SAROJ KUMAR PODDAR versus STATE (NCT OF DELHI) & ANR.

Citation: [2007] 1 S.C.R. 907 · Decided: 16-01-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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t 
J 
SAROJKUMARPODDAR 
A 
v. 
STATE (NCT OF DELHI) & ANR. 
JANUARY 16,2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B 
Negotiable Instruments Act; ss. 138 and I 4 I: 
Dishonour of Cheque-Vicarious liability of director for commission 
of offences on the part of a Company-Held: Director liable only in the 
event condition precedent therefor in s. I 41 of the Act satisfied-Cheques 
C 
in question not issued by appellant/director-No averments made in the 
complaint petition as to the manner, he was responsible for the conduct 
of business of company-Specific allegation requires to be made against 
the Director to make him vicariously liable in terms of provisions of law 
-Al/egationlaverments in the petition do not disclose any offence as 
against the appellant, Director-Proceedings against him, therefore, should 
D 
have been quashed by High Court-Hence impugned judgment cannot be 
sustained and set aside. 
Respondent no. 2, a manufacturer supplied its product to a Company. 
Allegedly, a sum of Rs. 13,36,923 was due and payable to respondent no.2 
by the Company. The Company issued three cheques in favour of the 
complainant. The cheques were dishonoured. A complaint petition came to 
be filed by respondent no.2 against the Company, Managing Director and 
other directors, including the appellant. Cognizance was taken against the 
appellant and other accused persons. Applications for quashing the orders 
taking cognizance of the offence in the complaint petitions were filed by the 
appellant before the High Court, which were dismissed by it. Hence the 
present appeal. 
Appellant contended that the averments made in complaint petitions 
even if given face value and taken to be correct in their entirety they do 
not constitute an offence as against the appellant in terms of Section 141 
of the Negotiable Instruments Act; and that in any event, the appellant 
having resigned from the directorship of the Company, the complaint 
petitions as against him were not maintainable. 
Respondents submitted that the appellant had not disclosed as to when 
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908 
SUPREME COURT REPORTS 
[2007) 1 S.C.R 
A 
the resignation purported to have been submitted by him was accepted by 
the Company and in that view of the matter the complaint petitions were 
maintainable. 
Allowing the appeal, the Court 
B 
HELD: 1.1. A person would be vicariously liable for commission of an 
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offence on the part of a Company only in the event the conditions precedent 
laid down therefor in Section 141 of the Act stand satisfied. 
[Para 10) [912-D) 
1.2. Apart from the Company and the appellant, the Managing Director 
and all other Directors were also made accused. The appellant did not issue 
any cheque. He had resigned from the directorship of the Company. It may 
be true that as to exactly on what date the resignation was accepted by the 
Company is not known, but, even otherwise, there is no averment in the 
complaint petitions as to how and in what manner the appellant was 
responsible for the conduct of the business of the Company or otherwise 
responsible to it in regard to its functioning. He had not issued any cheque. 
How he is responsible for dishonour of the cheque has not been stated. The 
allegations so made, thus, do not satisfy the requirements of Section 141 
of the Act. [Para 12) [912-G-H, 913-A-B) 
1.3. Allegations to satisfy the requirements of Section 138 of the Act 
might have been made in the complaint petition but the same principally 
relate to the purported offence made by the Company. With a view to make 
a Director of a Company vicariously liable for the acts of the Company, it 
was obligatory on the part of the complainant to make specific allegatio~s 
as are required in law. [Para 13) [913-C) 
2. The alJegations made in the complaint petitions even if are taken 
to be correct in their entirety do not disclose any offence as against the 
appellant. The proceedings against him, thus, should have been quashed by 
the High Court. The impugned judgment, therefore, cannot be sustained 
which is set aside accordingly. [Para 16) [915-GJ 
S.MS. Pharmaceuticals Ltd. v. Neeta Bhalla and Another, [2005) 8 
SCC 89 and Sabitha Ramamurthy & Anr. v. R.B.S. Channabasavaradhya, 
(2006) 9 SCALE 212, relied on. 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 70 of 
H 
2001. 
' 
SAROJ KUMAR PODDAR v. STATE (NCT OF DELHI) [SINHA, J.] 909 
From the common final Judgment and Order dated 27-7-2006 of 
the High Cou

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