SUNITA PALITA & OTHERS versus M/S PANCHAMI STONE QUARRY

Citation: [2022] 14 S.C.R. 458 · Decided: 01-08-2022 · Supreme Court of India · Bench: INDIRA BANERJEE · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 14 S.C.R.
[2022] 14 S.C.R. 458
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SUNITA PALITA & OTHERS
v.
M/S PANCHAMI STONE QUARRY
(Criminal Appeal No. 1105 of 2022)
AUGUST 01, 2022
[INDIRA BANERJEE AND J. K. MAHESHWARI, JJ.]
Code of Criminal Procedure, 1973: s.482 – Quashing of
proceedings – Dishonour of cheque – Account Payee Cheque signed
by accused no. 2, who was M.D. of the Company in favour of
respondent in discharge of liability – On dishonour of cheque,
respondent filed complaint u/s.138 r/w s.141 of NI Act – In the
complaint, appellants who were independent/non-executive director
were impleaded as accused no. 3 to 5 – Appellants unsuccessfully
filed application in High Court u/s.482 praying that the proceeding
be quashed – Hence instant appeal – Held: Jurisdiction u/s.482
must be exercised if the interest of justice so requires – High Court
failed to appreciate that none of these appellants were Managing
Director or Joint Managing Director of the Accused Company –
Nor were they signatories of the cheque which was dishonoured –
A Director of a company who was not in charge or responsible for
the conduct of the business of the company at the relevant time, will
not be liable u/s.139 r/w. 141 of NI Act – The materials on record
clearly show that these appellants were independent, non-executive
Directors of the company – High Court adopted a hyper technical
approach in rejecting the application u/s.482 – High Court erred
in law in not exercising its jurisdiction u/s.482 in the facts and
circumstances of this case to grant relief to the appellants –
Companies Act, 2013 – ss.2(47), 149 and 150 – Negotiable
Instrument Act, 1881 – ss. 139,141.
Allowing the appeal, the Court
HELD: 1. Section 482 of the Cr.P.C. protects the inherent
power of the High Court to make such orders as may be necessary
to give effect to any order under the Cr.P.C or to prevent abuse
of the process of any Court or otherwise secure the ends of
justice. While it is true that inherent jurisdiction under Section
482 should be exercised sparingly, carefully and with caution and
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only when such exercise is justified by the tests specially laid
down in the Section, the Court is duty bound to exercise its
jurisdiction under Section 482 of the Cr.P.C. when the exercise
of such power is justified by the tests laid down in the said Section.
Jurisdiction under Section 482 of the Cr.P.C. must be exercised
if the interest of justice so requires. [Paras 34 and 35][473-G-H;
747-A-B]
2. The High Court failed to appreciate that none of these
Appellants were Managing Director or Joint Managing Director
of the Accused Company. Nor were they signatories of the cheque
which was dishonoured. As held by this Court in, inter alia, S.M.S.
Pharmaceuticals Ltd., the liability under Section 138/141 of the
NI Act arises from being in charge of and responsible for the
conduct of the business of the company at the relevant time when
the offence was committed, and not on the basis of merely holding
a designation or office in a company. It would be a travesty of
justice to drag Directors, who may not even be connected with
the issuance of a cheque or dishonour thereof, such as Director
(Personnel), Director (Human Resources Development) etc. into
criminal proceedings under the NI Act, only because of their
designation. [Paras 38 and 42][474-E-F; 475-E-G]
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8
SCC 89 : [2005] 3 Suppl. SCR 371 – followed.
3. Liability depends on the role one plays in the affairs of a
company and not on designation or status alone. The materials
on record clearly show that these Appellants were independent,
non-executive Directors of the company. A non-Executive
Director is not involved in the day-to-day affairs of the company
or in the running of its business. Such Director is in no way
responsible for the day-to-day running of the Accused Company.
Moreover, when a complaint is filed against a Director of the
company, who is not the signatory of the dishonoured cheque,
specific averments have to be made in the pleadings to
substantiate the contention in the complaint, that such Director
was in charge of and responsible for conduct of the business of
the Company or the Company, unless such Director is the
designated Managing Director or Joint Managing Director who
SUNITA PALITA & OTHERS v. M/S PANCHAMI STONE
QUARRY
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SUPREME COURT REPORTS
[2022] 14 S.C.R.
would obviously be responsible for the company and/o

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