Himachal Pradesh High Court
Reserved On: 07.08.2025 vs Chander Kanta Chandel & Others on 22 August, 2025
2025:HHC:28521
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. MMO No. 789 of 2024
Reserved on: 07.08.2025
Date of Decision: 29.08.2025
.
Hukam Chand ...Petitioner
Versus
Chander Kanta Chandel & others
...Respondents
Coram
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes
For the petitioner : Mr. Abhishek Raj, Advocate.
For the Respondents : Mr. Ankush Kumar, Advocate vice
Mr. Vinay Thakur, Advocate, for
respondent No. 1.
None for respondent No.2.
Mr. Amit Dhumal, Advocate, for
respondents No. 3 and 4.
Mr. Rajiv Chauhan, Advocate, for
respondent No. 6.
None for respondents No. 5, 7 and
8.
Rakesh Kainthla, Judge
The petitioner has filed the present petition under
Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023
(BNSS) for quashing complaint No. 237 of 2023 filed for the
commission of an offence punishable under Section 138 read
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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with Sections 141 and 142 of Negotiable Instruments Act (NI Act)
pending before the learned Additional Chief Judicial Magistrate,
.
Theog, District Shimla, H.P. (learned Trial Court). (The parties
shall hereinafter be referred to in the same manner as they are
arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present
petition are that the complainant filed a complaint before the
learned Trial Court for the commission of an offence punishable
under Section 138, read with Sections 141 and 142 of the NI Act
against the accused. It was asserted that the accused No.1, M/s
Pride NATC Co-operative Society Limited, is registered under
the H.P. Co-operative Societies Act. It opened one Branch office
at Theog, District Shimla, H.P. by hiring the premises of the
complainant in the year 2017 for carrying out commercial
activities. It remained the tenant of the complainant till
31.01.2023. Accused No.2, being the President of accused No.1
and accused No.6, being the Secretary of accused No.1, visited
the office on 20.01.2023 and expressed their desire to vacate the
premises on 31.01.2023. The complainant demanded an amount
of ₹2,40,000/- being the arrears of rent from June 2022 to
31.01.2023. They issued a post-dated cheque of ₹2,40,000/-,
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which was signed by accused No.2 and accused No.6 on behalf of
accused No.1. The complainant presented the cheque, but it was
.
dishonoured with an endorsement of “funds insufficient”. The
complainant issued a notice demanding the amount, but no
amount was paid. Accused Nos. 2 to 8 are office bearers of the
Managing Committee of accused No.1. Hence, a complaint was
filed against the accused for taking action against them as per
law.
3. to
Learned Trial Court found sufficient reasons to
summon the accused vide order dated 02.08.2023.
4. Being aggrieved from the filing of the complaint, the
petitioner Hukam Chand, who was arrayed as accused No. 8, has
approached this Court asserting that the learned Trial Court
erred in summoning him. The order does not show an
application of the mind. The complaint does not contain any
allegations against the petitioner. The petitioner was arrayed as
accused, being a member of the Managing Committee of accused
No.1. The petitioner has not signed any cheque. As per
averments made in the complaint, the cheque was signed by
accused Nos. 2 and 6 on behalf of accused No.1; therefore, only
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they can be held liable for the commission of an offence
punishable under Section 138 of the NI Act. The proceedings
.
against the petitioner amount to an abuse of the process of law.
Therefore, it was prayed that the present petition be allowed and
the complaint pending before the learned Trial Court be
quashed.
5. I have heard Mr. Abhishek Raj, learned counsel for
the petitioner, Mr. Ankush Kumar, learned vice counsel
representing respondent No.1, Mr. Amit Dhumal, learned
counsel for respondents No. 3 and 4 and Mr. Rajiv Chauhan,
learned counsel for the respondent No.6.
6. Mr. Abhishek Raj, learned counsel for the petitioner,
submitted that the learned Trial Court erred in summoning the
accused. There are no allegations against the petitioner except
that he is a member of the Managing Committee, which is not
sufficient to summon him. An Administrator has been
appointed to look after the affairs of the society, and the offence
punishable under Section 138 of the NI Act is not made out.
Hence, he prayed that the present petition be allowed and the
complaint pending before the learned Trial Court be quashed.
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7. Mr. Ankush Kumar, learned vice counsel
representing respondent No.1, submitted that the petitioner has
.
raised a disputed question of fact which cannot be adjudicated
by this Court while exercising the inherent jurisdiction. The
matter is pending before the learned Trial Court, which should
be left to adjudicate the same. Hence, he prayed that the present
petition be dismissed.
8.
Mr. Amit Dhumal, learned counsel for respondents
No. 3 and 4 and Mr. Rajiv Chauhan, learned counsel for
respondent No.6, adopted the submissions advanced by Mr.
Abhishek Raj, learned counsel for the petitioner.
9. I have given considerable thought to the submissions
made at the bar and have gone through the records carefully.
10. The law relating to quashing of criminal cases was
explained by the Hon’ble Supreme Court in B.N. John v. State of
U.P., 2025 SCC OnLine SC 7 as under: –
“7. As far as the quashing of criminal cases is concerned,
it is now more or less well settled as regards the
principles to be applied by the court. In this regard, one
may refer to the decision of this Court in State of
Haryana v. Ch. Bhajan Lal, 1992 Supp (1) SCC 335, wherein
this Court has summarised some of the principles under::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521which FIR/complaints/criminal cases could be quashed in
the following words:
“102. In the backdrop of the interpretation of the
various relevant provisions of the Code under Chapter.
XIV and of the principles of law enunciated by this
Court in a series of decisions relating to the exercise of
the extraordinary power under Article 226 or the
inherent powers under Section 482 of the Code whichwe have extracted and reproduced above, we give the
following categories of cases by way of illustration
wherein such power could be exercised either to
prevent abuse of the process of any court or otherwiseto secure the ends of justice, though it may not be
possible to lay down any precise, clearly defined and
sufficiently channelised and inflexible guidelines or
rigid formulae and to give an exhaustive list of myriadkinds of cases wherein such power should be
exercised.
(1) Where the allegations made in the first
information report or the complaint, even if they
are taken at their face value and accepted in theirentirety, do not prima facie constitute any offence
or make out a case against the accused.
(2) Where the allegations in the firstinformation report and other materials, if any,
accompanying the FIR do not disclose acognizable offence, justifying an investigation
by police officers under Section 156(1) of the
Code except under an order of a Magistratewithin the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made
in the FIR or complaint and the evidence
collected in support of the same do not disclose
the commission of any offence and make out a
case against the accused.
(4) Where the allegations in the FIR do not
constitute a cognizable offence but constitute only a::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521non-cognizable offence, no investigation is
permitted by a police officer without an order of a
Magistrate as contemplated under Section 155(2) of
the Code.
.
(5) Where the allegations made in the FIR or
complaint are so absurd and inherently
improbable on the basis of which no prudent
person can ever reach a just conclusion thatthere is sufficient ground for proceeding against
the accused.
(6) Where there is an express legal bar engrafted in
any of the provisions of the Code or the concernedAct (under which a criminal proceeding is
instituted) to the institution and continuance of the
proceedings and/or where there is a specific
provision in the Code or the concerned Act,providing efficacious redress for the grievance of the
aggrieved party.
(7) Where a criminal proceeding is manifestly
attended with mala fide and/or where the
proceeding is maliciously instituted with anulterior motive for wreaking vengeance on the
accused and with a view to spite him due to a
private and personal grudge.” (emphasis added)
8. Of the aforesaid criteria, clause no. (1), (4) and (6)
would be of relevance to us in this case.
In clause (1), it has been mentioned that where the
allegations made in the first information report or the
complaint, even if they are taken at their face value and
accepted in their entirety, do not prima facie constitute
any offence or make out a case against the accused, then
the FIR or the complaint can be quashed.
As per clause (4), where the allegations in the FIR do not
constitute a cognizable offence but constitute only a non-
cognizable offence, no investigation is permitted by a
police officer without an order dated by the Magistrate as
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contemplated under Section 155 (2) of the CrPC, and in
such a situation, the FIR can be quashed.
Similarly, as provided under clause (6), if there is an
express legal bar engrafted in any of the provisions of
.
the CrPC or the concerned Act under which the criminal
proceedings are instituted, such proceedings can be
quashed.”
11. This position was reiterated in Ajay Malik v. State of
Uttarakhand, 2025 SCC OnLine SC 185, wherein it was observed:
“8. It is well established that a High Court, in exercising
its extraordinary powers under Section 482 of the CrPC,
may issue orders to prevent the abuse of court processes
or to secure the ends of justice. These inherent powers are
neither controlled nor limited by any other statutoryprovision. However, given the broad and profound
nature of this authority, the High Court must exercise it
sparingly. The conditions for invoking such powers are
embedded within Section 482 of the CrPC itself, allowing
the High Court to act only in cases of clearabuse of process or where intervention is essential to
uphold the ends of justice.
9. It is in this backdrop that this Court, over the
course of several decades, has laid down the principles
and guidelines that High Courts must follow beforequashing criminal proceedings at the threshold, thereby
pre-empting the Prosecution from building its case
before the Trial Court. The grounds for quashing, interalia, contemplate the following situations : (i) the
criminal complaint has been filed with mala fides; (ii) the
FIR represents an abuse of the legal process; (iii) no prima
facie offence is made out; (iv) the dispute is civil in nature;
(v.) the complaint contains vague and omnibus
allegations; and (vi) the parties are willing to settle and
compound the dispute amicably (State of Haryana v.
Bhajan Lal, 1992 Supp (1) SCC 335)::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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12. The present petition is to be decided as per the
parameters laid down by the Hon’ble Supreme Court.
.
13. It was specifically asserted in para 2 of the complaint
that M/s Pride NATC Co-operative Society Limited is registered
under the provisions of the H.P. Co-operative Societies Act;
therefore, it is an association of persons and falls within the
definition of the Company as per explanation ‘a’ to Section 141
of the NI Act.
14. to
The Hon’ble Supreme Court dealt with the liability of
the Company and its Directors in Pawan Kumar Goel v. State of
U.P., 2022 SCC OnLine SC 1598 and held that only a person, who is
in charge of and responsible to the Company for its affairs can be
summoned and punished under Section 138 read with Section
141 of NI Act. It was observed:
“22. A two-judge Bench of this Court in the case of K.K.
Ahuja v. V.K. Vora (2005) 8 SCC 89, after analysing theprovisions contained in Section 141 of the Act, observed as
under:–
“16. Having regard to section 141, when a cheque issued by
a company (incorporated under the Companies Act, 1956)
is dishonoured, in addition to the company, the following
persons are deemed to be guilty of the offence and shall be
liable to be proceeded against and punished:
(i) every person who, at the time the offence was
committed, was in charge of and was responsible to::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521the company for the conduct of the business of the
company;
(ii) any Director, Manager, Secretary or other officer
of the company with whose consent and.
connivance, the offence under section 138 has been
committed; and
(iii) any Director, Manager, Secretary or other
officer of the company whose negligence resulted in
the offence under section 138 of the Act being
committed by the company.
While the liability of persons in the first category arises
under sub-section (1) of Section 141, the liability of
persons mentioned in categories (ii) and (iii) arises under
sub-section (2). The scheme of the Act, therefore, is that a
person who is responsible to the company for the conduct
of the business of the company and who is in charge of the
business of the company is vicariously liable by reason
only of his fulfilling the requirements of subsection (1). But
if the person responsible to the company for the conduct of
business of the company was not in charge of the conduct
of the business of the company, then he can be made liable
only if the offence was committed with his consent or
connivance or as a result of his negligence.
17. The criminal liability for the offence by a company
under section 138 is fastened vicariously on the persons
referred to in sub-section (1) of section 141 by virtue of a
legal fiction. Penal statutes are to be construed strictly.
Penal statutes providing constructive vicarious liability
should be construed much more strictly. When conditions
are prescribed for extending such constructive criminal
liability to others, courts will insist upon strict literal
compliance. There is no question of inferential or implied
compliance. Therefore, a specific averment complying
with the requirements of section 141 is imperative. As
pointed out in K. Srikanth Singh v. North East Securities
Ltd. – (2007) 12 SCC 788, the mere fact that at some point
of time, an officer of a company had played some role in
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the financial affairs of the company, will not be sufficient
to attract the constructive liability under section 141 of the
Act.
18. Sub-section (2) of section 141 provides that a Director,
.
Manager, Secretary or other officer, though not in charge
of the conduct of the business of the company, will be
liable if the offence had been committed with his consent
or connivance or if the offence was a result of any
negligence on his part. The liability of persons mentioned
in subsection (2) is not on account of any legal fiction but
on account of the specific part played-consent and
connivance or negligence. If a person is to be made liable
under sub-section (2) of section 141, then it is necessary to
aver consent and connivance, or negligence on his part.”
23. The scope of Section 141 of the NI Act was again
exhaustively considered by this Court in S.M.S
Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89.:
“10. ….What is required is that the persons who are sought
to be made criminally liable under Section 141 should be,
at the time the offence was committed, in charge of and
responsible to the company for the conduct of the businessof the company. Every person connected with the
company shall not fall within the ambit of the provision.
It is only those persons who were in charge of andresponsible for the conduct of the business of the company
at the time of the commission of an offence who will beliable for criminal action. It follows from this that if a
director of a Company who was not in charge of and was
not responsible for the conduct of the business of thecompany at the relevant time, will not be liable under the
provision. The liability arises from being in charge of and
responsible for the conduct of the business of the company
at the relevant time when the offence was committed, and
not on the basis of merely holding a designation or office
in a company. Conversely, a person not holding any office
or designation in a Company may be liable if he satisfies
the main requirement of being in charge of and
responsible for the conduct of business of a Company at::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521the relevant time. Liability depends on the role one plays
in the affairs of a Company and not on designation or
status. If being a Director or Manager, or Secretary was
enough to cast criminal liability, the Section would have.
said so. Instead of “every person”, the section would have
said “every Director, Manager or Secretary in a Company
is liable”, etc. The legislature is aware that it is a case of
criminal liability, which means serious consequences sofar as the person sought to be made liable is
concerned. Therefore, only persons who can be said to be
connected with the commission of a crime at the relevant
time have been subjected to action…
18. To sum up, there is an almost unanimous judicial
opinion that necessary averments ought to be contained in
a complaint before a person can be subjected to criminal
process. A liability under Section 141 of the Act is sought tobe fastened vicariously on a person connected with a
company, the principal accused being the company itself.
It is a departure from the rule in criminal law against
vicarious liability. A clear case should be spelt out in the
complaint against the person sought to be made liable.
Section 141 of the Act contains the requirements for
making a person liable under the said provision. That the
respondent falls within the parameters of Section 141 hasto be spelt out. A complaint has to be examined by the
Magistrate in the first instance on the basis of theaverments contained therein. If the Magistrate is satisfied
that there are averments which bring the case within
Section 141, he would issue the process. We have seen thatmerely being described as a director in a company is not
sufficient to satisfy the requirement of Section 141. Even a
non-director can be liable under Section 141 of the Act.
The averments in the complaint would also serve the
purpose that the person sought to be made liable would
know what is the case which is alleged against him. This
will enable him to meet the case at the trial.” (emphasis
supplied)::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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15. This position was reiterated in Rajesh Viren Shah v.
Redington India Ltd., (2024) 4 SCC 305: 2024 SCC OnLine SC 143,
.
wherein it was observed:
“3. The position of law as to the liability that can be
fastened upon a Director for non-realisation of a chequeis no longer res integra. Before adverting to the judicial
position, we must also take note of the statutory
provision — Section 141 of the NI Act, which states that
every person who at the time of the offence wasresponsible for the affairs/conduct of the business of the
company, shall be held liable and proceeded against under
Section 138 of the NI Act, with exception thereto being
that such an act if done without his knowledge or afterhim having taken all necessary precautions, would not be
held liable. However, if it is proved that any act of acompany is proved to have been done with the connivance
or consent or may be attributable to (i) a Director; (ii) a
Manager; (iii) a Secretary; or (iv) any other officer — they
shall be deemed to be guilty of that offence and shall beproceeded against accordingly.
4. Coming to the judicial position, we notice a judgment
of this Court in Monaben Ketanbhai Shah v. State of
Gujarat [Monaben Ketanbhai Shah v. State of Gujarat,(2004) 7 SCC 15: 2004 SCC (Cri) 1857] wherein it was
observed that: (SCC pp. 18-19, para 6)
“6. … The primary responsibility is on the complainantto make necessary averments in the complaint so as to
make the accused vicariously liable. For fastening the
criminal liability, there is no presumption that every
partner knows about the transaction. The obligation of
the appellants to prove that at the time the offence was
committed, they were not in charge of and were not
responsible to the firm for the conduct of the business
of the firm, would arise only when first the::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521complainant makes necessary averments in the
complaint and establishes that fact.”
5. A Bench of three learned Judges in S.M.S.
Pharmaceuticals Ltd. v. Neeta Bhalla [S.M.S.
.
Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005
SCC (Cri) 1975] observed: (SCC p. 102, para 18)
“18. To sum up, there is an almost unanimous judicial
opinion that necessary averments ought to be
contained in a complaint before a person can be
subjected to criminal process. … A clear case should be
spelt out in the complaint made against the person
sought to be made liable. Section 141 of the Act
contains the requirements for making a person liable
under the said provision. That the respondent falls
within the parameters of Section 141 has to be spelt
out.”
6. We also notice this Court to have observed, in regard to
the exercise of the inherent powers under Section
482CrPC, in cases involving negotiable instruments that
interference would not be called for, in the absence of
“some unimpeachable, incontrovertible evidence which is
beyond suspicion or doubt or totally acceptable circumstances
which may clearly indicate that the Director could not have
been concerned with the issuance of cheques and asking him
to stand the trial would be abuse of process of Court.
(Ashutosh Ashok Parasrampuriya case [Ashutosh Ashok
Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023) 14
SCC 770: 2021 SCC OnLine SC 915], SCC para 24)” This
principle, as held in S.M.S. Pharmaceuticals [S.M.S.
Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: 2005
SCC (Cri) 1975], was followed in Ashutosh Ashok
Parasrampuriya v. Gharrkul Industries (P) Ltd. [Ashutosh
Ashok Parasrampuriya v. Gharrkul Industries (P) Ltd., (2023)
14 SCC 770: 2021 SCC OnLine SC 915].
16. It was held by the Hon’ble Supreme Court in Susela
Padmavathy Amma v. Bharti Airtel Ltd., 2024 SCC OnLine SC 311,
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that a person can be vicariously liable if he is in charge and
responsible to the Company for the conduct of its business. It
.
was observed:
“18. In the case of State of Haryana v. Brij Lal Mittal (1998)
5 SCC 343, this Court observed thus:
“8. Nonetheless, we find that the impugned judgment
of the High Court has got to be upheld for an
altogether different reason. Admittedly, the three
respondents were being prosecuted as directors of themanufacturers with the aid of Section 34(1) of the Act,
which reads as under:
“34. Offences by companies.–(1) Where an offence
r under this Act has been committed by a company,
every person who at the time the offence wascommitted, was in charge of, and was responsible
to the company for the conduct of the business of
the company, as well as the company shall be
deemed to be guilty of the offence and shall beliable to be proceeded against and punished
accordingly:
Provided that nothing contained in this sub-
section shall render any such person liable to
any punishment provided in this Act if he provesthat the offence was committed without his
knowledge or that he exercised all due diligenceto prevent the commission of such offence.”
It is thus seen that the vicarious liability of a person
for being prosecuted for an offence committed under
the Act by a company arises if, at the material time, he
was in charge of and was also responsible to the
company for the conduct of its business. Simply
because a person is a director of the company, it does
not necessarily mean that he fulfils both the above
requirements so as to make him liable. Conversely,
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without being a director, a person can be in charge of
and responsible to the company for the conduct of its
business. From the complaint in question, we,
however, find that except for a bald statement that the
.
respondents were directors of the manufacturers,
there is no other allegation to indicate, even prima
facie, that they were in charge of the company and also
responsible to the company for the conduct of its
business.”
19. It could thus be seen that this Court had held that
simply because a person is a director of the company, it
does not necessarily mean that he fulfils the twin
requirements of Section 34(1) of the said Act so as to
make him liable. It has been held that a person cannot be
made liable unless, at the material time, he was in charge
of and was also responsible to the company for the
conduct of its business.
20. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this
Court was considering the question as to whether it was
sufficient 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 they usually decide
policy matters and guide the course of business of the
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::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521made responsible for the day-to-day functions of the
company. These are matters which form part of the
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 aboutthe 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 theofficers in a company. …..”
21. It was held that merely because a person is a director
of a company, it is not necessary that he is aware of the
day-to-day 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 the day-to-day affairs of the company or
responsible to the affairs of the company. This Court,
however, clarified that the position of a managing
director or a joint managing director in a company may be
different. This Court further held that these persons, as
the designation of their office suggests, are in charge of a
company and are responsible for the conduct of the
business of the company. To escape liability, they will
have to prove that when the offence was committed, they
had no knowledge of the offence or that they exercised all
due diligence to prevent the commission of the offence.
22. In the case of Pooja Ravinder Devidasani v. State of
Maharashtra (2014) 16 SCC 1, this Court observed thus:
“17. …… Every person connected with the Company
will not fall into the ambit of the provision. Time and
again, it has been asserted by this Court that only
those persons who were in charge of and responsible
for the conduct of the business of the Company at the::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521time of the commission of an offence will be liable for
criminal action. A Director, who was not in charge of
and was not responsible for the conduct of the
business of the Company at the relevant time, will not.
be liable for an offence under Section 141 of the NI Act.
In National Small Industries Corpn. [National Small
Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3
SCC 330: (2010) 1 SCC (Civ) 677: (2010) 2 SCC (Cri) 1113]this Court observed: (SCC p. 336, paras 13-14)
“13. Section 141 is a penal provision creating
vicarious liability, and which, as per settled law,
must be strictly construed. It is therefore notsufficient to make a bald, cursory statement in a
complaint that the Director (arrayed as an accused)
is in charge of and responsible to the company for
the conduct of the business of the company withoutanything more as to the role of the Director. But the
complaint should spell out as to how and in what
manner Respondent 1 was in charge of or was
responsible to the accused Company for the
conduct of its business. This is in consonance withthe strict interpretation of penal statutes, especially
where such statutes create vicarious liability.
14. A company may have a number of Directors and
to make any or all the Directors as accused in a
complaint merely on the basis of a statement thatthey are in charge of and responsible for the
conduct of the business of the company without
anything more is not a sufficient or adequatefulfilment of the requirements under Section 141.”
(emphasis in original)
18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal
Gupta v. D.H. Mehta, (1971) 3 SCC 189: 1971 SCC (Cri)
279: AIR 1971 SC 2162], this Court observed that a
person “in charge of a business” means that the
person should be in overall control of the day-to-day
business of the Company.
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19. A Director of a company is liable to be convicted for
an offence committed by the company if he/she was in
charge of and was responsible to the company for the
conduct of its business or if it is proved that the
.
offence was committed with the consent or
connivance of, or was attributable to any negligence
on the part of the Director concerned (see State of
Karnataka v. Pratap Chand [State of Karnataka v. Pratap
Chand, (1981) 2 SCC 335: 1981 SCC (Cri) 453] ).
20. In other words, the law laid down by this Court is
that for making a Director of a company liable for the
offences committed by the company under
Section 141 of the NI Act, there must be specific
averments against the Director showing as to how and
in what manner the Director was responsible for the
conduct of the business of the company.
21. In Sabitha Ramamurthy v. R.B.S.
Channabasavaradhya [Sabitha Ramamurthy v. R.B.S.
Channabasavaradhya, (2006) 10 SCC 581 (2007) 1 SCC
(Cri) 621], it was held by this Court that: (SCC pp. 584-
85, para 7)
“7. … it is not necessary for the complainant to
specifically reproduce the wordings of the section,
but what is required is a clear statement of fact so
as to enable the court to arrive at a prima facie
opinion that the accused is vicariously liable.
Section 141 raises a legal fiction. By reason of the
said provision, a person although is not personally
liable for the commission of such an offence would
be vicariously liable therefor. Such vicarious
liability can be inferred so far as a company
registered or incorporated under the Companies
Act, 1956 is concerned only if the requisite
statements, which are required to be averred in the
complaint petition, are made so as to make the
accused therein vicariously liable for the offence
committed by the company.” (emphasis supplied)
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By verbatim reproducing the words of the section
without a clear statement of fact supported by proper
evidence, so as to make the accused vicariously liable,
is a ground for quashing proceedings initiated against
.
such person under Section 141 of the NI Act.”
23. It could thus clearly be seen that this Court has held
that merely reproducing the words of the section without
a clear statement of fact as to how and in what manner a
director of the company was responsible for the conduct
of the business of the company, would not ipso facto make
the director vicariously liable.
24. A similar view has previously been taken by this Court
in the case of K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48.
25. In the case of State of NCT of Delhi through Prosecuting
Officer, Insecticides, Government of NCT, Delhi v. Rajiv
Khurana (2010) 11 SCC 469, this Court reiterated the
position thus:
“17. The ratio of all these cases is that the complainant
is required to state in the complaint how a Director
who is sought to be made an accused was in charge ofthe business of the company or responsible for the
conduct of the company’s business. Every Director
need not be and is not in charge of the business of thecompany. If that is the position with regard to a
Director, it is needless to emphasise that in the case ofnon-director officers, it is all the more necessary to
state what were his duties and responsibilities in the
conduct of the business of the company and how andin what manner he is responsible or liable.”
26. In the case of Ashoka Mal Bafna (supra), this Court
observed thus:
“9. To fasten vicarious liability under Section 141 of
the Act on a person, the law is well settled by this Court
in a catena of cases that the complainant should
specifically show as to how and in what manner the
accused was responsible. Simply because a person is a::: Downloaded on – 25/08/2025 21:24:49 :::CIS
21
2025:HHC:28521Director of a defaulter Company, does not make him
liable under the Act. Time and again, it has been
asserted by this Court that only the person who was at
the helm of affairs of the Company and in charge of.
and responsible for the conduct of the business at the
time of the commission of an offence will be liable for
criminal action. (See Pooja Ravinder Devidasani v. State
of Maharashtra [Pooja Ravinder Devidasani v. State ofMaharashtra, (2014) 16 SCC 1: (2015) 3 SCC (Civ)
384: (2015) 3 SCC (Cri) 378: AIR 2015 SC 675].)
10. In other words, the law laid down by this Court is
that for making a Director of a Company liable for theoffences committed by the Company under Section 141
of the Act, there must be specific averments against
the Director showing as to how and in what manner
the Director was responsible for the conduct of thebusiness of the Company.”
27. A similar view has been taken by this Court in the case
of Lalankumar Singh v. State of Maharashtra 2022 SCC
OnLine SC 1383, to which one of us (B.R. Gavai, J.) was a
party.
17. The Hon’ble Supreme Court held in Siby Thomas v.
Somany Ceramics Ltd., (2024) 1 SCC 348 that the primary
responsibility to make the averment that the accused is in
charge and responsible for the firm for its affairs lies upon the
complainant in the absence of which the accused cannot be held
liable. It was observed:
9. Bearing in mind the averments made in the complaint
in relation to the role of the appellant and sub-section
(1) of Section 141, we will have to appreciate the rival
contentions. Going by the decision relied on by the
respondent in the S.P. Mani case [S.P. Mani & Mohan::: Downloaded on – 25/08/2025 21:24:49 :::CIS
22
2025:HHC:28521Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685: (2024) 1
SCC (Cri) 203] it is the primary responsibility of the
complainant to make specific averments in the
complaint, so as to make the accused vicariously liable.
.
Relying on para 58.2 of the said decision the learned
counsel appearing for the respondent would also submit
that the complainant is supposed to know only generally
as to who were in charge of the affairs of the company or
firm, as the case may be and he relied on mainly the
following recitals thereunder: (SCC p. 716, para 58)
“58. … 58.2. The complainant is supposed to know
only generally as to who was in charge of the affairs
of the company or firm, as the case may be. The
other administrative matters would be within the
special knowledge of the company or the firm and
those who are in charge of it. In such
r circumstances, the complainant is expected to
allege that the persons named in the complaint are
in charge of the affairs of the company/firm.”
10. We are of the considered view that the respondent
has misread the said decision. Under the sub-caption
“Specific averments in the complaint”, in para 51 of S.P.
Mani case [S.P. Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] and
paras 34.1 and 34.4 of Gunmala Sales case [Gunmala Sales
(P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ)
433 : (2015) 1 SCC (Cri) 580] as also in para 52 of S.P. Mani
case [S.P. Mani & Mohan Dairy v. Snehalatha Elangovan,
(2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203], it was held in
the decision in S.P. Mani case [S.P. Mani & Mohan
Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 : (2024)
1 SCC (Cri) 203] thus : (SCC pp. 714-715, paras 51-52)
“51. In Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu
Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580], this Court after an
exhaustive review of its earlier decisions on Section
141 of the NI Act, summarised its conclusion as
under : (SCC pp. 126-27, para 34)::: Downloaded on – 25/08/2025 21:24:49 :::CIS
23
2025:HHC:28521’34. … 34.1. Once in a complaint filed under
Section 138 read with Section 141 of the NI
Act, the basic averment is made that the
Director was in charge of and responsible for.
the conduct of the business of the company at
the relevant time when the offence was
committed, the Magistrate can issue a
process against such Director.
34.2.-
34.3. * * *
34.4. No restriction can be placed on the
High Court’s powers under Section 482 of the
Code. The High Court always uses and must
use this power sparingly and with great
circumspection to prevent inter alia the abuse
of the process of the Court. There are no fixed
r formulae to be followed by the High Court in
this regard, and the exercise of this power
depends upon the facts and circumstances of
each case. The High Court at that stage does
not conduct a mini-trial or roving inquiry,
but nothing prevents it from taking
unimpeachable evidence or totally acceptable
circumstances into account which may lead it
to conclude that no trial is necessary qua a
particular Director.’
52. The principles of law and the dictum as laid
in Gunmala Sales [Gunmala Sales (P) Ltd. v. Anu
Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580], in our opinion, still holds the
field and reflects the correct position of law.
11. In the light of the afore-extracted recitals from the
decision in Gunmala Sales (P) Ltd. v. Anu Mehta [Gunmala
Sales (P) Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC
(Civ) 433 : (2015) 1 SCC (Cri) 580], quoted with agreement
in S.P. Mani case [S.P. Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685 : (2024) 1 SCC (Cri) 203] and
in view of sub-section (1) of Section 141 of the NI Act, it
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2025:HHC:28521
cannot be said that in a complaint filed under Section 138
read with Section 141 of the NI Act to constitute basic
averment it is not required to aver that the accused
concerned is a person who was in charge of and
.
responsible for the conduct of the business of the
company at the relevant time when the offence was
committed. In para 53 of S.P. Mani case [S.P. Mani &
Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685:
(2024) 1 SCC (Cri) 203], it was held thus: (SCC p. 715)
“53. In the case at hand, we find clear and specific
averments not only in the complaint but also in the
statutory notice issued to the respondent.”
It is thereafter that in the decision in S.P. Mani case [S.P.
Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10
SCC 685: (2024) 1 SCC (Cri) 203] in para 58.1 it was held
that the primary responsibility of the complainant is to
make specific averments in the complaint so as to make
the accused vicariously liable.
12. Bearing in mind the afore-extracted recitals from
the decisions in Gunmala Sales [Gunmala Sales (P)
Ltd. v. Anu Mehta, (2015) 1 SCC 103 : (2015) 1 SCC (Civ) 433 :
(2015) 1 SCC (Cri) 580] and S.P. Mani case [S.P. Mani &
Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685 :
(2024) 1 SCC (Cri) 203], we have carefully gone through
the complaint filed by the respondent. It is not averred
anywhere in the complaint that the appellant was incharge of the conduct of the business of the company at
the relevant time when the offence was committed. What
is stated in the complaint is only that Accused 2 to 6,being the partners, are responsible for the day-to-day
conduct and business of the company. It is also relevant
to note that an overall reading of the complaint would
not disclose any clear and specific role of the appellant.
18 This position was reiterated in K.S. Mehta v. Morgan
Securities & Credits (P) Ltd., 2025 SCC OnLine SC 492, wherein it
was observed:
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“16. This Court has consistently held that non-executive
and independent director(s) cannot be held liable under
Section 138 read with Section 141 of the NI Act unless
specific allegations demonstrate their direct involvement.
in affairs of the company at the relevant time.
16.1. This Court in National Small Industries Corpn.
Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 observed:
“13. Section 141 is a penal provision creating vicarious
liability, and which, as per settled law, must be strictly
construed. It is therefore not sufficient to make a bald,
cursory statement in a complaint that the Director(arrayed as an accused) is in charge of and responsible to
the company for the conduct of the business of the
company without anything more as to the role of the
Director. But the complaint should spell out as to how andin what manner Respondent 1 was in charge of or was
responsible to the accused Company for the conduct of itsbusiness. This is in consonance with the strict
interpretation of penal statutes, especially where such
statutes create vicarious liability.
22. Therefore, this Court has distinguished the case of
persons who are in charge of and responsible for the
conduct of the business of the company at the time of the
offence and the persons who are merely holding the postin a company and are not in charge of and responsible for
the conduct of the business of the company. Further, inorder to fasten the vicarious liability in accordance with
Section 141, the averment as to the role of the Directorsconcerned should be specific. The description should be
clear, and there should be some unambiguous allegations
as to how the Directors concerned were alleged to be in
charge of and were responsible for the conduct and affairs
of the company.
39. From the above discussion, the following principles
emerge: (i) The primary responsibility is on the
complainant to make specific averments as are required
under the law in the complaint so as to make the accused::: Downloaded on – 25/08/2025 21:24:49 :::CIS
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2025:HHC:28521vicariously liable. For fastening the criminal liability,
there is no presumption that every Director knows about
the transaction. (ii) Section 141 does not make all the
Directors liable for the offence. The criminal liability can.
be fastened only on those who, at the time of the
commission of the offence, were in charge of and were
responsible for the conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company
registered or incorporated under the Companies Act,
1956 only if the requisite statements, which are required
to be averred in the complaint/petition, are made so as to
make the accused therein vicariously liable for offencecommitted by the company along with averments in the
petition containing that the accused were in charge of and
responsible for the business of the company and by virtue
of their position they are liable to be proceeded with. (iv)Vicarious liability on the part of a person must be pleaded
and proved and not inferred. (v) If the accused is aManaging Director or a Joint Managing Director, then it is
not necessary to make a specific averment in the
complaint and by virtue of their position, they are liable to
be proceeded with. (vi) If the accused is a Director or anofficer of a company who signed the cheques on behalf of
the company, then also it is not necessary to make a
specific averment in the complaint. (vii) The personsought to be made liable should be in charge of and
responsible for the conduct of the business of the companyat the relevant time. This has to be averred as a fact as
there is no deemed liability of a director in such cases.”
16.2. In N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481, this
Court in Para 8 observed:
“To launch a prosecution against the alleged Directors,
there must be a specific allegation in the complaint as to
the part played by them in the transaction. There should
be a clear and unambiguous allegation as to how the
Directors are in charge and responsible for the conduct of
the business of the company. The description should be
clear. It is true that precise words from the provisions of::: Downloaded on – 25/08/2025 21:24:49 :::CIS
27
2025:HHC:28521the Act need not be reproduced, and the court can always
come to a conclusion in the facts of each case. But still, in
the absence of any averment or specific evidence, the net
result would be that the complaint would not be.
entertainable.”
16.3. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005)
8 SCC 89, this Court laid down that mere designation as a
director is not sufficient; specific role and responsibility
must be established in the complaint.
16.4. In Pooja Ravinder Devidasani v. State of
Maharashtra, (2014) 16 SCC 1, this Court while taking into
consideration that a non-executive director plays a
governance role, they are not involved in the daily
operations or financial management of the company,
held that to attract liability under Section 141 of the NI
Act, the accused must have been actively in charge of the
company’s business at the relevant time. Mere
directorship does not create automatic liability under the
Act. The law has consistently held that only those who are
responsible for the day-to-day conduct of business can
be held accountable.
16.5. In Ashok Shewakramani v. State of Andhra
Pradesh, (2023) 8 SCC 473, this Court held:
“8. After having considered the submissions, we are of the
view that there is non-compliance on the part of thesecond Respondent with the requirements of Sub-section
(1) of Section 141 of the NI Act. We may note here that we
are dealing with the Appellants who have been alleged tobe the Directors of the Accused No. 1 company. We are not
dealing with the cases of a Managing Director or a whole-
time Director. The Appellants have not signed the cheques.
In the facts of these three cases, the cheques have been
signed by the Managing Director and not by any of the
Appellants.”
16.6. In Hitesh Verma v. Health Care At Home India Pvt. Ltd.,
Crl. Appeal No. 462 of 2025, this Court held:
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“4. As the appellant is not a signatory to the cheque, he is
not liable under Section 138 of the 1881 Act. “As it is only
the signatory to the cheque who is liable under Section
138, unless the case is brought within the four corners of.
Section 141 of the 1881 Act, no other person can be held
liable….”
5. There are twin requirements under sub-Section (1) of
Section 141 of the 1881 Act. In the complaint, it must be
alleged that the person, who is sought to be held liable by
virtue of vicarious liability, at the time when the offence
was committed, was in charge of, and was responsible to
the company for the conduct of the business of the
company. A Director who is in charge of the company and
a Director who was responsible to the company for the
conduct of the business are two different aspects. The
requirement of law is that both the ingredients of sub-
Section (1) of Section 141 of the 1881 Act must be
incorporated in the complaint. Admittedly, there is no
assertion in the complaints that the appellant, at the time
of the commission of the offence, was in charge of the
business of the company. Therefore, on a plain reading of
the complaints, the appellant cannot be prosecuted with
the aid of sub-Section (1) of Section 141 of the 1881 Act.”
19. Therefore, the complainant should not only aver that
the accused is in charge but also that he is responsible to the
Company for its affairs.
20. In the present case, the averments contained in
paragraphs 14 and 22 of the complaint are reproduced as
under:-
“14. That the accused nos. 2 to 8 are office bearers of
the Management Committee of accused no.1.
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xxxx
22. That the accused no. 2 to 8 are office bearers of the
Management Committee of accused no.1.
According to the latest Audited Report for the year.
2019-2020 of the said society and they are persons
responsible for the conduct of business of accused
no.1 and the said cheque was issued at their behest
and with their knowledge, consent and connivanceto the complainant.”
21. It is apparent from these averments that there is no
mention that the petitioner is in charge and responsible for the
affairs of the society.
r It only mentions that the petitioner is
responsible for the conduct of the business of accused No.1,
which is distinct from the petitioner being in charge and
responsible for the affairs of the society. Therefore, the
averments do not satisfy the requirement of Section 141 of the NI
Act.
22 In the present case, the complaint does not show that
the cheque was issued at the behest of the present petitioner
with his knowledge, consent and connivance. Para 3 of the
complaint mentions that the accused No. 1 had opened a Branch.
Para-6 reads that accused Nos 2 and 6 visited the office and
expressed their desire to vacate the premises. Para-7 reads that
the complainant demanded payment from them, and accused
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Nos 2 and 6 issued a post-dated cheque, which was signed by
them. These averments show that the cheque was issued at the
.
instance of the accused no. 2 & 6, who had visited Theog. There
is nothing in the complaint that the present petitioner was
present at Theog, that the other accused had talked to him
telephonically to obtain his consent, or that accused 2 and 6 had
shown any letter written by the present petitioner authorising
them to issue the cheque; therefore, the mere bald reproduction
of Section 141 of the NI Act will not help the complainant.
23. It was submitted that an Administrator was
appointed to regulate the society, and notice was issued after the
appointment of the Administrator; therefore, the offence
punishable under Section 138 of the NI Act has not been
committed. It is unnecessary to adjudicate this plea because the
petitioner has succeeded on the ground that the necessary
averments to implicate him are missing. Any adjudication of this
question will affect the other accused, and in the absence of any
challenge to the summoning order by them, it will be prejudicial
to their interest to adjudicate this question. Hence, this question
is left open to be decided in an appropriate case.
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24. Thus, the present complaint does not contain the
necessary averments to summon the present petitioner as an
.
accused, and the learned Trial Court erred in summoning him.
Hence, the present petition is allowed, and the complaint
pending before the learned Additional Chief Judicial Magistrate,
Theog, H.P., is ordered to be quashed qua the present petitioner.
A copy of this judgment be sent to the concerned court for
information.
25. to
The observations made hereinbefore shall remain
confined to the disposal of the petition and will have no bearing,
whatsoever, on the merits of the case.
26. The present petition stands disposed of, and so are
the pending miscellaneous applications, if any.
(Rakesh Kainthla)
Judge
22nd August 2025
(ravinder)
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