LexN.K. WAHI versus SHEKHAR SINGH AND ORS.
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N.K. WAHi v. SHEKHAR SINGH AND ORS. MARCH 9, 2007 [DR.ARIJITPASAYAT ANDLOKESHWARSINGHPANTA,JJ.] Negotiable Instruments Act, 1881-ss. 138 and 141-Dishonour of cheque-Issued by a Company- Complaint-Against the company and also A B its Directors-No specific allegation against the Directors-Quashing of C proceedings by High Court-On appeal, held:. Proceedings rightly quashed- To launch prosecution against the Directors, there must be specific allegation against them- Merely being Director of a Company would not attract applicability of s. 141-Code of Criminal Procedure, 1973-s. 482. Appellant filed a complaint under Sections 138 and 141 of Negotiable D Instruments Act, 1881 against a Company and its Directors-respondents. It took the plea that the respondents were jointly and severely liable being the Directors of the Company. Respondents filed application for dropping the proceedings on the grounds that they were not Directors of the Company at the relevant time and that there was no specific allegation against them in terms of Section 141. The application was dismissed. Respondents then filed E application under Section 482 Cr.P.C. for quashing the proceedings. High Court quashed the proceedings. Hence the present appeals. Dismissing the appeals, the Court HELD: I. Section 141 (l) of Negotiable Instruments Act, 1881 clearly F shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the company is not liable. Only such person would be held liable if at the time when offence is committed he was in charge and was responsible to the company for the conduct of the business of the company as well as the company. Merely being G a Director of the company in the absence of above factors will not make him liable. (Para 8) (886-C-D] 2. 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 883 II 884 SUPREME COURT REPORTS (2007] 3 S.C.R. A transaction. There should be clear and unambiguous allegation as to how the Directors are incharge and responsible for the conduct of the business of the company. It is true that precise words from the provisions of the Act need not be reproduced and the court can always come to a conclusion in facts of each case. But still in the absence of any averment or specific evidence the B net result would be that complaint would not be entertainable. [Para 9) [886-E) S.M.S. Pharmaceuticals Ltd v. Neeta Bhalla and Anr., [20051 8 SCC 89; Sabitha Ramamurthy and Anr. v. R.B.S. Channabasavaradhya and Anr., (2006) 9 SCALE 212 and Saroj Kumar Poddar v. State NCT of Delhi and Anr., C JT (2007) 2 SC 233, relied on. CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos. 83-85 of2004. From the Judgment and Order dated 7.8.2002 of the High Court of Delhi at New Delhi in Criminal Misc. (Main) Nos. 787/2001 & 789/2001 & Crl. R. No. D 41512002. Rajeev Sharam for the Appellant. Ashok Bhan, Varona Bhandari, Gugnani, D.S. Mabra, Jayshree Wad, Ashish Wad, Neeraj Kumar, Chirag Dave for J.S. Wad & Co. B.L. Wali, E Shankar Divate for the Respondents. The Judgment of the Court was delivered by DR. ARIJIT PASAYAT, J. I.Challenge in this appeal is to the order passed by a learned Single Judge of the Delhi High Court, allowing the three applications filed by the respondents for quashing the order passed by the F learned Metropolitan Magistrate, New Delhi, on 25th November, 2000. G 2. Background facts in nutshell are as under: 3. Appellant presented a criminal complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (in short the 'Act') in the Court of Metropolitan Magistrate, New Delhi. It was pleaded that Mis Western India Industries Ltd. is a limited company and the respondents and some others were the Directors/persons responsible for carrying on the business of the company and the liability of these persons is joint and several. It was stated that certain cheques had been issued by the company H which were dishonored on being presented. After giving the necessary -~ N.K. WAHlv. SHEKHARSINGH [PASAYAT.J.) 885 notice the complaint was filed. The respondents filed an application for A dropping the proceedings stating that they were not Directors of the company and further there was no allegation against them in terms of Section 141 of the Act and as su
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