Advocates appeared:
For the Appellant(s) : Mr. Chander Uday Singh, Sr. Adv. Mr. Rohan Thawani, Adv. Mr. Rohan Thawni, Adv. Ms. Vandana Sehgal, AOR Ms. Pooja Dhar, Adv. Ms. Aakriti Vikas, Adv. Mr. Pratul Pratap Singh, Adv. Ms. S. Ambica, Adv.
For the Respondent(s): Mr. Mahfooz Ahsan Nazki, AOR Mrs. Polanki Gowtham, Adv. Mr. Polanki Gowtham, Adv. Mr. T Vijaya Bhaskar Reddy, Adv. Ms. Niti Richhariya, Adv. Ms. Rajeswari Mukherjee, Adv. Mr. Meeran Maqbool, Adv. Mr. M. Vijaya Bhaskar, AOR Mr. G. N. Reddy, AOR Mr. Vedurumudi Vishnoo C Kashyap, Adv. Mr. D. Bharat Kumar, Adv. Mr. Aman Shukla, Adv. Mr. M. Chandrakanth Reddy, Adv. Mr. Abhijit Sengupta, AOR

What is the standard for vicarious liability under Section 141 NI Act when a director signs a cheque but is not a signatory of the instrument? What are the required averments under Section 141(1) NI Act to hold directors in charge of and responsible for the conduct of the company for offence under Section 138 NI Act? What is the remedy when the complaint lacks the essential ingredients of Section 141(1) NI Act and/or service of notice under Section 138 NI Act?

Key Points: - The Supreme Court held that merely being a director or in charge of day-to-day affairs is not enough; the person must be in charge of and responsible for the conduct of the business of the company at the time of the offence. (!) (!) (!) - The complaint must specifically aver that the accused was in charge of and responsible to the company for the conduct of the business, not just generally liable for transactions; non-compliance leads to quashing under Section 482 CrPC for those appellants. (!) (!) - In several appeals, the Court quashed the complaint against directors where the cheques were signed by others (e.g., Managing Director) and not by the directors themselves, finding lack of Section 141(1) compliance. (!) (!) (!) (!) - The service of demand notice under Section 138 NI Act is a condition precedent for filing a complaint; failure to serve it can render the complaint defective. (!) - The Court reiterated that vicarious liability under Section 141 is an exception to the general rule and requires strict averments of a director’s in-charge-and-responsible status. (!) (!) - Appeals were allowed and complaints quashed insofar as the appellants were concerned where the prerequisites of Section 141(1) were not met. (!) (!) (!) - Cheques were signed by the Managing Director rather than the directors, reinforcing that not all directors can be held liable without proper Section 141(1) compliance. (!) (!)

What is the standard for vicarious liability under Section 141 NI Act when a director signs a cheque but is not a signatory of the instrument?

What are the required averments under Section 141(1) NI Act to hold directors in charge of and responsible for the conduct of the company for offence under Section 138 NI Act?

What is the remedy when the complaint lacks the essential ingredients of Section 141(1) NI Act and/or service of notice under Section 138 NI Act?