Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Online)(SC) 391

SUPREME COURT OF INDIA
SUSELA PADMAVATHY AMMA – Appellant
Versus
M/S. BHARTI AIRTEL LIMITED – Respondent
Crl.A. No.-001577-001578 / 2024

Directors are not liable under the Negotiable Instruments Act unless proven to be in charge of the company's affairs at the time of the offence.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 and 142 - Criminal Procedure Code, 1973 - Section 482 - Quashing of criminal complaints - High Court dismissed the petition for quashing complaints against directors of a company for dishonored cheques - The court emphasized that mere directorship does not imply liability unless the director is in charge of the company's affairs - The appellant was not shown to be responsible for the company's day-to-day operations - The absence of specific averments against the appellant led to the quashing of the proceedings. (Paras 3.9, 5, 19, 22)

Facts of the case:
The appeals arose from the High Court's dismissal of petitions to quash criminal complaints against directors of a telecom company for dishonored cheques totaling over Rs. 2.5 crores, where the appellant claimed she was not involved in daily operations.

Findings of Court:
The court found that the allegations against the appellant were insufficient to establish her liability under the N.I. Act, as there were no specific averments regarding her role in the company's operations.

Issues: The primary issue was whether the appellant could be held liable under the N.I. Act based solely on her position as a director without evidence of her involvement in the company's affairs.

Ratio Decidendi: The court ruled that for a director to be held liable under Section 141 of the N.I. Act, there must be clear averments demonstrating their responsibility for the company's conduct, which was lacking in this case.

Result: Appeals allowed; the High Court's order was quashed and the criminal proceedings against the appellant were set aside.

JUDGEMENT

B.R. GAVAI, J.

1. Leave granted.

2. The present appeals challenge the common judgment and order dated 26th April, 2022 passed by the High Court of Judicature at Madras (hereinafter referred to as “High Court”), in Crl. O.P. Nos. 3470 & 5767 of 2019 and Crl. M.P. Nos. 2224, 2225 & 3255 of 2019, whereby the High Court rejected the prayer for quashing of C.C. Nos. 3151 & 3150 of 2017, on the file of learned XVIII Metropolitan Magistrate, Saidapet, Chennai (now transferred to the learned Metropolitan Magistrate, Fast Track Court-III, Saidapet, Chennai), in connection with the offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the N.I. Act”).

3. The facts, in brief, giving rise to the present appeals are as follows:

3.1 M/s. Bharti Airtel Limited (hereinafter referred to as, “complainant” or “respondent”), is a company engaged in the business of providing telecommunication services, under a license issued by the Government of India, in various telecom circles in India.

3.2 One M/s. Fibtel Telecom Solutions (India) Private Limited (hereinafter referred to as, “Fibtel Telecom Solutions” or “Company”), a company registered with the Telecom Regulatory Authority of India (TRAI) as a telemarketer, had approached the Solutions furnished five post-dated cheques to the complainant, on 17th June 2016, details of which are as given below:

respondent intending to obtain telecom resources for the purpose

of transactional communication and requested the complainant

for allotment of telecom resources for the said purpose. One

Manju Sukumaran Lalitha is the Director & Authorized Signatory

of Fibtel Telecom Solutions and one Susela Padmavathy Amma,

the appellant herein, is the Director of Fibtel Telecom Solutions.

3.3 Based on the representation made by Fibtel Telecom

Solutions, the respondent had agreed to provide the required

services, whereupon the parties entered into a Service

Agreement, vide which Fibtel Telecom Solutions had to pay Rs.

14,00,000/- as fixed monthly recurring charges to the

respondent. It is the thus the case of the respondent that Fibtel

Telecom Solutions owes a sum of Rs. 2,55,08,309/-, in lieu of the

service provided to it by the respondent.

3.4 However, the grievance of the respondent is that in-spite of

regular follow-ups and reminders, Fibtel Telecom Solutions failed

and neglected to clear the respondent’s dues. Only thereafter,

upon repeated demands made by the respondent, Fibtel Telecom