For vicarious liability under Section 141 of the Negotiable Instruments Act, specific averments regarding a director's involvement in company affairs are essential; mere directorship is insufficient.

ORDER :

(G. Jayachandran, J.)

The petitioner herein is the third accused in C.C.No.2111 of 2021 on the file of learned Metropolitan Magistrate No.II, Fast Track Court, Allikulam, Chennai.

2. The private complaint is in respect of dishonour of two cheques drawn from the account maintained by M/s HNS Chits Pvt Ltd, Chennai at Yes Bank, Parrys Corner, Chennai. The Company is the First Accused) and its two Directors are the second and third accused. The Complaint states that the first accused Chit Fund Company run by the second and third accused had collected totally a sum of Rs.54,19,500/-between January 2018 and 16/10//2018 towards chit subscription from the complainant. After repeated demand two cheques for: (1) Rs.15,80,000/-, dated 30/11/2020 and (2) Rs.15,00,000/-, dated 30/11/2020; signed and issued by the second accused returned without fund. For the statutory notice issued by the complainant, the 2nd and 3rd accused replied making unsustainable allegations. Hence, the Company and its two Directors being incharge of the day to day affairs of the first accused company are liable for prosecution under Section 138 r/w 141 of Negotiable Instruments Act 1881.

3. The petition to quash the complaint is filed on the ground that the third accused is neither signatory of the cheque nor the Director incharge of the day to day affairs of the Company. The cheques were issued by the second accused, who is all alone responsible for the day to day affairs of the Company. Except rendering her name, there is no other activity carried out by the petitioner. In the complaint, there is no averment as to the specific participation by this petitioner in the affairs of the Company. To the statutory notice, the petitioner has replied stating that she has nothing to do with the company and the transaction. Hence, the complaint being given against this petitioner is vexatious, so to be quashed.

4. The Learned Counsel for the respondent/ Complainant referring the averment in the complaint and the Master Data maintained by Registrar of Chits, submits that this petitioner is wife of the second accused, who is the signatory of the subject cheques. The first accused company consists of only two directors namely, Surendranath, who is the second accused and his wife, Anitha Kappor, who is the third accused – petitioner herein. In the reply notice, except making unsustainable allegations, the petitioner has not stated that she has no knowledge about the cheques or she is not involved in the day to day affairs of the company. Even while cross examination of the complainant, no suggestion was put to the complainant about her non-participation in the affairs of the company. While so, the petitioner has to discharge the reverse burden and cannot seek for quash of the complaint.

5. In support of the respective argument, the following judgments are relied by the learned Counsels:

(1) S.P.Mani and Mohan Dairy –vs- Dr.Snehalatha Elangovan reported in [2023 (10) SCC 685].

(2) Susela Padmavathy Amma –vs- Bharti Airtel Limited reported in [2024 SCC OnLine SC 311].

6. This Court is of the view that the issue is no more a res integra, after the judgement of the Hon'ble Supreme Court in S.P.Mani and Mohan Dairy case cited supra. In this judgment, the Hon’ble Supreme Court has vividly explained the law of vicarious liability under corporate crime by analysing Section 141 of the Negotiable Instruments Act, 1881. In this judgment, the Hon'ble Supreme Court has distinguished Sections 141(1) and 141(2) of Negotiable Instrumetns Act, 1881, and what is the essential element for implicating a person under this Section.

7. The summary of the final conclusion of the judgment in S.P.Mani and Mohan Dairy case cited supra at paragraph 58 is as below:

“58.Our final conclusions may be summarised as under:

58.1. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no