IMPORTANT POINT
Vicarious liability of Directors under Section 138 NI Act depends on their actual role in the company's affairs, and strict interpretation of the provision is necessary.

JUDGMENT (Oral)

1. By way of present petition filed under Section 482 Cr.P.C., the petitioner seeks to assail the summoning order dated 24.02.2020 passed by learned M.M. in Complaint Case No. 1538/2020 initiated under Section 138 read with Section 142 of the Negotiable Instrument Act, 1881 (for short, the `NI Act').

2. Facts, as available from the records, are that the parties were having business relations since April, 2017. It was further claimed that from time to time, respondent No.1/Rachna Sarees supplied fabric clothes to Manglam Embroideries Pvt. Ltd./accused company on credit basis. Subsequently, to repay the dues of Rs.8 lacs, eight cheques for Rs.1 lac each were issued. However, on presentation, the cheques were returned dishonoured with the remarks `funds insufficient' vide return memo dated 09.12.2019. Subsequently, a demand notice was issued to the petitioner as well as the accused company, however upon their failure to discharge the liability, the subject complaint came to be filed.

3. Present petition is premised on the ground that though in the criminal complaint, respondent has impleaded the petitioner as Director of the accused company, however, the petitioner is neither the director nor the authorised signatory of the accused company. Consequently, the petitioner has denied having any vicarious liability to make any payment.

4. The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra. In S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla & Anr., (2005) 8 SCC 89, the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability. The relevant extract of the said judgement reads as under:

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8. The officers responsible for conducting the affairs of companies are generally referred to as directors, managers, secretaries, managing directors, etc. What is required to be considered is: Is it sufficient to simply state in a complaint that a particular person was a director of the company at the time the offence was committed and nothing more is required to be said. For this, it may be worthwhile to notice the role of a director in a company. The word "director" is defined in Section 2(13) of the Companies Act, 1956 as under:

"2. (13) `director' includes any person occupying the position of director, by whatever name called;"

There is a whole chapter in the Companies Act on directors, which is Chapter II...There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company...What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs...Therefore, mere use of a particular designation of an officer without more, may not be enough by way of an averment in a complaint. When the requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements...

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10....What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable