Vicarious liability under the Negotiable Instruments Act requires proof of a director's active involvement and responsibility in the company's operations, not merely their title.

JUDGMENT :

AMIT MAHAJAN, J.

1. The present petitions are filed seeking quashing of summoning order dated 24.03.2018 (hereafter ‘impugned order’) passed by the learned Metropolitan Magistrate (‘MM’), Patiala House Courts, New Delhi in complaint case bearing CC No. 36097/2016.

2. The subject complaint was filed by the respondent in CRL.M.C. 2520/2020 (hereafter ‘complainant’) under Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’) against the accused company - M/s West Haryana Highways (hereafter ‘accused company’) and its directors pursuant to the dishonour of the cheque issued by the accused company. The accused company is engaged in the business of construction/laning of roads.

3. It is alleged that the accused company approached the complainant for a grant of a term loan for the purpose of six/four laning of existing two lane road from Delhi-Haryana Border to Rohtak. It is alleged that on the request of the accused company, the complainant vide Sanction letter dated 25.04.2008 sanctioned a Senior Term Debt of Rs.100 crores. Subsequently, it is averred that the accused company through its directors vide letter dated 30.10.2013, approached the complainant for restructuring of the existing debt of Rs.88 crores. It is alleged that on the request of the accused company, the complainant agreed to restructure the existing debt of Rs.88 crores on the terms and conditions as stipulated in the letter dated 31.12.2013.

4. It is alleged that the Interest During Construction (‘IDC’) dues were pending to the complainant. It is alleged that upon the request of the accused company, the complainant purchased the Cheque No. 013805 dated 30.09.2014 issued by the accused company through its authorised signatories in amounting to Rs.1.5 crores for the payment of the IDC dues to the complainant. The complainant duly credited Rs.1.5 crores to the account of the accused company as consideration for the said cheque. The said cheque, upon presentation, got dishonoured and returned unpaid vide return memo dated 16.10.2014 with remarks “Funds Insufficient.” The subject cheque was once again presented for encashment on the assurance of the accused company. However, on this occasion as well, the same returned unpaid vide return memo dated 05.12.2014 for the reason “funds insufficient.” Subsequently, upon the non-payment of the cheque amount within the statutory period despite the receipt of demand notice, the complainant filed a complaint under Section 138 of the NI Act.

5. The learned MM, by the impugned order, issued summons to the accused company being the drawer of the subject cheque, to Mahesh Kumar Chaturvedi and Suresh Sharma being signatory of the dishonoured cheque, and the petitioners along with two other directors being directors of the accused company and responsible for managing the day-to-day affairs of the accused company.

Arguments advanced on behalf of the petitioners in CRL.M.C.4497/2019

6. The learned senior counsel for the petitioners submitted that the summoning order is liable to be quashed qua the petitioners. He submitted that merely because the petitioners were directors of the accused company at the relevant time when the offence was committed does not suffice for the offence under Section 138 read with Sectio