Directorship alone is insufficient for vicarious liability under S.138; involvement in daily management is also required.

1. It appears that a complaint has been filed against the present petitioners along with another accused under S.138 read with S.141 of the Negotiable Instrument Act . The prosecution is being challenged by way of this petition under S.482, Cr. P.C. solely on the ground that there are no offences disclosed against the petitioners who are accused Nos. 2 and 4. It is argued by the learned counsel for the petitioners that it is not sufficient to be a Director of a Company for having vicarious liability under S.138 of the Negotiable Instrument Act but such Director should be involved in day to day business before any liability can be fastened on him, under S.138 of the Negotiable Instrument Act . He relies on a judgment of this Court reported in Secunderabad Health Care v. Secunderabad Hospital , 1998 (2) ALD (Crl.) 206 : 1998 CriLJ 4521 (AP). This judgment is based on the judgment of the Supreme Court being State of Haryana v. Brij Lal Mittal , 1998 (4) Supreme 364 : 1998 CriLJ 3287.

2. Before appreciating the law laid down by this Court and also by the Supreme Court, it will be curious to note what are the allegations levelled against the petitioners. Para 6 of the complaint is reproduced as below.
"The complainant submits that the above notice was received by the accused Nos. 2 and 3 on 6-5-1996 as per the postal acknowledgement. The postal acknowledgment from accused Nos. 1 and 4 are awaited. The accused had 15 days time from that date i.e., on or before 21-5-1996 to pay up the said amount which they have failed and neglected to do thereby committing an offence under S.138 of the Negotiable Instrument Act , 1881. The accused No. 1 is a company and accused No. 2 is the Director and accused No. 3 is the Managing Director who is incharge of and responsible to the company for its day to day affairs and accused No. 4 is an Executive Director of accused No. 1 company. The offence has been committed with the consent and connivance of accused Nos. 2, 3 and 4. Therefore accused Nos. 2, 3 and 4 are also responsible and liable along with accused No. 1 for the above offence."
In the light of the allegations in para 6 of the complaint it will be interesting to note the facts which led to the judgment of the learned single Judge of this Court. The facts have been revealed by the judgment in para 12 which are reproduced as follows :
"There is no whisper in the complaint against respondents 3 to 7. It is not even averred that they are aware of the second accused issuing cheques in question to the complainant. It is not even alleged that they are involved in day to day management of the affairs of the company. Nothing is stated as to in what way they shall be deemed to be guilty of the offences committed by the first accused company. The sworn statement of the complainant recorded at the time of taking cognizance also does not reveal anything against the petitioner accused 3 to 7. For the aforesaid reason the process ought not to have been set in motion as against the petitioners accused 3 to 7. The allegations levelled against the first and second petitioners are clear. The second petitioner admittedly was the Managing Director and was incharge of the company. The truth or otherwise of the allegations levelled against even the petitioners 1 and 2 in the complaint is a different matter altogether."
It is manifestly clear that there was no whisper in the complaint against the accused. It has never been averred that the accused were aware that one of the accused had issued a cheque to the complainant. The facts of the case are altogether different where it has been averred that accused No. 2 is the Director and accused No. 3 is the Managing Director and is also incharge of and responsible to the company for its day to day affairs. It is also stated that accused No. 4 is an Executi