LexHDFC BANK LIMITED versus STATE OF MAHARASHTRA AND ANR.
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[2025] 5 S.C.R. 2162 : 2025 INSC 759 HDFC Bank Limited v. State of Maharashtra and Anr. (Criminal Appeal No. 2843 of 2025) 22 May 2025 [Manoj Misra and K.V. Viswanathan,* JJ.] Issue for Consideration Issue arose whether the High Court was justified in quashing the complaint insofar as respondent no.2-director of the company on the ground that necessary averments to invoke the vicarious liability against the respondent no.2 u/s.141 NI Act were lacking. Headnotes† Negotiable Instruments Act, 1881 – ss.141, 138 – Offence by companies – Vicarious liability – Necessary averments – Accused no.1 company along with respondent no.2 and other two directors approached the appellant-complainant for grant of credit facility for the working capital requirements – However, the accused failed to repay the outstanding dues – Cheque was issued but was dishonored – Criminal proceedings u/s.138 against the company and its directors – High Court quashed the same on the ground that there were no sufficient averments in the complaint filed by the appellant to invoke the vicarious liability against the respondent no.2 u/s.141 – Justification: Held: High Court completely unjustified in quashing the proceedings against respondent No.2 – Repetition of the exact words of the Section in the same order, like a mantra or a magic incantation is not the mandate of the law – What is mandated is that the complaint should spell out that the accused sought to be arrayed falls within the parameters of s.141(1) – Only then could vicarious liability be inferred against the said accused, so as to proceed to trial – Substance will prevail over form – Administrative role of each director would be within the special knowledge of the company or the director of the firm and it is for them to establish that they were not in charge of the affairs of the company – Submission for the respondent No.2 that the specific role attributed to the directors * Author [2025] 5 S.C.R. 2163 HDFC Bank Limited v. State of Maharashtra and Anr. should be set out in the complaint does not merit acceptance – Complainant is supposed to know only generally as to who are in charge of the affairs of the company – There is no obligation on the complainant to plead in the complaint as to matters within the special knowledge of the company or the directors or firm about the specific role attributed to them in the company – Averments in the complaint set out against the respondent No.2 fulfill the requirement of s.141(1), and this is not a case where trial against her can be aborted by quashment of proceedings – Judgment of the High Court set aside. [Paras 34, 38, 39] Case Law Cited S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another [2005] Supp. 3 SCR 371 : (2005) 8 SCC 89 – relied on. Siby Thomas v. Somany Ceramics Limited [2023] 13 SCR 821 : (2024) 1 SCC 348 – distinguised. Monaben Ketanbhai Shah and Another v. State of Gujarat and Others [2004] Supp. 3 SCR 411 : (2004) 7 SCC 15; Sabitha Ramamurthy and Another v. R.B.S. Channabasavaradhya [2006] Supp. 6 SCR 126 : (2006) 10 SCC 581; A.K. Singhania v. Gujarat State Fertilizer Company Limited and Another [2013] 9 SCR 1069 : (2013) 16 SCC 630; Ashok Shewakramani and Others v. State of Andhra Pradesh and Another (2023) 8 SCC 473; Ashutosh Ashok Parasrampuriya and Another v. Gharrkul Industries Private Limited and Others (2023) 14 SCC 770; S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan [2022] 9 SCR 634 : (2023) 10 SCC 685; K.K. Ahuja v. V.K. Vora and Another [2009] 9 SCR 1144 : (2009) 10 SCC 48; National Small Industries Corporation Limited v. Harmeet Singh Paintal and Another [2010] 2 SCR 805 : (2010) 3 SCC 330 – referred to. Books and Periodicals Cited P. Ramanatha Aiyar’s Advanced Law Lexicon – referred to. List of Acts Negotiable Instruments Act, 1881. List of Keywords Quashing the complaint; Director of the company; Necessary averments; Vicarious liability; Grant of credit facility for the working 2164 [2025] 5 S.C.R. Supreme Court Reports capital requirements; Repay the outstanding dues; Cheque dishonored; Criminal proceedings; Administrative role of each director; Special knowledge of the company. Case Arising From CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2843 of 2025 From the Judgment and Order dated 10.01.2024 of the High Court of Judicature at Bombay in CRLWP NO. 275 of 2022 Appearances for Parties Advs. for the Appellant: Arvind Nayar, Sr. Adv., Asav R
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