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SUPREME COURT OF INDIA
A.S. OKA, UJJAL BHUYAN, JJ.
Hitesh Verma - Appellant
Versus
M/s Health Care at Home India Pvt. Ltd. - Respondent
Crl. A. No(S).462 of 2025 & connected cases (Arising out of S.L.P. (Criminal) No(S).8368/2019)
Decided on : 29-01-2025
Key Points: - The appellant, not being a signatory to the cheque, cannot be held liable under Section 138 unless the requirements of Section 141 are met. (!) - For vicarious liability under Section 141(1), a complaint must allege that at the time of the offence the person was in charge of and responsible to the company for the conduct of its business; both ingredients are required. (!) - There must be a specific allegation that the accused was in charge of the business at the time of the offence; absence of this defeats prosecution under Section 138 via Section 141. (!) - The court held that the impugned orders taking cognizance are set aside as against the appellant (accused no.3) for lack of required allegations under Section 141(1). (!) - The Appeals are allowed on the stated terms, leaving merits of the complaints to be decided by the Trial Court. (!)
ORDER :
1. Leave granted.
2. Heard the learned counsel appearing for the parties.
3. The appellant is arraigned as accused no.3 in the complaints filed by the first respondent under Section 138 of the Negotiable Instruments Act, 1881 (for short, “the 1881 Act”). Admittedly, the appellant is not a signatory to the cheque. Paragraphs 4 and 5 of the complaints subject-matter of these Appeals are similar which read thus:
5. It is stated that the Accused No.2 and Accused No.3 are the Directors and Authorized Signatories of the Accused No.1 and are solely responsible for the day to day business activities and operations of Accused No.1. It is pertinent to note that the Accused No.2 under instructions and direction from the Accused No.3 had signed the Cheque being no.214804 on behalf of the Accused No.1 in discharge of the legal liability arising out of the Invoice bearing no.DEL/18- 19/0624 dated 31.08.2018.”
4. As the appellant is not a signatory to the cheque, he is not liable under Section 138 of the 1881 Act. As it is only the signatory to the cheque is liable under Section 138, unless the case is brought within the four corners of Section 141 of the 1881 Act, no other person can be held liable. Section 141 reads thus:
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section, —
(a) “company” means any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.”
5. There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingred
A non-signatory director cannot be held liable under Section 138 of the Negotiable Instruments Act unless the complaint alleges their responsibility for the company's conduct at the time of the offen....
A Company Secretary, who is not involved in the day-to-day affairs of the company and is not responsible for the conduct of its business, cannot be held criminally liable for a dishonored cheque issu....
A non-signatory to a cheque cannot be prosecuted under Section 138 of the Negotiable Instruments Act for cheque bounce, as liability is limited to the cheque's drawer.
Independent Directors - In case of Director or an officer of company, who signed cheque on behalf of company, there is no need to make a specific averment that, he was in charge of and was responsibl....
A director's liability for dishonored cheques under the Negotiable Instruments Act is contingent upon their active management role at the time of issuance.
A complaint under Section 138 must contain specific averments to establish vicarious liability; mere title or position is insufficient for liability. Absence of allegations against an accused leads t....
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