Directors cannot be held liable under Section 138 of the Negotiable Instruments Act without specific allegations regarding their involvement in the company's day-to-day operations.

ORAL ORDER

1. Heard learned advocate Mr. Divyang A. Ramani for the respondent No.2 and learned APP Mr. Rohan Shah for respondent No.1 – State. Learned advocate Mr.Dharmesh V. Shah does not remain present when the matter was taken up for hearing.

2. The fact which is coming out from the complaint as well as notice under Section 138 of the Negotiable Instruments Act (for short, hereinafter referred to as `the Act’) that a transaction of borrowing of money was ensued between the parties and the accused Company accepted the amount of Rs.50,00,000/- (Rupees fifty lacs only) through Cheque by the complainant.

3. When the application to CID Crime and Railway, Gandhinagar was filed by the complainant, a co- accused remained present and discharged of the liability, the impugned Cheque came to be issued by the Company in favour of the complainant as the Cheque was dishonored with an endorsement

“Account Blocked.” Notice under Section 138 of the Act came to be given by the complainant to the accused including the petitioners on 8.6.2016. In the said notice, there are no averments to the effect that what is the role of the petitioners in the management and administration of the accused No.1 – Company. It is not the case made out by the complainant against the petitioners, except an averment that accused Nos.3 and 4 i.e. present petitioners are the Directors of the Company and Cheque was issued.

4. It would be apt to refer the decision of Hon’ble Apex Court in the case of Susela Padmavathy Amma v. M/s. Bharti Airtel Limited decided on 15.3.2024 by Division Bench of Hon’ble Supreme Court of India wherein a similar issue was cropped up before the Apex Court and while deciding the question of non-mentioning of required averments in the complaint, in paragraph Nos.9, 10 and 14 which are reproduced for the sake of convenience, Hon’ble Apex Court has observed hereunder:

“ 9. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this Court was considering the question as to whether it was sufÏcient to make the person liable for being a director of a company under Section 141 of the Negotiable Instruments Act, 1881 . This Court considered the definition of the word “director” as defined in Section 2(13) of the Companies Act, 1956. This Court observed thus:

“ 8. ……. 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. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to- day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. 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. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the ofÏcers in a company. …..”

10. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-today functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. Thi