although is not personally liable for commission of such an
offence would be vicariously liable therefor. Such vicarious liability can be inferred
so far as a company registered or incorporated under the Companies Act, 1956 is
concerned 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. Before a person can be made
vicariously liable, strict compliance with the statutory requirements would be
insisted. Not only the averments made in para 7 of the complaint petitions do not
meet the said statutory requirements, the sworn statement of the witness made by
the son of the respondent herein, does not contain any statement that the appellants
were in charge of the business of the Company. In a case where the court is
required to issue summons which would put the accused to some sort of
harassment, the court should insist strict compliance with the statutory
requirements. In terms of Section 200 of the Code of Criminal Procedure, the
complainant is bound to make statements on oath as to how the offence has been
committed and how the accused persons are responsible therefor. In the event,
ultimately, the prosecution is found to be frivolous or otherwise mala fide, the court
may direct registration of case against the complainant for mala fide prosecution of
the accused. The accused would also be entitled to file a suit for damages. The
relevant provisions of the Code of Criminal Procedure are required to be construed
from the aforementioned point of view.
8. This Court in Monaben Ketanbhai Shah v. State of Gujarat [(2004) 7 SCC 15 :
2004 SCC (Cri) 1857] held as under: (SCC pp. 18-19, para 6)
"6. From the above, it is evident that in the complaint there are no averments
against the appellants except stating in the title that they are partners of the firm.
Learned counsel for the respondent complainants contended that a copy of the
partnership deed was also filed which would show that the appellants were
active in the business. No such document was filed with the complaint or made
part thereof. The filing of the partnership deed later is of no consequence for
determining the point in issue. Section 141 does not make all partners liable for
the offence. The criminal liability has been fastened on those who, at the time of
the commission of the offence, were in charge of and were responsible to the
firm for the conduct of the business of the firm. These may be sleeping partners
who are not required to take any part in the business of the firm; they may be
ladies and others who may not know anything about the business of the firm.
The primary responsibility is on the complainant to make necessary averments
in the complaint so as to make the accused vicariously liable. For fastening the
criminal liability, there is no presumption that every partner knows about the
transaction. The obligation of the appellants to prove that at the time the offence
was committed they were not in charge of and were not responsible to the firm
for the conduct of the business of the firm, would arise only when first the
complainant makes necessary averments in the complaint and establishes that
fact. The present case is of total absence of requisite averments in the
complaint."
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19 In the matter of National Small Industries Corporation Ltd. v.
Harmeet Singh Paintal and another reported in (2010) 3 SCC 330, the
Supreme Court observed as under:-
12. It is very clear from the above provision that what is required is that the persons
who are sought to be made vicariously liable for a criminal offence under Section
141 should be, 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. Every
person connected with the company shall not fall within the ambit of the provision.
Only those persons who were in charge of and responsible for the conduct of the
business of the company at the time of commission of an offence will be liable for
criminal action. It follows from the fact that if a Director of a company who was not
in charge of and was not responsible for the conduct of the business of the company
at the relevant time, will not be liable for a criminal offence under the provisions. The
liability arises from being in charge of and responsible for the conduct of the business
of the company at the relevant time when the offence was committed and not on the
basis of merely holding a designation or office in a company.
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 conduct of its business. This is in
consonance with strict interpretation of penal statutes, especially, where such statutes
create vicarious liability.
14. A company may have a number of Directors and to make any or all the Directors
as accused in a complaint merely on the basis of a statement that they are in charge of
and responsible for the conduct of the business of the company without anything
more is not a sufficient or adequate fulfilment of the requirements under Section 141.
15. In a catena of decisions, this Court has held that for making Directors liable for
the offences committed by the company under Section 141 of the Act, there must be
specific averments against the Directors, showing as to how and in what manner the
Directors were responsible for the conduct of the business 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
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
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 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.
20 In case of Pooja Ravinder Devidasani Vs State of Maharashtra and
another reported in AIR 2015 SC 675, it has been held :-
27. Unfortunately, the High Court did not deal the issue in a proper perspective and
committed error in dismissing the writ petitions by holding that in the complaints
filed by Respondent 2, specific averments were made against the appellant. But on
the contrary, taking the complaint as a whole, it can be inferred that in the entire
complaint, no specific role is attributed to the appellant in the commission of
offence. It is settled law that to attract a case under Section 141 of the NI Act a
specific role must have been played by a Director of the company for fastening
vicarious liability. But in this case, the appellant was neither a Director of the
accused Company nor in charge of or involved in the day-to-day affairs of the
Company at the time of commission of the alleged offence. There is not even a
whisper or shred of evidence on record to show that there is any act committed by
the appellant from which a reasonable inference can be drawn that the appellant
could be vicariously held liable for the offence with which she is charged.
28. In the entire complaint, neither the role of the appellant in the affairs of the
Company was explained nor in what manner the appellant is responsible for the
conduct of business of the Company, was explained. From the record it appears that
the trade finance facility was extended by Respondent 2 to the default Company
during the period from 13-4-2008 to 14-10-2008, against which the cheques were
issued by the Company which stood dishonoured. Much before that on 17-12-2005
the appellant resigned from the Board of Directors. Hence, we have no hesitation to
hold that continuation of the criminal proceedings against the appellant under
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Section 138 read with Section 141 of the NI Act is a pure abuse of process of law
and it has to be interdicted at the threshold.
30. Putting the criminal law into motion is not a matter of course. To settle the scores
between the parties which are more in the nature of a civil dispute, the parties cannot
be permitted to put the criminal law into motion and courts cannot be a mere
spectator to it. Before a Magistrate taking cognizance of an offence under Sections
138/141 of the NI Act, making a person vicariously liable has to ensure strict
compliance with the statutory requirements. The superior courts should maintain
purity in the administration of justice and should not allow abuse of the process of
the court. The High Court ought to have quashed the complaint against the appellant
which is nothing but a pure abuse of process of law.
21 The Supreme court in the matter of S.M.S. Pharmaceuticals Ltd Vs.
Neeta Bhalla, reported in AIR 2005 SC 3512 (Three Judges Bench) has held
as under:-
12. While analysing Section 141 of the Act, it will be seen that it operates in cases
where an offence under Section 138 is committed by a company. The key words
which occur in the section are "every person". These are general words and take
every person connected with a company within their sweep. Therefore, these words
have been rightly qualified by use of the words "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, etc." what is required is that the persons who are sought to be made
criminally liable under Section 141 should be, at the time the offence was
committed, in charge of and responsible to the company for the conduct of the
business of the company. Every person connected with the company shall not fall
within the ambit of the provision. It is only those persons who were in charge of and
responsible for the conduct of business of the company at the time of commission of
an offence, who will be liable for criminal action. It follows from this that if a
director of a company who was not in charge of and was not responsible for the
conduct of the business of the company at the relevant time, will not be liable under
the provision. The liability arises from being in charge of and responsible for the
conduct of business of the company at the relevant time when the offence was
committed and not on the basis of merely holding a designation or office in a
company. Conversely, a person not holding any office or designation in a company
may be liable if he satisfies the main requirement of being in charge of and
responsible for the conduct of business of a company at the relevant time. Liability
depends on the role one plays in the affairs of a company and not on designation or
status. If being a director or manager or secretary was enough to cast criminal
liability, the section would have said so. Instead of "every person" the section would
have said "every director, manager or secretary in a company is liable"..., etc. The
legislature is aware that it is a case of criminal liability which means serious
consequences so far as the person sought to be made liable is concerned. Therefore,
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
only persons who can be said to be connected with the commission of a crime at the
relevant time have been subjected to action.
13. A reference to sub-section (2) of Section 141 fortifies the above reasoning
because sub-section (2) envisages direct involvement of any director, manager,
secretary or other officer of a company in the commission of an offence. This section
operates when in a trial it is proved that the offence has been committed with the
consent or connivance or is attributable to neglect on the part of any of the holders of
these offices in a company. In such a case, such persons are to be held liable.
Provision has been made for directors, managers, secretaries and other officers of a
company to cover them in cases of their proved involvement.
14. The conclusion is inevitable that the liability arises on account of conduct, act or
omission on the part of a person and not merely on account of holding an office or a
position in a company. Therefore, in order to bring a case within Section 141 of the
Act the complaint must disclose the necessary facts which make a person liable.
**********
**********
19. To sum up, there is almost unanimous judicial opinion that necessary averments
ought to be contained in a complaint before a person can be subjected to criminal
process. A liability under Section 141 of the Act is sought to be fastened vicariously
on a person connected with a company, the principal accused being the company
itself. It is a departure from the rule in criminal law against vicarious liability. A
clear case should be spelled out in the complaint against the person sought to be
made liable. Section 141 of the Act contains the requirements for making a person
liable under the said provision. That the respondent falls within the parameters of
Section 141 has to be spelled out. A complaint has to be examined by the Magistrate
in the first instance on the basis of averments contained therein. If the Magistrate is
satisfied that there are averments which bring the case within Section 141, he would
issue the process. We have seen that merely being described as a director in a
company is not sufficient to satisfy the requirement of Section 141. Even a non-
director can be liable under Section 141 of the Act. The averments in the complaint
would also serve the purpose that the person sought to be made liable would know
what is the case which is alleged against him. This will enable him to meet the case
at the trial.
20. In view of the above discussion, our answers to the questions posed in the
Reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the
time the offence was committed, the person accused was in charge of, and
responsible for the conduct of business of the company. This averment is an
essential requirement of Section 141 and has to be made in a complaint. Without
this averment being made in a complaint, the requirements of Section 141 cannot
be said to be satisfied.
(b) The answer to question posed in sub-para (b) has to be in negative. Merely
being a director of a company is not sufficient to make the person liable
under Section 141 of the Act. A director in a company cannot be deemed to be in
charge of and responsible to the company for conduct of its business. The
requirement of Section 141 is that the person sought to be made liable should be in
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
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.
(c) The answer to question (c) has to be in affirmative. The question notes that
the Managing Director or Joint Managing Director would be admittedly in charge
of the company and responsible to the company for conduct of its business. When
that is so, holders of such positions in a company become liable under Section
141 of the Act. By virtue of the office they hold as Managing Director or Joint
Managing Director, these persons are in charge of and responsible for the conduct
of business of the company. Therefore, they get covered under Section 141. So far
as signatory of a cheque which is dishonoured is concerned, he is clearly
responsible for the incriminating act and will be covered under sub-section (2) off
Section 141.
22 In the case of K.K. Ahuja v. V.K. Vora & Another reported in 2009 (10)
SCC 48, it was held that mere fact that at some point of time an officer of a
company had played some role in the financial affairs of the company, that
will not be sufficient to attract the constructive liability under Section 141 of
the NI Act. The Supreme Court summarised the legal position as follows:
27. (i) If the accused is the Managing Director or a Joint Managing Director, it is not
necessary to make an averment in the complaint that he is in charge of, and is
responsible to the company, for the conduct of the business of the company. It is
sufficient if an averment is made that the accused was the Managing Director or
Joint Managing Director at the relevant time. This is because the prefix 'Managing'
to the word 'Director' makes it clear that they were in charge of and are responsible
to the company, for the conduct of the business of the company.
(ii) In the case of a Director or an officer of the company who signed the cheque on
behalf of the company, there is no need to make a specific averment that he was in
charge of and was responsible to the company, for the conduct of the business of the
company or make any specific allegation about consent, connivance or negligence.
The very fact that the dishonoured cheque was signed by him on behalf of the
company, would give rise to responsibility under sub-section (2) of Section 141.
(iii) In the case of a Director, secretary or manager as defined in Section 2(24) of the
Companies Act or a person referred to in clauses (e) and (f) of Section 5 of the
Companies Act, an averment in the complaint that he was in charge of, and was
responsible to the company, for the conduct of the business of the company is
necessary to bring the case under Section 141(1) of the Act. No further averment
would be necessary in the complaint, though some particulars will be desirable. They
can also be made liable under Section 141(2) by making necessary averments
relating to consent and connivance or negligence, in the complaint, to bring the
matter under that sub-section.
(iv) Other officers of a company cannot be made liable under sub-section (1) of
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Section 141. Other officers of a company can be made liable only under sub-section
(2) of Section 141, by averring in the complaint their position and duties in the
company and their role in regard to the issue and dishonour of the cheque, disclosing
consent, connivance or negligence.
23 It was further observed that if a mere reproduction of the wording of
Section 141(1) of the Act in the complaint was sufficient to make a person
liable to face prosecution, virtually, every officer/employee of a company
without exception could be impleaded as accused by merely making an
averment that at the time, when the offence was committed, they were in
charge of and were responsible to the company for the conduct of business of
the company.
24 In the case of Harshendra Kumar D. Vs. Rebilata Koley reported in
(2011) 3 SCC 351, it was held that:
25. In our judgment, the above observations cannot be read to mean that in a
criminal case where trial is yet to take place and the matter is at the stage of issuance
of summons or taking cognizance, materials relied upon by the accused which are in
the nature of public documents or the materials which are beyond suspicion or
doubt, in no circumstance, can be looked into by the High Court in exercise of its
jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction
under Section 397 of the Code. It is fairly settled now that while exercising inherent
jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the
Code in a case where complaint is sought to be quashed, it is not proper for the High
Court to consider the defence of the accused or embark upon an enquiry in respect
of merits of the accusations. However, in an appropriate case, if on the face of the
documents, which are beyond suspicion or doubt, placed by the accused, the
accusations against him cannot stand, it would be travesty of justice if the accused is
relegated to trial and he is asked to prove his defence before the trial court. In such a
matter, for promotion of justice or to prevent injustice or abuse of process, the High
Court may look into the materials which have significant bearing on the matter at
prima facie stage.
26. Criminal prosecution is a serious matter; it affects the liberty of a person. No
greater damage can be done to the reputation of a person than dragging him in a
criminal case. In our opinion, the High Court fell into grave error in not taking into
consideration the uncontroverted documents relating to the appellant's resignation
from the post of Director of the Company. Had these documents been considered by
the High Court, it would have been apparent that the appellant has resigned much
before the cheques were issued by the Company.
27. As noticed above, the appellant resigned from the post of Director on 2-3-2004.
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
The dishonoured cheques were issued by the Company on 30-4-2004 i.e. much after
the appellant had resigned from the post of Director of the Company. The
acceptance of the appellant's resignation is duly reflected in the Resolution dated 2-
3-2004. Then in the prescribed form (Form 32), the Company informed to the
Registrar of Companies on 4-3-2004 about the appellant's resignation. It is not even
the case of the complainants that the dishonoured cheques were issued by the
appellant. These facts leave no manner of doubt that on the date the offence was
committed by the Company, the appellant was not the Director; he had nothing to do
with the affairs of the Company. In this view of the matter, if the criminal
complaints are allowed to proceed against the appellant, it would result in gross
injustice to the appellant and tantamount to an abuse of process of the court.
25 The Supreme court in case of Sunita Palita Vs. Panchami Stone
Quarry reported in 2022 (10) SCC 152 relying on the judgments of National
Small Industries Corporation Limited and Puja Ravinder Devidasani
(supra) held as under:-
45. Even though the High Court deprecated the adoption of a hyper technical
approach in construing pleadings, to quash criminal proceedings, the High Court
adopted a hyper technical approach in rejecting the application under Section 482 of
the Cr.P.C., on a cursory reading of the formalistic pleadings in the complaint,
endorsing the contents of Section 141 of the NI Act, without any particulars. What
the High Court overlooked was, the contention of these Appellants that they were
non-Executive Independent Directors of the Accused Company, based on
unimpeachable materials on record. The High Court observed that in the petition it
had specifically been averred that all the accused persons were responsible and liable
for the whole business management of the Accused Company, and took the view that
the averments in the complaint were sufficient to meet the requirements of Section
141 of the NI Act.
46. As held by this Court in National Small Industries Corporation Ltd. v. Harmeet
Singh Paintal quoted with approval in the subsequent decision of this Court in Pooja
Ravinder Devidasani v. State of Maharashtra and Anr. (supra) the impleadment of all
Directors of an Accused Company on the basis of a statement that they are in charge
of and responsible for the conduct of the business of the company, without anything
more, does not fulfil the requirements of Section 141 of the NI Act.
47. In any event there could be no justification for not dispensing with the personal
appearance of the Appellants, when the Company had entered appearance through an
authorized officer. As held by this Court in Pepsi Foods Ltd. v. Special Judicial
Magistrate and Ors. summoning an accused person cannot be resorted to as a matter
of course and the order must show application of mind.
48. In our considered view, the High Court erred in law in not exercising its
jurisdiction under Section 482 of the Cr.P.C in the facts and circumstances of this
case to grant relief to the Appellants.
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
26 In Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Private
Limited and another reported in 2025 SC Online SC 321, it was contended
that appellant was a non-executive director and had no involvement in the
financial affairs of the company. The complaint did not provide any specific
averments detailing his role in the dishonoured cheques. The Supreme court
considering the law laid down in cases of National Small Industries
Corporation Limited, N.K. Wahi, S.M.S. Pharmaceuticals Ltd and Puja
Ravinder Devidasani (supra) held as under:-
18. Petitioner's role in the accused company was limited to that of an independent
non-executive director, with no financial responsibilities or involvement in the day-
to-day operations of the company. Furthermore, he was not responsible for the
conduct of its business.
19. The legal precedents cited above, including Pooja Ravinder (supra), clearly hold
that non-executive directors cannot be held liable under section 138 NI Act unless
specific evidence proves their active involvement.
20. In view of the above observations, the Appellant cannot be held vicariously
liable under section 141 of the NI Act. The complaints do not meet the mandatory
legal requirements to implicate him.
(Also See: K.S. Mehta Vs. Morgan Securities and Creditors Pvt Ltd.
reported in 2025 SCC Online SC 492)
27 The material on record shows that the petitioner was associated with
Omaxe Infrastructure and Construction Ltd. as an independent additional
Director. He was not involved in day-to-day functioning of the company or
directly concerned with the financial affairs of the accused company. There is
no averment to the effect that with the cheques were issued with knowledge
of the petitioner attributable through Board processes and with his consent
or connivance. He was not signatory of the cheques in question, therefore,
composite liability of the petitioner under section 141 of the Negotiable
Instrument Act, 1881 cannot be inferred in absence of specific averments in
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
the complaint as to the role and responsibility of the petitioner about the
conduct of the business of the accused company. In such a scenario, bald
allegation of the assurance to honour the cheque, aimed at implicating the
petitioner, would not make the petitioner liable for the alleged offence.
28 In view of above discussion, this court is of considered opinion that
learned Judicial Magistrate First class, Indore has committed manifest error in
taking cognizance against the petitioner Subhojit for the offence punishable
under Section 138 read with Section 141 of the Negotiable Instruments Act,
1881. The summoning orders and the subsequent proceedings in SCNIA no.
27258/2015 and SCNIA no. 1165/2016 are an abuse of the process of court.
Consequently, the MCRC no. 41874 / 2023 and MCRC no. 41879 / 2023 are
allowed. It is directed that the criminal complaint and consequent proceedings
in SCNIA no. 27258/2015 and SCNIA no. 1165/2016 stand quashed, so far as
they relate to the petitioner Subhojit.
Let a copy of this order be sent to the trial Court for information and
compliance.
(SANJEEV S KALGAONKAR)
BDJ JUDGE
BHUNESH
DN: c=IN, o=HIGH COURT OF MADHYA PRADESH
BENTCH AT INDORE, ou=HIGH COURT OF
MADHYA PRADESH BENTCH AT INDORE,
2.5.4.20=3fb5bcda9fd75d95d6c7cdcbd092ee5a
74a94a5534aed3a66d9385cfcfc201e0,
WAR DATT
postalCode=452001, st=MADHYA PRADESH,
serialNumber=89FD75A8D0C99E05779A327974
E46BC85102826CE0604B211E4C91102B4D1269,
cn=BHUNESHWAR DATT
Date: 2025.07.28 19:05:25 +05'30'
