Himachal Pradesh High Court
Reserved On: 07.08.2025 vs Chander Kanta Chandel & Others on 22 August, 2025
2025:HHC:28521 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. MMO No. 789 of 2024 Reserved on: 07.08.2025 Date of Decision: 29.08.2025 .
Hukam Chand ...Petitioner
Versus
Chander Kanta Chandel & others
...Respondents
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes For the petitioner : Mr. Abhishek Raj, Advocate.
For the Respondents : Mr. Ankush Kumar, Advocate vice Mr. Vinay Thakur, Advocate, for respondent No. 1.
None for respondent No.2.
Mr. Amit Dhumal, Advocate, for respondents No. 3 and 4.
Mr. Rajiv Chauhan, Advocate, for respondent No. 6.
None for respondents No. 5, 7 and 8. Rakesh Kainthla, Judge The petitioner has filed the present petition under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) for quashing complaint No. 237 of 2023 filed for the commission of an offence punishable under Section 138 read 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 25/08/2025 21:24:49 :::CIS 22025:HHC:28521 with Sections 141 and 142 of Negotiable Instruments Act (NI Act) pending before the learned Additional Chief Judicial Magistrate, .
Theog, District Shimla, H.P. (learned Trial Court). (The parties shall hereinafter be referred to in the same manner as they are arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court for the commission of an offence punishable under Section 138, read with Sections 141 and 142 of the NI Act against the accused. It was asserted that the accused No.1, M/s Pride NATC Co-operative Society Limited, is registered under the H.P. Co-operative Societies Act. It opened one Branch office at Theog, District Shimla, H.P. by hiring the premises of the complainant in the year 2017 for carrying out commercial activities. It remained the tenant of the complainant till 31.01.2023. Accused No.2, being the President of accused No.1 and accused No.6, being the Secretary of accused No.1, visited the office on 20.01.2023 and expressed their desire to vacate the premises on 31.01.2023. The complainant demanded an amount of ₹2,40,000/- being the arrears of rent from June 2022 to 31.01.2023. They issued a post-dated cheque of ₹2,40,000/-, ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 3 2025:HHC:28521 which was signed by accused No.2 and accused No.6 on behalf of accused No.1. The complainant presented the cheque, but it was .
dishonoured with an endorsement of "funds insufficient". The complainant issued a notice demanding the amount, but no amount was paid. Accused Nos. 2 to 8 are office bearers of the Managing Committee of accused No.1. Hence, a complaint was filed against the accused for taking action against them as per law.
3. to Learned Trial Court found sufficient reasons to summon the accused vide order dated 02.08.2023.
4. Being aggrieved from the filing of the complaint, the petitioner Hukam Chand, who was arrayed as accused No. 8, has approached this Court asserting that the learned Trial Court erred in summoning him. The order does not show an application of the mind. The complaint does not contain any allegations against the petitioner. The petitioner was arrayed as accused, being a member of the Managing Committee of accused No.1. The petitioner has not signed any cheque. As per averments made in the complaint, the cheque was signed by accused Nos. 2 and 6 on behalf of accused No.1; therefore, only ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 4 2025:HHC:28521 they can be held liable for the commission of an offence punishable under Section 138 of the NI Act. The proceedings .
against the petitioner amount to an abuse of the process of law.
Therefore, it was prayed that the present petition be allowed and the complaint pending before the learned Trial Court be quashed.
5. I have heard Mr. Abhishek Raj, learned counsel for the petitioner, Mr. Ankush Kumar, learned vice counsel representing respondent No.1, Mr. Amit Dhumal, learned counsel for respondents No. 3 and 4 and Mr. Rajiv Chauhan, learned counsel for the respondent No.6.
6. Mr. Abhishek Raj, learned counsel for the petitioner, submitted that the learned Trial Court erred in summoning the accused. There are no allegations against the petitioner except that he is a member of the Managing Committee, which is not sufficient to summon him. An Administrator has been appointed to look after the affairs of the society, and the offence punishable under Section 138 of the NI Act is not made out.
Hence, he prayed that the present petition be allowed and the complaint pending before the learned Trial Court be quashed.
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7. Mr. Ankush Kumar, learned vice counsel representing respondent No.1, submitted that the petitioner has .
raised a disputed question of fact which cannot be adjudicated by this Court while exercising the inherent jurisdiction. The matter is pending before the learned Trial Court, which should be left to adjudicate the same. Hence, he prayed that the present petition be dismissed.
8. Mr. Amit Dhumal, learned counsel for respondents No. 3 and 4 and Mr. Rajiv Chauhan, learned counsel for respondent No.6, adopted the submissions advanced by Mr. Abhishek Raj, learned counsel for the petitioner.
9. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
10. The law relating to quashing of criminal cases was explained by the Hon'ble Supreme Court in B.N. John v. State of U.P., 2025 SCC OnLine SC 7 as under: -
"7. As far as the quashing of criminal cases is concerned, it is now more or less well settled as regards the principles to be applied by the court. In this regard, one may refer to the decision of this Court in State of Haryana v. Ch. Bhajan Lal, 1992 Supp (1) SCC 335, wherein this Court has summarised some of the principles under ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 6 2025:HHC:28521 which FIR/complaints/criminal cases could be quashed in the following words:
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter .
XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.
(4) Where the allegations in the FIR do not constitute a cognizable offence but constitute only a ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 7 2025:HHC:28521 non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.
.
(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to a private and personal grudge." (emphasis added)
8. Of the aforesaid criteria, clause no. (1), (4) and (6) would be of relevance to us in this case.
In clause (1), it has been mentioned that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out a case against the accused, then the FIR or the complaint can be quashed. As per clause (4), where the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order dated by the Magistrate as ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 8 2025:HHC:28521 contemplated under Section 155 (2) of the CrPC, and in such a situation, the FIR can be quashed. Similarly, as provided under clause (6), if there is an express legal bar engrafted in any of the provisions of .
the CrPC or the concerned Act under which the criminal proceedings are instituted, such proceedings can be quashed."
11. This position was reiterated in Ajay Malik v. State of Uttarakhand, 2025 SCC OnLine SC 185, wherein it was observed:
"8. It is well established that a High Court, in exercising its extraordinary powers under Section 482 of the CrPC, may issue orders to prevent the abuse of court processes or to secure the ends of justice. These inherent powers are neither controlled nor limited by any other statutory provision. However, given the broad and profound nature of this authority, the High Court must exercise it sparingly. The conditions for invoking such powers are embedded within Section 482 of the CrPC itself, allowing the High Court to act only in cases of clear abuse of process or where intervention is essential to uphold the ends of justice.
9. It is in this backdrop that this Court, over the course of several decades, has laid down the principles and guidelines that High Courts must follow before quashing criminal proceedings at the threshold, thereby pre-empting the Prosecution from building its case before the Trial Court. The grounds for quashing, inter alia, contemplate the following situations : (i) the criminal complaint has been filed with mala fides; (ii) the FIR represents an abuse of the legal process; (iii) no prima facie offence is made out; (iv) the dispute is civil in nature; (v.) the complaint contains vague and omnibus allegations; and (vi) the parties are willing to settle and compound the dispute amicably (State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335) ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 9 2025:HHC:28521
12. The present petition is to be decided as per the parameters laid down by the Hon'ble Supreme Court.
.
13. It was specifically asserted in para 2 of the complaint that M/s Pride NATC Co-operative Society Limited is registered under the provisions of the H.P. Co-operative Societies Act;
therefore, it is an association of persons and falls within the definition of the Company as per explanation 'a' to Section 141 of the NI Act.
14. to The Hon'ble Supreme Court dealt with the liability of the Company and its Directors in Pawan Kumar Goel v. State of U.P., 2022 SCC OnLine SC 1598 and held that only a person, who is in charge of and responsible to the Company for its affairs can be summoned and punished under Section 138 read with Section 141 of NI Act. It was observed:
"22. A two-judge Bench of this Court in the case of K.K. Ahuja v. V.K. Vora (2005) 8 SCC 89, after analysing the provisions contained in Section 141 of the Act, observed as under:--
"16. Having regard to section 141, when a cheque issued by a company (incorporated under the Companies Act, 1956) is dishonoured, in addition to the company, the following persons are deemed to be guilty of the offence and shall be liable to be proceeded against and punished:
(i) every person who, at the time the offence was committed, was in charge of and was responsible to ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 10 2025:HHC:28521 the company for the conduct of the business of the company;
(ii) any Director, Manager, Secretary or other officer of the company with whose consent and .
connivance, the offence under section 138 has been committed; and
(iii) any Director, Manager, Secretary or other officer of the company whose negligence resulted in the offence under section 138 of the Act being committed by the company.
While the liability of persons in the first category arises under sub-section (1) of Section 141, the liability of persons mentioned in categories (ii) and (iii) arises under sub-section (2). The scheme of the Act, therefore, is that a person who is responsible to the company for the conduct of the business of the company and who is in charge of the business of the company is vicariously liable by reason only of his fulfilling the requirements of subsection (1). But if the person responsible to the company for the conduct of business of the company was not in charge of the conduct of the business of the company, then he can be made liable only if the offence was committed with his consent or connivance or as a result of his negligence.
17. The criminal liability for the offence by a company under section 138 is fastened vicariously on the persons referred to in sub-section (1) of section 141 by virtue of a legal fiction. Penal statutes are to be construed strictly. Penal statutes providing constructive vicarious liability should be construed much more strictly. When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific averment complying with the requirements of section 141 is imperative. As pointed out in K. Srikanth Singh v. North East Securities Ltd. - (2007) 12 SCC 788, the mere fact that at some point of time, an officer of a company had played some role in ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 11 2025:HHC:28521 the financial affairs of the company, will not be sufficient to attract the constructive liability under section 141 of the Act.
18. Sub-section (2) of section 141 provides that a Director, .
Manager, Secretary or other officer, though not in charge of the conduct of the business of the company, will be liable if the offence had been committed with his consent or connivance or if the offence was a result of any negligence on his part. The liability of persons mentioned in subsection (2) is not on account of any legal fiction but on account of the specific part played-consent and connivance or negligence. If a person is to be made liable under sub-section (2) of section 141, then it is necessary to aver consent and connivance, or negligence on his part."
23. The scope of Section 141 of the NI Act was again exhaustively considered by this Court in S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89.:
"10. ....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 the business of the company at the time of the 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 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. 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 ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 12 2025:HHC:28521 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, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action...
18. To sum up, there is an 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 spelt 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 spelt out. A complaint has to be examined by the Magistrate in the first instance on the basis of the 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." (emphasis supplied) ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 13 2025:HHC:28521
15. This position was reiterated in Rajesh Viren Shah v.
Redington India Ltd., (2024) 4 SCC 305: 2024 SCC OnLine SC 143, .
wherein it was observed:
"3. The position of law as to the liability that can be fastened upon a Director for non-realisation of a cheque is no longer res integra. Before adverting to the judicial position, we must also take note of the statutory provision -- Section 141 of the NI Act, which states that every person who at the time of the offence was responsible for the affairs/conduct of the business of the company, shall be held liable and proceeded against under Section 138 of the NI Act, with exception thereto being that such an act if done without his knowledge or after him having taken all necessary precautions, would not be held liable. However, if it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to (i) a Director; (ii) a Manager; (iii) a Secretary; or (iv) any other officer -- they shall be deemed to be guilty of that offence and shall be proceeded against accordingly.
4. Coming to the judicial position, we notice a judgment of this Court in Monaben Ketanbhai Shah v. State of Gujarat [Monaben Ketanbhai Shah v. State of Gujarat, (2004) 7 SCC 15: 2004 SCC (Cri) 1857] wherein it was observed that: (SCC pp. 18-19, para 6) "6. ... 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 ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 14 2025:HHC:28521 complainant makes necessary averments in the complaint and establishes that fact."
5. A Bench of three learned Judges in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [S.M.S. .
Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005 SCC (Cri) 1975] observed: (SCC p. 102, para 18) "18. To sum up, there is an almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. ... A clear case should be spelt out in the complaint made 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 spelt out."
6. We also notice this Court to have observed, in regard to the exercise of the inherent powers under Section 482CrPC, in cases involving negotiable instruments that interference would not be called for, in the absence of "some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court. (Ashutosh Ashok Parasrampuriya case [Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14 SCC 770: 2021 SCC OnLine SC 915], SCC para 24)" This principle, as held in S.M.S. Pharmaceuticals [S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005 SCC (Cri) 1975], was followed in Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd. [Ashutosh Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14 SCC 770: 2021 SCC OnLine SC 915].
16. It was held by the Hon'ble Supreme Court in Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 SCC OnLine SC 311, ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 15 2025:HHC:28521 that a person can be vicariously liable if he is in charge and responsible to the Company for the conduct of its business. It .
was observed:
"18. In the case of State of Haryana v. Brij Lal Mittal (1998) 5 SCC 343, this Court observed thus:
"8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. Admittedly, the three respondents were being prosecuted as directors of the manufacturers with the aid of Section 34(1) of the Act, which reads as under:
"34. Offences by companies.--(1) Where an offence r under this Act has been committed by 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 such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence."
It is thus seen that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if, at the material time, he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company, it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely, ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 16 2025:HHC:28521 without being a director, a person can be in charge of and responsible to the company for the conduct of its business. From the complaint in question, we, however, find that except for a bald statement that the .
respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business."
19. It could thus be seen that this Court had held that simply because a person is a director of the company, it does not necessarily mean that he fulfils the twin requirements of Section 34(1) of the said Act so as to make him liable. It has been held that a person cannot be made liable unless, at the material time, he was in charge of and was also responsible to the company for the conduct of its business.
20. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was considering the question as to whether it was sufficient to make the person liable for being a director of a company under Section 141 of the Negotiable Instruments Act, 1881. This Court considered the definition of the word "director" as defined in Section 2(13) of the Companies Act, 1956. This Court observed thus:
"8. ....... There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company.
It happens that a person may be a director in a company, but he may not know anything about the day-to-day functioning of the company. As a director, he may be attending meetings of the Board of Directors of the company, where they usually decide policy matters and guide the course of business of the company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company, who may be ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 17 2025:HHC:28521 made responsible for the day-to-day functions of the company. These are matters which form part of the resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the .
role of a director in a company is a question of fact, depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company. ....."
21. It was held that merely because a person is a director of a company, it is not necessary that he is aware of the day-to-day functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary to aver as to how the director of the company was in charge of the day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.
22. In the case of Pooja Ravinder Devidasani v. State of Maharashtra (2014) 16 SCC 1, this Court observed thus:
"17. ...... Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that only those persons who were in charge of and responsible for the conduct of the business of the Company at the ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 18 2025:HHC:28521 time of the commission of an offence will be liable for criminal action. A Director, 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 an offence under Section 141 of the NI Act.
In National Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330: (2010) 1 SCC (Civ) 677: (2010) 2 SCC (Cri) 1113] this Court observed: (SCC p. 336, paras 13-14) "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 the 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."
(emphasis in original)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189: 1971 SCC (Cri) 279: AIR 1971 SC 2162], this Court observed that a person "in charge of a business" means that the person should be in overall control of the day-to-day business of the Company.
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19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the .
offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335: 1981 SCC (Cri) 453] ).
20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section 141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company.
21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581 (2007) 1 SCC (Cri) 621], it was held by this Court that: (SCC pp. 584- 85, para 7) "7. ... it is not necessary for the complainant to specifically reproduce the wordings of the section, but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused is vicariously liable.
Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for the 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." (emphasis supplied) ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 20 2025:HHC:28521 By verbatim reproducing the words of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable, is a ground for quashing proceedings initiated against .
such person under Section 141 of the NI Act."
23. It could thus clearly be seen that this Court has held that merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable.
24. A similar view has previously been taken by this Court in the case of K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48.
25. In the case of State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi v. Rajiv Khurana (2010) 11 SCC 469, this Court reiterated the position thus:
"17. The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is sought to be made an accused was in charge of the business of the company or responsible for the conduct of the company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of the business of the company and how and in what manner he is responsible or liable."
26. In the case of Ashoka Mal Bafna (supra), this Court observed thus:
"9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 21 2025:HHC:28521 Director of a defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of .
and responsible for the conduct of the business at the time of the commission of an offence will be liable for criminal action. (See Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1: (2015) 3 SCC (Civ) 384: (2015) 3 SCC (Cri) 378: AIR 2015 SC 675].)
10. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company."
27. A similar view has been taken by this Court in the case of Lalankumar Singh v. State of Maharashtra 2022 SCC OnLine SC 1383, to which one of us (B.R. Gavai, J.) was a party.
17. The Hon'ble Supreme Court held in Siby Thomas v.
Somany Ceramics Ltd., (2024) 1 SCC 348 that the primary responsibility to make the averment that the accused is in charge and responsible for the firm for its affairs lies upon the complainant in the absence of which the accused cannot be held liable. It was observed:
9. Bearing in mind the averments made in the complaint in relation to the role of the appellant and sub-section (1) of Section 141, we will have to appreciate the rival contentions. Going by the decision relied on by the respondent in the S.P. Mani case [S.P. Mani & Mohan ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 22 2025:HHC:28521 Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685: (2024) 1 SCC (Cri) 203] it is the primary responsibility of the complainant to make specific averments in the complaint, so as to make the accused vicariously liable.
.
Relying on para 58.2 of the said decision the learned counsel appearing for the respondent would also submit that the complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be and he relied on mainly the following recitals thereunder: (SCC p. 716, para 58) "58. ... 58.2. The complainant is supposed to know only generally as to who was in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such r circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm."
10. We are of the considered view that the respondent has misread the said decision. Under the sub-caption "Specific averments in the complaint", in para 51 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] and paras 34.1 and 34.4 of Gunmala Sales case [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580] as also in para 52 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203], it was held in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] thus : (SCC pp. 714-715, paras 51-52) "51. In Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580], this Court after an exhaustive review of its earlier decisions on Section 141 of the NI Act, summarised its conclusion as under : (SCC pp. 126-27, para 34) ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 23 2025:HHC:28521 '34. ... 34.1. Once in a complaint filed under Section 138 read with Section 141 of the NI Act, the basic averment is made that the Director was in charge of and responsible for .
the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue a process against such Director.
34.2.-
34.3. * * * 34.4. No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed r formulae to be followed by the High Court in this regard, and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini-trial or roving inquiry, but nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.'
52. The principles of law and the dictum as laid in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580], in our opinion, still holds the field and reflects the correct position of law.
11. In the light of the afore-extracted recitals from the decision in Gunmala Sales (P) Ltd. v. Anu Mehta [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 : (2015) 1 SCC (Cri) 580], quoted with agreement in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] and in view of sub-section (1) of Section 141 of the NI Act, it ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 24 2025:HHC:28521 cannot be said that in a complaint filed under Section 138 read with Section 141 of the NI Act to constitute basic averment it is not required to aver that the accused concerned is a person who was in charge of and .
responsible for the conduct of the business of the company at the relevant time when the offence was committed. In para 53 of S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685:
(2024) 1 SCC (Cri) 203], it was held thus: (SCC p. 715) "53. In the case at hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued to the respondent."
It is thereafter that in the decision in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685: (2024) 1 SCC (Cri) 203] in para 58.1 it was held that the primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable.
12. Bearing in mind the afore-extracted recitals from the decisions in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580] and S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203], we have carefully gone through the complaint filed by the respondent. It is not averred anywhere in the complaint that the appellant was in charge of the conduct of the business of the company at the relevant time when the offence was committed. What is stated in the complaint is only that Accused 2 to 6, being the partners, are responsible for the day-to-day conduct and business of the company. It is also relevant to note that an overall reading of the complaint would not disclose any clear and specific role of the appellant.
18 This position was reiterated in K.S. Mehta v. Morgan Securities & Credits (P) Ltd., 2025 SCC OnLine SC 492, wherein it was observed:
::: Downloaded on - 25/08/2025 21:24:49 :::CIS 252025:HHC:28521 "16. 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.
16.1. This Court in National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 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 conduct of its business. This is in consonance with the 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 ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 26 2025:HHC:28521 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 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 a 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 a 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."
16.2. In N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481, this Court in Para 8 observed:
"To launch a prosecution 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 a 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 ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 27 2025:HHC:28521 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 the complaint would not be .
entertainable."
16.3. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89, this Court laid down that mere designation as a director is not sufficient; specific role and responsibility must be established in the complaint.
16.4. In Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1, 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.
16.5. In Ashok Shewakramani v. State of Andhra Pradesh, (2023) 8 SCC 473, this Court held:
"8. 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 the Accused No. 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."
16.6. In Hitesh Verma v. Health Care At Home India Pvt. Ltd., Crl. Appeal No. 462 of 2025, this Court held:
::: Downloaded on - 25/08/2025 21:24:49 :::CIS 282025:HHC:28521 "4. 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 who 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...."
5. 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."
19. Therefore, the complainant should not only aver that the accused is in charge but also that he is responsible to the Company for its affairs.
20. In the present case, the averments contained in paragraphs 14 and 22 of the complaint are reproduced as under:-
"14. That the accused nos. 2 to 8 are office bearers of the Management Committee of accused no.1.::: Downloaded on - 25/08/2025 21:24:49 :::CIS 29
2025:HHC:28521 xxxx
22. That the accused no. 2 to 8 are office bearers of the Management Committee of accused no.1. According to the latest Audited Report for the year .
2019-2020 of the said society and they are persons responsible for the conduct of business of accused no.1 and the said cheque was issued at their behest and with their knowledge, consent and connivance to the complainant."
21. It is apparent from these averments that there is no mention that the petitioner is in charge and responsible for the affairs of the society.
r It only mentions that the petitioner is responsible for the conduct of the business of accused No.1, which is distinct from the petitioner being in charge and responsible for the affairs of the society. Therefore, the averments do not satisfy the requirement of Section 141 of the NI Act.
22 In the present case, the complaint does not show that the cheque was issued at the behest of the present petitioner with his knowledge, consent and connivance. Para 3 of the complaint mentions that the accused No. 1 had opened a Branch.
Para-6 reads that accused Nos 2 and 6 visited the office and expressed their desire to vacate the premises. Para-7 reads that the complainant demanded payment from them, and accused ::: Downloaded on - 25/08/2025 21:24:49 :::CIS 30 2025:HHC:28521 Nos 2 and 6 issued a post-dated cheque, which was signed by them. These averments show that the cheque was issued at the .
instance of the accused no. 2 & 6, who had visited Theog. There is nothing in the complaint that the present petitioner was present at Theog, that the other accused had talked to him telephonically to obtain his consent, or that accused 2 and 6 had shown any letter written by the present petitioner authorising them to issue the cheque; therefore, the mere bald reproduction of Section 141 of the NI Act will not help the complainant.
23. It was submitted that an Administrator was appointed to regulate the society, and notice was issued after the appointment of the Administrator; therefore, the offence punishable under Section 138 of the NI Act has not been committed. It is unnecessary to adjudicate this plea because the petitioner has succeeded on the ground that the necessary averments to implicate him are missing. Any adjudication of this question will affect the other accused, and in the absence of any challenge to the summoning order by them, it will be prejudicial to their interest to adjudicate this question. Hence, this question is left open to be decided in an appropriate case.
::: Downloaded on - 25/08/2025 21:24:49 :::CIS 312025:HHC:28521
24. Thus, the present complaint does not contain the necessary averments to summon the present petitioner as an .
accused, and the learned Trial Court erred in summoning him.
Hence, the present petition is allowed, and the complaint pending before the learned Additional Chief Judicial Magistrate, Theog, H.P., is ordered to be quashed qua the present petitioner.
A copy of this judgment be sent to the concerned court for information.
25. to The observations made hereinbefore shall remain confined to the disposal of the petition and will have no bearing, whatsoever, on the merits of the case.
26. The present petition stands disposed of, and so are the pending miscellaneous applications, if any.
(Rakesh Kainthla) Judge 22nd August 2025 (ravinder) ::: Downloaded on - 25/08/2025 21:24:49 :::CIS