LexCENTRAL BANK OF INDIA versus M/S. ASIAN GLOBAL LTD. & ORS.
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A B [2010] 7 S.C.R. 694 CENTRAL BANK OF INDIA v. MIS. ASIAN GLOBAL LTD. & ORS. (Special Leave Petition (Crl.) No. 5093 of 2008) JULY 6, 2010 [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.] Negotiable Instruments Act, 1881: c ss. 138, 139 and 141 - Prosecution of companies and their Directors - Vicarious liability of Directors - HELD: Unless a specific averment has been made in the complaint that when the offence was committed, the person accused was in charge of and responsible for the conduct of business of 0 the company, the requirements of s. 141 would not be satisfied -· Merely being a Director would not make a person vicariously liable - For launching prosecution uls 138 rlw s.141 against Directors of a company, there has to be a specific allegation in the complaint as to the role played by E them in the transaction in question - In the instant case, High Court has rightly held that in the absence of any specific charge against the accused, the complaint was liable to be quashed and they were entitled to be discharged - Code of Criminal Procedure, 1973 - ss.245(2) and 482. F Respondent no. 1-Company was availing packing credit facility and overdraft facility from the petitioner Bank. When the account of respondent no. 1 was alleged to have become irregular, respondent no. 3, a sister concern of respondent no. 1, gave corporate guarantee __ G for due payment of the outstanding dues of respondent no. 1, and issued a cheque in its favour. When the cheque was presented for encashment, the same was dishonoured. The petitioner Bank filed a complaint against both the Companies, and their Directors as also H 694 CENTRAL BANK OF INDIA v. ASIAN GLOBAL LTD. & 695 ORS. against the Joint Managing Director of respondent no.1, A · and some other persons alleging commission of the offences punishable u/ss 138 and 139 of the Negotiable Instruments Act, 1881 r/w ss. 120-B and 420 IPC. Summonses were issued to the accused, whereupon they filed an application u/s 245(2) CrPC praying for recall B of the order issuing the summonses and for their consequent discharge from the criminal proceedings on the ground that there was no privity of contract between the petitioner Bank and respondent no. 3. The trial court rejected the application, but the High Court allowed the c petition filed by the respondents u/s 482 CrPC. Aggrieved, the Bank filed the petitions for special leave to file the appeal. Dismissing the petitions, the Court HELD: 1.1. This Court in the case of S.M.S. D Pharmaceuticals Ltd.* while interpreting the provisions of sub-s. (1) of s.141 of the Negotiable Instruments Act, 1881, made it very clear that unless a specific averment was made in the complaint that at the time when the offence E was committed, the person accused was in charge of and ~sponsible for the conduct of the business of the Company, the requirements of s. 141 would not be satisfied. It was further held that while a Managing Director or a Joint Managing Director of the Company F would be admittedly in charge of the Company and responsible to the Company for the conduct of its business, the same yardstick would not apply to a Director. In the case of N.K. Wahi**, while considering the question of vicarious liability of a Director of a Company, G this Court held that merely being a Director would not make a person liable for an offence that may have been committed by the Company. For launching a prosecution against the Directors of a Company u/s 138 r/w s.141 of the .,.1:881 Act, there had to be a specific allegation in the H 696 SUPREME COURT REPORTS [2010] 7 S.C.R, A complaint in regard to the part played by them in the transaction in question. [para 13-14] [701-B-G] *S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla & Anr. 2005 (3) Suppl. SCR 371 = (2005) 8 sec 89; **N.K. Wahi B vs. Shekhar Singh & Ors. 2007 (3) SCR 883 = (2007) 9 SCC 481, relied on. 1.2. In the instant case, save and except for the statement that the respondents 'RJ and 'SJ' and some of the other accused were Directors of the accused C Companies and were responsible and liable for the acts of the said Companies, no specific allegation has been made against any of them nor has any other material been disclosed in the complaint to make out a case against the respondents that they had been in charge of D the affairs of the Company and were responsible for its action at the relevant time. The question of pr
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