NATIONAL HOUSING BANK versus BHERUDAN DUGAR HOUSING FINANCE LTD. & ORS. ETC.

Citation: [2024] 8 S.C.R. 1 · Decided: 01-08-2024 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Case Partly allowed

Judgment (excerpt)

[2024] 8 S.C.R. 1 : 2024 INSC 566
National Housing Bank 
v. 
Bherudan Dugar Housing Finance Ltd. & Ors. Etc.
(Criminal Appeal No. 3176-3177 of 2024)
01 August 2024
[Abhay S. Oka* and Augustine George Masih, JJ.]
Issue for Consideration
On a complaint filed u/s. 200 CrPC, wherein the Magistrate took 
cognizance of the complaint for the offence u/s. 29A (i) read with 
s. 50 and punishable u/s. 49 (2A) of the 1987 Act against the first 
respondent-company, second accused-Managing director and other 
five accused as directors, whether the High Court was justified in 
quashing the complaint in its entirety, holding that the requirements 
of sub-Section (1) of s. 50 of the 1987 Act are similar to the 
requirements incorporated in s. 141 of the Negotiable Instruments 
Act, 1881, which were not complied with by the complainant.
Headnotes†
National Housing Bank Act, 1987 – ss. 29A rw s. 50 – Offence 
by companies – Vicarious liability of the Directors – Averment 
in the complaint, if essential requirement – Magistrate 
taking cognizance of the complaint for the offence u/s. 29A 
(i) rw s. 50 and punishable u/s. 49 (2A) against the first  
accused-company, second accused-Managing director and 
other five accused as directors – High Court quashed the 
complaint in its entirety – Justification:
Held: Unless assertions, as required by sub-section (1) of s. 50, 
are made, vicarious liability of the Directors of the first accused 
company not attracted – No assertions made that the second to 
seventh accused, at the time of the commission of the offence, 
were in charge of, and responsible to the first accused company for 
the conduct of its business – In the absence of the averments, the 
trial court could not have taken cognizance of the offence against 
the third to seventh accused, who are allegedly the directors of 
the first accused company – However, the second accused being 
the Managing Director, would be in charge of the company and 
responsible to the company for its business, thus, no justification 
* Author
2
[2024] 8 S.C.R.
Digital Supreme Court Reports
for quashing the complaint against the second accused – First 
respondent is a company – No reasons have been assigned to 
quash the complaint against the first accused – Impugned order 
is modified – Complaint quashed as against the third to seventh 
accused, however, the complaint to proceed against the first and 
second accused. [Paras 6, 8, 9]
Case Law Cited
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. [2005] 
Suppl. 3 SCR 371 : (2005) 8 SCC 89 – referred to.
List of Acts
Code of Criminal Procedure, 1973; National Housing Bank Act, 
1987; Negotiable Instruments Act, 1881.
List of Keywords
Offence by companies; Vicarious liability of the Directors; 
Averment in the complaint; Quashing of the complaint.
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos. 
3176-3177 of 2024
From the Judgment and Order dated 12.07.2017 of the High Court of 
Judicature at Madras in CROP Nos. 1593 and 10570 of 2011
Appearances for Parties
Navin Prakash, Adv. for the Appellant.
Dr. Joseph Aristotle S, Sr. Adv., Ms. Priya Aristotle, Ms. Nikita Patra, 
Ashish Yadav, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Abhay S. Oka, J.
FACTS
1.	
The appellant filed a complaint under Section 200 of the Code of 
Criminal Procedure, 1973, alleging the commission of an offence of 
violating the provisions in Section 29A of the National Housing Bank 
[2024] 8 S.C.R. 
3
National Housing Bank v.  
Bherudan Dugar Housing Finance Ltd. & Ors. Etc.
Act, 1987 (for short, the ‘1987 Act’). The learned Magistrate took 
cognizance of the complaint for the offence under Section 29A (i) read 
with Section 50 and punishable under Section 49(2A) of the 1987 
Act. Section 49(2A) provides for a minimum sentence of one year, 
which may extend to five years. For convenience, we will refer to the 
parties as per their status before the Trial Court. The first accused is 
a company. The second accused was described in the complaint as 
the Managing Director of the first accused company, and the other five 
accused were described as the Directors. By the impugned judgment, 
the High Court has proceeded to quash the complaint in its entirety. 
The High Court held that the requirements of sub-Section (1) of Section 
50 of the 1987 Act are similar to the requirements incorporated in 
Section 141 of the Negotiable Instruments Act, 1881 (for short, ‘the 
NI Act’), which wer

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