Non-executive directors cannot be held liable under the Negotiable Instruments Act without specific allegations of their involvement; general averments are insufficient to summon them for proceeding.

Hon'ble Ashish Naithani, J.

The present application under Section 482 of the

Code of Criminal Procedure has been moved by the Applicants, namely Mr. Ashwini Kumar Singh and Ms. Sunita Palta, seeking quashing of the entire proceedings of Criminal Case No. 109 of 2017, M/s RPG Infratech v. MBL Infrastructures Ltd. and others, pending before the learned Judicial Magistrate, Ranikhet, District Almora, as well as the

impugned common summoning order dated 25.07.2017.

2. The Respondent filed Criminal Complaint No. 109

of 2017 under Sections 138 and 141 of the Negotiable Instruments Act, 1881 , alleging dishonour of Cheque No.

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639991 dated 13.03.2017 for an amount of 1,35,84,099/-, drawn on State Bank of India, Nehru Place Branch, New Delhi, issued by the accused company M/s MBL Infrastructures Ltd. in favour of the Respondent.

3. The cheque, upon presentation, was dishonoured due to insufficiency of funds. A statutory notice under Section 138 of the Negotiable Instruments Act was issued on 25.05.2017, but the payment was not made within the stipulated period. Consequently, a complaint was filed, whereupon cognizance was taken, and summons were issued to all the accused, including the present Applicants, on 25.07.2017.

4. The Applicants were impleaded in their capacity as Directors of the accused company. They contend that they were only non-executive, independent directors, not responsible for day-to-day management or conduct of business, and that their impleadment is not sustainable in law.

5. It is relevant to note that the Applicants, along with other co-accused, had earlier approached this Court by way of Criminal Misc. Application (C482) No. 1600 of 2017, which was dismissed vide judgment dated 04.07.2018. The order was challenged before the Hon’ble Supreme Court in SLP (Cri.) No. 7083 of 2018, which was disposed of on 04.09.2018 without interfering with the High Court’s order, clarifying those observations therein would not prejudice subsequent stages of trial.

6. The present second application under Section 482 CrPC is filed on the plea of a change in circumstances, namely, the authoritative pronouncement of the Hon’ble Supreme Court in ‘ Chintalapati Srinivasa Raju v. SEBI ’ (2018) 7 SCC 443 , delivered on 28.08.2018, which clarified the role of non-executive directors and held that they cannot be held liable for the conduct of business of the company in the absence of specific averments as to their involvement.

7. Learned counsel for the Applicants submits that the complaint itself reveals that the company issued the cheque in question M/s MBL Infrastructures Ltd., and there is no specific allegation against the Applicants as to their role in the transaction. It is argued that the Applicants were non-executive, independent directors, not involved in the day-to-day conduct of business or financial affairs of the company, and therefore could not be held liable under Section 141 of the Negotiable Instruments Act.

8. He further contended that the learned Magistrate passed the summoning order mechanically, without application of mind, merely on the bald assertion that “all accused were in charge and responsible for the conduct of business and day-to-day affairs of the company.” The absence of particularized allegations against the Applicants renders the complaint unsustainable as against them.

9. Learned Counsel for the Applicants has placed reliance upon the judgment of the Hon’ble Supreme Court in ‘ Chintalapati Srinivasa Raju v. SEBI ’, (2018) 7 SCC 443 , which has unequivo