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ABHAY S. OKA, SANJAY KAROL
Ashok Shewakramani – Appellant
Versus
State of Andhra Pradesh – Respondent
Key Points: - The Supreme Court held that merely being a director or in charge of day-to-day affairs is not enough; the person must be in charge of and responsible for the conduct of the business of the company at the time of the offence. (!) (!) (!) - The complaint must specifically aver that the accused was in charge of and responsible to the company for the conduct of the business, not just generally liable for transactions; non-compliance leads to quashing under Section 482 CrPC for those appellants. (!) (!) - In several appeals, the Court quashed the complaint against directors where the cheques were signed by others (e.g., Managing Director) and not by the directors themselves, finding lack of Section 141(1) compliance. (!) (!) (!) (!) - The service of demand notice under Section 138 NI Act is a condition precedent for filing a complaint; failure to serve it can render the complaint defective. (!) - The Court reiterated that vicarious liability under Section 141 is an exception to the general rule and requires strict averments of a director’s in-charge-and-responsible status. (!) (!) - Appeals were allowed and complaints quashed insofar as the appellants were concerned where the prerequisites of Section 141(1) were not met. (!) (!) (!) - Cheques were signed by the Managing Director rather than the directors, reinforcing that not all directors can be held liable without proper Section 141(1) compliance. (!) (!)
JUDGMENT :
Abhay S. Oka, J.
CRIMINAL APPEAL NO.879 OF 2023
1. We have heard the learned senior counsel appearing for the appellants. The appellants are Accused Nos.5, 6 and 7 in a complaint filed by the second Respondent under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the NI Act').
2. By the impugned Judgment, the High Court has dismissed a petition filed by the appellants under Section 482 of the Code of Criminal Procedure, 1973 (for short, 'the Code') for quashing the complaint. By the impugned Judgment, several petitions under Section 482 of the Code were decided arising out of different complaints filed by the same complainant.
3. At the outset, we may note here that in paragraph 10 of the impugned Judgment, the High Court has purported to quote the relevant paragraph from the complaint bearing CC No.1/2012, which is the subject matter of this appeal. We, however, find that the averments made in this complaint are different.
4. The main issue canvassed by the learned Senior Counsel appearing for the appellants is that though the appellants were directors of the first accused company at a relevant time, the mandatory averments which are required to be made in te
Dishonour of cheque – Offence by company – There is non-compliance on part of second respondent with requirements of sub-section (1) of Section 141 of NI Act – Cheques have been signed by Managing Di....
Dishonour of cheque – Offence by company – It may not be proper to split while reading complaint so as to come to a conclusion that allegations as a whole are not sufficient to fulfil requirement of ....
Dishonour of cheque – Offence by Partnership Firm – Only that person who, at the time offence was committed, was in charge of and was responsible to company for conduct of business of company as well....
The main legal point established in the judgment is the requirement for specific averments and unimpeachable evidence to establish vicarious liability of directors in cases of cheque bounce under Sec....
Point of Law : Where there is not even an averment against the Managing Director or joint Managing Director of the Company therein. [Para 11]
Vicarious liability of Directors under Section 138 NI Act depends on their actual role in the company's affairs, and strict interpretation of the provision is necessary.
Dishonour of cheque – Contents of notice, reply given by noticee and contents of complaint would form an important part of arraigning accused into proceedings under Section 138 of NI Act.
(1) Dishonour of cheque – Offence by company – For fastening criminal liability, there is no legal requirement for complainant to show that accused partner of firm was aware about each and every tran....
Directors can only be held vicariously liable under Section 141 of the Negotiable Instruments Act if specific averments are made in the complaint regarding their responsibility for the company's cond....
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