Madhya Pradesh High Court
Subhojit vs Skm Steels Ltd. Through Its Business … on 28 July, 2025
Author: Sanjeev S Kalgaonkar
Bench: Sanjeev S Kalgaonkar
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IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE SANJEEV S KALGAONKAR
ON THE 28th OF JULY, 2025
MISC. CRIMINAL CASE No. 41874 OF 2023
SUBHOJIT
Versus
SKM STEELS LTD. & OTHERS
WITH
MISC. CRIMINAL CASE No. 41879 OF 2023
SUBHOJIT
Versus
SKM STEELS LTD.& OTHERS
Appearance:
Shri Sandeep Kochatta advocate for the petitioner.
Shri Vijay Kumar Assudani advocate for the respondent No.1.
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ORDER
M.Cr.C. No. 41874 of 2023 is filed for quashing criminal complaint
and subsequent criminal proceedings at SCNIA No. 27258/2015 pending
before Judicial Magistrate First Class Indore. M.Cr.C. No. 41879 of 2023 is
filed for quashing criminal complaint and subsequent criminal proceedings at
SCNIA No. 1165/2016 pending before Judicial Magistrate First Class Indore.
Both the matters involve identical issue, therefore, they are being considered
together.
2 The exposition of facts, in brief, giving rise to present petitions is as
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under:-
a. SKM Steels Limited, a public limited company, through its
business manager Bhuwanesh Mehta filed a written complaint for
offence punishable under Section 138 read with Sections 141 and 142
of Negotiable Instruments Act against (I) Omaxe Infrastructure and
Construction Ltd., (ii) Subhoji Dutta (petitioner), (iii) Abhishek Roy,
(iv) Pinaki Roy, (v) Shish Pal Singh and (vi) Col.P.S. Mangat.
b. It is alleged in the complaint that the accused company placed
purchase orders for Thermo Mechanically Treated (TMT) steel to the
complainant company in December, 2013. The complainant company
supplied TMT steel on credit pursuant to purchase order. The accused
No.1 company handed over post-dated cheques to the complainant. The
cheques in question were presented for payment with Bank of India,
but the cheques were returned with objection ‘payment stopped by
drawer’. After correspondence between the complainant and the
accused, new cheques No. 232328 dated 25.06.2015 and 232329 dated
25.07.2015 (in MCRC No. 41879/2023) and 232327 dated 25.05.2015
and 232330 dated 25.4.2015 (in MCRC No. 41874/2023) were issued.
When the complainant presented the cheques with the bank, the
cheques were dishonoured for the reason of insufficient funds. The
accused No. 4 Pinaki Roy was the Managing Director of accused No. 1,
Omaxe Infrastructure and Construction Ltd. and signatory of cheques
in question. Accused no. 2, 3 and 5 were directors of the complainant
company, who were incharge and responsible for day to day financial
affairs of the company and had personally assured Mr. Amitabh
Mandloi of the complainant company that said chequess would be
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honoured on presentation. Despite service of statutory notices dated
15.10.2015 (in MCRC No. 41879/2023) and 25.11.2014 (in MCRC No.
41874/2023), the accused failed to make payment of due amount,
therefore, the complaint for offence punishable under Sections 138 read
with 141 and 142 of the Act was filed before the learned Judicial
Magistrate First Class, Indore.
c. The learned JMFC vide impugned orders dated 14.09.2015 in
SCNIA No. 27258/15) (MCRC No. 41874/2023) and dated 18.01.2016
in SCNIA No. 1165/2016) (MCRC No. 41879/2023), took cognizance
against all the accused for offence punishable u/S 138 of the Act and
directed issuance of process against them. The identical orders passed
in both the matters read as under:-
”पपंजजीयन पर तरर्क श्रवण करयये गयये।
पररववादजी रजी ओर सये प्रसतस्तुत पररववाद पत्र एवपं उसरये सवाथ सपंलगन दसतवावयेजजपं रवा अवलजरन
करयवा गयवा।
आरजपजी क्रमवापंर 1 रपंपनजी हहै एवपं आरजपजी क्रमवापंर 2 लगवायत 5 उकत रपंपनजी रये डवायरयेकक्टर
एवपं आरजपजी क्रमवापंर 6 रपंपनजी रवा प्रजजयेकक्ट, महैनयेजर हहै कजसरये दवारवा पररववादजी रपंपनजी रज पत्र
कदनवापंर 28.01.14 प्रजजयेकक्ट डवायरयेकक्टर रजी हहैकसयत सये कलखवा गयवा हहै तथवा यह आशववासन
कदयवा गयवा हहै कर आरजपजी रपंपनजी रवाकशि रवा भस्तुगतवान ररयेगजी और यकद करसजी प्ररवार रवा कवलपंब
रवाररत हजतवा हहै तज 18 प्रकतशित रजी दर सये बयवाज दयेय हजगवा। अत: अकभलयेख ममें इस सपंबपंध ममें
पयवार्कपत सवाकय ममौजजूद हहै कर आरजपजीगण नये प्रदवाय करयये गयये चयेर रवा अनवादरण करयवा हहै तथवा
अकभयजगजी नये अकधकनयम ममें उललयेखखत अवकध रये अपंदर सपंपजूणर्क रवायर्कववाहजी रजी हहै। प्रथम दृषक्टयवा
उकत आधवार पर आरजपजीगण रये कवरूद्ध धवारवा 138 परक्रवामय कलखखत अकधकनयम रये अधजीन
रवायर्कववाहजी हयेतस्तु पयवार्कपत आधवार कवद्यमवान प्रतजीत हजतये हहैं अत: आरजपजीगण रये कवरूद्ध धवारवा 138
परक्रवामय कलखखत अकधकनयम रये अपरवाध रये तहत सपंजवान कलयवा जवातवा हहै। ”
3 Feeling aggrieved by the aforestated orders dated 14.09.2015 and
18.01.2016, these petitions MCRC No. 41874/2023 and MCRC No.
41879/2023 under Section 482 of Code of Criminal Procedure are filed.
4 Learned counsel for the petitioner, referring to the judgments passed in
cases SMS Pharmaceuticals Vs. Neeta Bhalla reported in AIR 2005 SC
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3512; Sabitha Ramamurthy Vs. RBS Channabasavardhya reported in
(2006) 10 SCC 581; Saroj Kumar Poddar Vs. State (NCT of Delhi) reported
in (2007) 3 SCC 693; National Small Industries Corporation Ltd Vs.
Harmeet Singh Paintal reported in (2010) 3 SCC 330; Anita Malhotra Vs.
Apparel Export Promotioin Council reported in (2012) 1 SCC 520;
Gunmala Sales Pvt Ltd. Vs. Anul Mehta and others reported in (2015) 1
SCC 103; Pooja Ravinder Devidasani Vs. State of Maharashtra reported in
AIR 2015 SC 675; Sunita Palita Vs. Panchami Stone Quarry reported in
AIR Online 2022 SC 1198; M.A. Alagappan Vs. PVT Ltd reported in 2024
SCC Online Delhi 698; Bharat Dhirajilal Mehta Vs. OXYZO Financial
Services Pvt Ltd. reported in 2024 SCC Online Del 3589; Sandip
Vinodkumar Patel and others Vs. STCI Finance Ltd reported in 2024 SCC
Online Del 5586; Seema Asthana Vs. Jaideep Arora reported in 2024 SCC
Online Del 6844, K.S. Mehta Vs. Morgan Securities and Credits Pvt Ltd.
reported in 2025 SCC Online SC 492 and Kamalkishor Shrigopal Taparia
Vs. India Ener-Gen Private Limited reported in 2025 SCC Online SC 321
contended that the complainant has failed to make specific allegations in the
complaint that the petitioner was in-charge of and was responsible to the
accused company for conduct of its business. Further, no averments have
been made in the complaint that the alleged offence was committed with
consent or connivance or any neglect on the part of applicant. The general
and omnibus allegations with regard to the assurance to honour the cheque,
allegedly given by the petitioner, would not make the petitioner responsible to
the accused company for conduct of business. Therefore, the petitioner cannot
be prosecuted with the help of Section 141 of the Act, 1881.
5 Per contra learned counsel for the respondents, referred the judgment
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of the Supreme court in case of S.V. Muzumdar and others Vs. Gujarat State
Fertilizer Co. Ltd. reported in (2005) 4 SCC 173 to contend that burden to
prove that offence was not committed with consent or connivance or neglect
of the petitioner is on the petitioner/accused. The question has to be
adjudicated at the trial. Whether a person was incharge or responsible to the
company for conduct of its business will be adjudicated on the basis of
material appearing in evidence. Therefore, the proceedings cannot be quashed
at the initial stage.
6 Learned counsel for the respondent relying on the judgment of
Supreme Court in the cases of N.K. Wahi Vs. Shekhar Singh and another
reported in (2007) 9 SCC 481 contended that the provisions contained in
Section 141 of the Act makes all the functionaries and the company liable for
the offence punishable u/S 138 of the Act. Section 141(2) of the Act provides
for vicarious liability of other officers also. The petitioner had given
assurance for honor of cheques issued towards supply of TMT Steel bars,
therefore, the petitioner is liable u/S 141(2) of the Act for the alleged offence.
7 Heard learned counsel for the parties. Perused the record.
8 In case of State of Haryana v. BhajanLal reported in 1992 Supp (1)
SCC 335, the Supreme Court laid down the principles for the exercise of the
jurisdiction by the High Court under Section 482 Cr.P.C to quash the
proceedings, as under :
“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 Cr.P.C which we 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 otherwise to 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
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list of myriad kinds 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 their
entirety do not prima facie constitute any offence or make out a case against
the accused.
(2) Where the allegations in the first information report and other materials, if
any, accompanying the FIR do not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) CrPC except under an
order of a Magistrate within the purview of Section 155(2) CrPC.
(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 non-cognizable offence, no investigation is permitted by
a police officer without an order of a Magistrate as contemplated under
Section 155(2) CrPC.
(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 that there 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 Act concerned (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 an ulterior motive for
wreaking vengeance on the accused and with a view to spite him due to
private and personal grudge.”
9 The Supreme Court in the case of Rajiv Thapar v. Madan Lal Kapoor,
(2013) 3 SCC 330, laid down the steps to be followed for exercise of
jurisdiction under Section 482 of Cr.P.C, for quashing of proceedings as
under:-
”29. The issue being examined in the instant case is the jurisdiction of the High Court
under Section 482 CrPC, if it chooses to quash the initiation of the prosecution
against an accused at the stage of issuing process, or at the stage of committal, or
even at the stage of framing of charges. These are all stages before the
commencement of the actual trial. The same parameters would naturally be available
for later stages as well. The power vested in the High Court under Section 482 CrPC,
at the stages referred to hereinabove, would have far-reaching consequences
inasmuch as it would negate the prosecution’s/complainant’s case without allowing
the prosecution/complainant to lead evidence. Such a determination must always be
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rendered with caution, care and circumspection. To invoke its inherent jurisdiction
under Section 482 CrPC the High Court has to be fully satisfied that the material
produced by the accused is such that would lead to the conclusion that his/their
defence is based on sound, reasonable, and indubitable facts; the material produced is
such as would rule out and displace the assertions contained in the charges levelled
against the accused; and the material produced is such as would clearly reject and
overrule the veracity of the allegations contained in the accusations levelled by the
prosecution/complainant. It should be sufficient to rule out, reject and discard the
accusations levelled by the prosecution/complainant, without the necessity of
recording any evidence. For this the material relied upon by the defence should not
have been refuted, or alternatively, cannot be justifiably refuted, being material of
sterling and impeccable quality. The material relied upon by the accused should be
such as would persuade a reasonable person to dismiss and condemn the actual basis
of the accusations as false. In such a situation, the judicial conscience of the High
Court would persuade it to exercise its power under Section 482 CrPC to quash such
criminal proceedings, for that would prevent abuse of process of the court and secure
the ends of justice.
30. Based on the factors canvassed in the foregoing paragraphs, we would delineate
the following steps to determine the veracity of a prayer for quashment raised by an
accused by invoking the power vested in the High Court under Section 482 CrPC:
30.1. Step one: whether the material relied upon by the accused is sound,
reasonable, and indubitable i.e. the material is of sterling and impeccable
quality?
30.2. Step two: whether the material relied upon by the accused would rule out
the assertions contained in the charges levelled against the accused i.e. the
material is sufficient to reject and overrule the factual assertions contained in the
complaint i.e. the material is such as would persuade a reasonable person to
dismiss and condemn the factual basis of the accusations as false?
30.3. Step three: whether the material relied upon by the accused has not been
refuted by the prosecution/complainant; and/or the material is such that it cannot
be justifiably refuted by the prosecution/complainant?
30.4. Step four: whether proceeding with the trial would result in an abuse of
process of the court, and would not serve the ends of justice? 30.5. If the answer
to all the steps is in the affirmative, the judicial conscience of the High Court
should persuade it to quash such criminal proceedings in exercise of power
vested in it under Section 482 CrPC. Such exercise of power, besides doing
justice to the accused, would save precious court time, which would otherwise
be wasted in holding such a trial (as well as proceedings arising therefrom)
specially when it is clear that the same would not conclude in the conviction of
the accused.”
30.5. If the answer to all the steps is in the affirmative, the judicial conscience
of the High Court should persuade it to quash such criminal proceedings in
exercise of power vested in it under Section 482 CrPC. Such exercise of power,
besides doing justice to the accused, would save precious court time, which
would otherwise be wasted in holding such a trial (as well as proceedings
arising therefrom) specially when it is clear that the same would not conclude in
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the conviction of the accused. In light of aforementioned propositions of law, the
fact scenario revealed by the material on record is examined.
10 In the case of Lalankumar Singh v. State of Maharashtra reported in
2022 SCC OnLine SC 1383, it was held that:
28. The order of issuance of process is not an empty formality. The Magistrate is
required to apply his mind as to whether sufficient ground for proceeding exists in
the case or not. The formation of such an opinion is required to be stated in the order
itself. The order is liable to be set aside if no reasons are given therein while coming
to the conclusion that there is a prima facie case against the accused. No doubt, that
the order need not contain detailed reasons. A reference in this respect could be
made to the judgment of this Court in the case of Sunil Bharti Mittal v. Central
Bureau of Investigation, which reads thus:
51. On the other hand, Section 204 of the Code deals with the issue of process,
if in the opinion of the Magistrate taking cognizance of an offence, there is
sufficient ground for proceeding. This section relates to commencement of a
criminal proceeding. If the Magistrate taking cognizance of a case (it may be
the Magistrate receiving the complaint or to whom it has been transferred
under Section 192), upon a consideration of the materials before him (i.e. the
complaint, examination of the complainant and his witnesses, if present, or
report of inquiry, if any), thinks that there is a prima facie case for proceeding
in respect of an offence, he shall issue process against the accused.
52. A wide discretion has been given as to grant or refusal of process and it
must be judicially exercised. A person ought not to be dragged into court
merely because a complaint has been filed. If a prima facie case has been made
out, the Magistrate ought to issue process and it cannot be refused merely
because he thinks that it is unlikely to result in a conviction.
53. However, the words “sufficient ground for proceeding” appearing in
Section 204 are of immense importance. It is these words which amply suggest
that an opinion is to be formed only after due application of mind that there is
sufficient basis for proceeding against the said accused and formation of such
an opinion is to be stated in the order itself. The order is liable to be set aside if
no reason is given therein while coming to the conclusion that there is prima
facie case against the accused, though the order need not contain detailed
reasons. A fortiori, the order would be bad in law if the reason given turns out
to be ex facie incorrect.
11 Section 141 of the Act, 1881 postulates constructive liability of the
Directors of the Company and other persons responsible for the conduct of
it’s business. It provides as under:
141. Offences by companies —
(1) If the person committing an offence under section 138 is a company, every
9NEUTRAL CITATION NO. 2025:MPHC-IND:19689
person who, at the time the offence was committed, 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 be liable to be
proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any person liable
to punishment if he proves that the offence was committed without his knowledge,
or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by
virtue of his holding any office or employment in the Central Government or State
Government or a financial he shall not be liable for prosecution under this Chapter.
(2) Notwithstanding anything contained in sub-section (1), where any offence under
this Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and punished accordingly.
Explanation.–For the purposes of this section, —
(a) “company” means any body corporate and includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.
12 Thus, every person, who was in charge of and was responsible to the
company for the conduct of the business of the company, shall be liable to be
proceeded against. So far as, sub-section (2) of Section 141 of the Act, 1881
is concerned, specific averments are required that the offence was committed
with the consent of or in connivance with, is attributable to the Director,
Manager, Secretary or other officer of the company.
13 Section 149 of the Companies Act, 2013 provides for Board of
Director. It further provides for the duties and responsibilities of an
independent Director as under:-
***********
(6) An independent director in relation to a company, means a director other than
managing director or a whole-time director or a nominee director,–
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant
expertise and experience;
(b) (i) who is or was not a promoter of the company or its holding, subsidiary or
associate company;
(ii) who is not related to promoters or directors in the company, its holding,
subsidiary or associate company;
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(c) who has or had no pecuniary relationship, other than remuneration as such
director or having transaction not exceeding ten per cent. of his total income or such
amount as may be prescribed,] with the company, its holding, subsidiary or associate
company, or their promoters, or directors, during the two immediately preceding
financial years or during the current financial year;
(d) none of whose relatives–
(i) is holding any security of or interest in the company, its holding, subsidiary or
associate company during the two immediately preceding financial years or during
the current financial year:
Provided that the relative may hold security or interest in the company of face
value not exceeding fifty lakh rupees or two per cent. of the paid-up capital of the
company, its holding, subsidiary or associate company or such higher sum as may
be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or
their promoters, or directors, in excess of such amount as may be prescribed during
the two immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the
indebtedness of any third person to the company, its holding, subsidiary or
associate company or their promoters, or directors of such holding company, for
such amount as may be prescribed during the two immediately preceding financial
years or during the current financial year; or
(iv) has any other pecuniary transaction or relationship with the company, or its
subsidiary, or its holding or associate company amounting to two per cent. or more
of its gross turnover or total income singly or in combination with the transactions
referred to in sub-clause (i), (ii) or (iii);]
(e) who, neither himself nor any of his relatives–
(i) holds or has held the position of a key managerial personnel or is or has been
employee of the company or its holding, subsidiary or associate company in any of
the three financial years immediately preceding the financial year in which he is
proposed to be appointed; 3 [Provided that in case of a relative who is an
employee, the restriction under this clause shall not apply for his employment
during preceding three financial years.]
(ii) is or has been an employee or proprietor or a partner, in any of the three
financial years immediately preceding the financial year in which he is proposed to
be appointed, of–
(A) a firm of auditors or company secretaries in practice or cost auditors of the
company or its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the
company, its holding, subsidiary or associate company amounting to ten per cent.
or more of the gross turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting power
of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any nonprofit
organisation that receives twenty-five per cent. or more of its receipts from the
company, any of its promoters, directors or its holding, subsidiary or associate
company or that holds two per cent. or more of the total voting power of the
11NEUTRAL CITATION NO. 2025:MPHC-IND:19689
company; or
(f) who possesses such other qualifications as may be prescribed.
(7) Every independent director shall at the first meeting of the Board in which he
participates as a director and thereafter at the first meeting of the Board in every
financial year or whenever there is any change in the circumstances which may affect
his status as an independent director, give a declaration that he meets the criteria of
independence as provided in sub-section (6).
Explanation.–For the purposes of this section, “nominee director” means a director
nominated by any financial institution in pursuance of the provisions of any law for
the time being in force, or of any agreement, or appointed by any Government, or
any other person to represent its interests.
(8) The company and independent directors shall abide by the provisions specified in
Schedule IV.
(9) Notwithstanding anything contained in any other provision of this Act, but
subject to the provisions of sections 197 and 198, an independent director shall not be
entitled to any stock option and may receive remuneration by way of fee provided
under sub-section (5) of section 197, reimbursement of expenses for participation in
the Board and other meetings and profit related commission as may be approved by
the members.
[Provided that if a company has no profits or its profits are inadequate, an
independent director may receive remuneration, exclusive of any fees payable under
sub-section (5) of section 197, in accordance with the provisions of Schedule V.]
(10) Subject to the provisions of section 152, an independent director shall hold
office for a term up to five consecutive years on the Board of a company, but shall be
eligible for reappointment on passing of a special resolution by the company and
disclosure of such appointment in the Board’s report.
(11) Notwithstanding anything contained in sub-section (10), no independent director
shall hold office for more than two consecutive terms, but such independent director
shall be eligible for appointment after the expiration of three years of ceasing to
become an independent director:
Provided that an independent director shall not, during the said period of three
years, be appointed in or be associated with the company in any other capacity, either
directly or indirectly.
Explanation.–For the purposes of sub-sections (10) and (11), any tenure of an
independent director on the date of commencement of this Act shall not be counted
as a term under those sub-sections.
(12) Notwithstanding anything contained in this Act,–
(i) an independent director;
(ii) a non-executive director not being promoter or key managerial personnel,
shall be held liable, only in respect of such acts of omission or commission by a
company which had occurred with his knowledge, attributable through Board
processes, and with his consent or connivance or where he had not acted diligently.
14 Schedule IV of the Companies Act, 2013 lays down the code for
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independent Director and his roles and functions.
II. Role and functions:
The independent directors shall:
(1) help in bringing an independent judgment to bear on the Board’s deliberations
especially on issues of strategy, performance, risk management, resources, key
appointments and standards of conduct;
(2) bring an objective view in the evaluation of the performance of board and
management;
(3) scrutinise the performance of management in meeting agreed goals and objectives
and monitor the reporting of performance;
(4) satisfy themselves on the integrity of financial information and that financial
controls and the systems of risk management are robust and defensible;
(5) safeguard the interests of all stakeholders, particularly the minority shareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of executive directors, key
managerial personnel and senior management and have a prime role in appointing
and where necessary recommend removal of executive directors, key managerial
personnel and senior management;
(8) moderate and arbitrate in the interest of the company as a whole, in situations of
conflict between management and shareholder’s interest.
III. Duties :
The independent directors shall–
(1) undertake appropriate induction and regularly update and refresh their skills,
knowledge and familiarity with the company;
(2) seek appropriate clarification or amplification of information and, where
necessary, take and follow appropriate professional advice and opinion of outside
experts at the expense of the company;
(3) strive to attend all meetings of the Board of Directors and of the Board
committees of which he is a member;
(4) participate constructively and actively in the committees of the Board in which
they are chairpersons or members;
(5) strive to attend the general meetings of the company;
(6) where they have concerns about the running of the company or a proposed action,
ensure that these are addressed by the Board and, to the extent that they are not
resolved, insist that their concerns recorded in the minutes of the Board meeting;
(7) keep themselves well informed about the company and the external environment
in which it operates;
(8) not to unfairly obstruct the functioning of an otherwise proper Board or
committee of the Board;
(9) pay sufficient attention and ensure that adequate deliberations are held before
approving related party transactions and assure themselves that the same are in the
interest of the company;
(10) ascertain and ensure that the company has an adequate and functional vigil
mechanism and to ensure that the interests of a person who uses such mechanism are
not prejudicially affected on account of such use;
13
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
(11) report concerns about unethical behavior, actual or suspected fraud or violation
of the company’s code of conduct or ethics policy;
(12) acting within their authority, assist in protecting the legitimate interests of the
company, shareholders and its employees;
(13) not disclose confidential information, including commercial secrets,
technologies, advertising and sales promotion plans, unpublished price sensitive
information, unless such disclosure is expressly approved by the Board or required
by law.
15 The roles, functions and the duties of an independent director show that
an independent Director does not indulge in day to day functioning of a
company. Therefore, an independent Director is made liable only in respect of
such acts of omission or commission by a company which had occurred with
his knowledge, attributable through Board processes and with his consent or
connivance or where he had not acted diligently.
16 Learned counsel for the petitioner referring to copy of Form DIR-12
pursuant to Section 7(i)(c), 168, 170(2) of Companies Act, 2013 and Rule 17
of Companies (Incorporation) Rules, 2014 and Sections 8, 15 and 18 of
Company (Appointment and Qualification of Directors) Rules, 2014
( Annexure A-5) submitted that the petitioner Subhojit Dutta has resigned
from M/s Reom Infrastructure and Construction Ltd w.e.f. 10.12.2015 as
Additional Director. Learned counsel further referred to copy of Form No. 32
pursuant to Section 303(2), 264(2), 266(1)(a) and 266 (1)(b)(iii) of
Companies Act, 1956 (Annexure P-4) and submitted that Shubhojit Dutta was
inducted in Omaxe Infrastructure and Construction Ltd. as Additional
Director (independent) w.e.f. 28.03.2013. The above information is verifiable
from the official website of the Ministry of Corporate Affairs. Thus, at the
most, it can be inferred that petitioner Subhojit Dutta was associated with
Omaxe Infrastructure and Construction Ltd. as an independent Additional
Director.
14
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
17 The respondent did not submit any documents to dispute the above
information. In the case of Anita Malhotra v. Apparel Export Promotion
Council and Another, reported in (2012) 1 SCC 520, the Apex court has held
as under:-
21. Inasmuch as the certified copy of the annual return dated 30-9-1999 is a public
document, more particularly, in view of the provisions of the Companies Act, 1956
read with Section 74(2) of the Evidence Act, 1872, we hold that the appellant had
validly resigned from the Directorship of the Company even in the year 1998 and
she cannot be held responsible for the dishonour of the cheques issued in the year
2004.
22. This Court has repeatedly held that in case of a Director, the complaint should
specifically spell out how and in what manner the Director was in charge of or was
responsible to the accused company for conduct of its business and mere bald
statement that he or she was in charge of and was responsible to the company for
conduct of its business is not sufficient. (Vide National Small Industries Corpn.
Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330). In the case on hand, particularly,
in Para 4 of the complaint, except the mere bald and cursory statement with regard to
the appellant, the complainant has not specified her role in the day-to-day affairs of
the Company. We have verified the averments as regards to the same and we agree
with the contention of Mr Akhil Sibal that except reproduction of the statutory
requirements the complainant has not specified or elaborated the role of the
appellant in the day-to-day affairs of the Company. On this ground also, the
appellant is entitled to succeed.
23. In the light of the above discussion and of the fact that the appellant has
established that she had resigned from the Company as a Director in 1998, well
before the relevant date, namely, in the year 2004, when the cheques were issued, the
High Court, in the light of the acceptable materials such as the certified copy of the
annual return dated 30-9-1999 and Form 32 ought to have exercised its jurisdiction
under Section 482 and quashed the criminal proceedings. We are unable to accept
the reasoning of the High Court and we are satisfied that the appellant has made out
a case for quashing the criminal proceedings. Consequently, Criminal Complaint No.
993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein (A-
3) is concerned, is quashed and the appeal is allowed.
18 In the case of Sabitha Ramamurthy and another v. R.B.S.
Channabasavaradhya, reported in (2006) 10 SCC 581, it has been held that:-
7. A bare perusal of the complaint petitions demonstrates that the statutory
requirements contained in Section 141 of the Negotiable Instruments Act had not
been complied with. It may be true that it is not necessary for the complainant to
specifically reproduce the wordings of the section but what is required is a clear
15NEUTRAL CITATION NO. 2025:MPHC-IND:19689
statement of fact so as to enable the court to arrive at a prima facie opinion that the
accused are vicariously liable. Section 141 raises a legal fiction. By reason of the
said provision, a person although is not personally liable for 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. Before a person can be made
vicariously liable, strict compliance with the statutory requirements would be
insisted. Not only the averments made in para 7 of the complaint petitions do not
meet the said statutory requirements, the sworn statement of the witness made by
the son of the respondent herein, does not contain any statement that the appellants
were in charge of the business of the Company. In a case where the court is
required to issue summons which would put the accused to some sort of
harassment, the court should insist strict compliance with the statutory
requirements. In terms of Section 200 of the Code of Criminal Procedure, the
complainant is bound to make statements on oath as to how the offence has been
committed and how the accused persons are responsible therefor. In the event,
ultimately, the prosecution is found to be frivolous or otherwise mala fide, the court
may direct registration of case against the complainant for mala fide prosecution of
the accused. The accused would also be entitled to file a suit for damages. The
relevant provisions of the Code of Criminal Procedure are required to be construed
from the aforementioned point of view.
8. This Court in Monaben Ketanbhai Shah v. State of Gujarat [(2004) 7 SCC 15 :
2004 SCC (Cri) 1857] held as under: (SCC pp. 18-19, para 6)
“6. From the above, it is evident that in the complaint there are no averments
against the appellants except stating in the title that they are partners of the firm.
Learned counsel for the respondent complainants contended that a copy of the
partnership deed was also filed which would show that the appellants were
active in the business. No such document was filed with the complaint or made
part thereof. The filing of the partnership deed later is of no consequence for
determining the point in issue. Section 141 does not make all partners liable for
the offence. The criminal liability has been fastened on those who, at the time of
the commission of the offence, were in charge of and were responsible to the
firm for the conduct of the business of the firm. These may be sleeping partners
who are not required to take any part in the business of the firm; they may be
ladies and others who may not know anything about the business of the firm.
The primary responsibility is on the complainant to 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
complainant makes necessary averments in the complaint and establishes that
fact. The present case is of total absence of requisite averments in the
complaint.”
16
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
19 In the matter of National Small Industries Corporation Ltd. v.
Harmeet Singh Paintal and another reported in (2010) 3 SCC 330, the
Supreme Court observed as under:-
12. It is very clear from the above provision that what is required is that the persons
who are sought to be made vicariously liable for a criminal offence under Section
141 should be, at the time the offence was committed, was in charge of, and was
responsible to the company for the conduct of the business of the company. Every
person connected with the company shall not fall within the ambit of the provision.
Only those persons who were in charge of and responsible for the conduct of the
business of the company at the time of commission of an offence will be liable for
criminal action. It follows from the fact that if a Director of a company 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 a criminal offence under the provisions. 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.
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 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 with 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 that they are in charge of
and responsible for the conduct of the business of the company without anything
more is not a sufficient or adequate fulfilment of the requirements under Section 141.
15. In a catena of decisions, this Court has held that for making Directors liable for
the offences committed by the company under Section 141 of the Act, there must be
specific averments against the Directors, showing as to how and in what manner the
Directors were responsible for the conduct of the business 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
vicariously 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
17NEUTRAL CITATION NO. 2025:MPHC-IND:19689
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 offence committed 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 a Managing Director or a Joint Managing Director then it is
not necessary to make 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 an officer of a company who signed the
cheques on behalf of the company then also it is not necessary to make specific
averment in the complaint.
(vii) The person sought to be made liable should be in charge of and
responsible for the conduct of the business of the company at the relevant time.
This has to be averred as a fact as there is no deemed liability of a Director in
such cases.
20 In case of Pooja Ravinder Devidasani Vs State of Maharashtra and
another reported in AIR 2015 SC 675, it has been held :-
27. Unfortunately, the High Court did not deal the issue in a proper perspective and
committed error in dismissing the writ petitions by holding that in the complaints
filed by Respondent 2, specific averments were made against the appellant. But on
the contrary, taking the complaint as a whole, it can be inferred that in the entire
complaint, no specific role is attributed to the appellant in the commission of
offence. It is settled law that to attract a case under Section 141 of the NI Act a
specific role must have been played by a Director of the company for fastening
vicarious liability. But in this case, the appellant was neither a Director of the
accused Company nor in charge of or involved in the day-to-day affairs of the
Company at the time of commission of the alleged offence. There is not even a
whisper or shred of evidence on record to show that there is any act committed by
the appellant from which a reasonable inference can be drawn that the appellant
could be vicariously held liable for the offence with which she is charged.
28. In the entire complaint, neither the role of the appellant in the affairs of the
Company was explained nor in what manner the appellant is responsible for the
conduct of business of the Company, was explained. From the record it appears that
the trade finance facility was extended by Respondent 2 to the default Company
during the period from 13-4-2008 to 14-10-2008, against which the cheques were
issued by the Company which stood dishonoured. Much before that on 17-12-2005
the appellant resigned from the Board of Directors. Hence, we have no hesitation to
hold that continuation of the criminal proceedings against the appellant under
18NEUTRAL CITATION NO. 2025:MPHC-IND:19689
Section 138 read with Section 141 of the NI Act is a pure abuse of process of law
and it has to be interdicted at the threshold.
30. Putting the criminal law into motion is not a matter of course. To settle the scores
between the parties which are more in the nature of a civil dispute, the parties cannot
be permitted to put the criminal law into motion and courts cannot be a mere
spectator to it. Before a Magistrate taking cognizance of an offence under Sections
138/141 of the NI Act, making a person vicariously liable has to ensure strict
compliance with the statutory requirements. The superior courts should maintain
purity in the administration of justice and should not allow abuse of the process of
the court. The High Court ought to have quashed the complaint against the appellant
which is nothing but a pure abuse of process of law.
21 The Supreme court in the matter of S.M.S. Pharmaceuticals Ltd Vs.
Neeta Bhalla, reported in AIR 2005 SC 3512 (Three Judges Bench) has held
as under:-
12. While analysing Section 141 of the Act, it will be seen that it operates in cases
where an offence under Section 138 is committed by a company. The key words
which occur in the section are “every person”. These are general words and take
every person connected with a company within their sweep. Therefore, these words
have been rightly qualified by use of the words “who, at the time the offence was
committed, 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, etc.” 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
business of 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 and
responsible for the conduct of business of the company at the time of commission of
an offence, who will be liable 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 the company 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 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 the 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 so far as the person sought to be made liable is concerned. Therefore,
19NEUTRAL CITATION NO. 2025:MPHC-IND:19689
only persons who can be said to be connected with the commission of a crime at the
relevant time have been subjected to action.
13. A reference to sub-section (2) of Section 141 fortifies the above reasoning
because sub-section (2) envisages direct involvement of any director, manager,
secretary or other officer of a company in the commission of an offence. This section
operates when in a trial it is proved that the offence has been committed with the
consent or connivance or is attributable to neglect on the part of any of the holders of
these offices in a company. In such a case, such persons are to be held liable.
Provision has been made for directors, managers, secretaries and other officers of a
company to cover them in cases of their proved involvement.
14. The conclusion is inevitable that the liability arises on account of conduct, act or
omission on the part of a person and not merely on account of holding an office or a
position in a company. Therefore, in order to bring a case within Section 141 of the
Act the complaint must disclose the necessary facts which make a person liable.
**********
**********
19. To sum up, there is 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 to be 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 spelled 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 has to be spelled out. A complaint has to be examined by the Magistrate
in the first instance on the basis of averments 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 that merely 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.
20. In view of the above discussion, our answers to the questions posed in the
Reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the
time the offence was committed, the person accused was in charge of, and
responsible for the conduct of business of the company. This averment is an
essential requirement of Section 141 and has to be made in a complaint. Without
this averment being made in a complaint, the requirements of Section 141 cannot
be said to be satisfied.
(b) The answer to question posed in sub-para (b) has to be in negative. Merely
being a director of a company is not sufficient to make the person liable
under Section 141 of the Act. A director in a company cannot be deemed to be in
charge of and responsible to the company for conduct of its business. The
requirement of Section 141 is that the person sought to be made liable should be in
20NEUTRAL CITATION NO. 2025:MPHC-IND:19689
charge of and responsible for the conduct of the business of the company at the
relevant time. This has to be averred as a fact as there is no deemed liability of a
director in such cases.
(c) The answer to question (c) has to be in affirmative. The question notes that
the Managing Director or Joint Managing Director would be admittedly in charge
of the company and responsible to the company for conduct of its business. When
that is so, holders of such positions in a company become liable under Section
141 of the Act. By virtue of the office they hold as Managing Director or Joint
Managing Director, these persons are in charge of and responsible for the conduct
of business of the company. Therefore, they get covered under Section 141. So far
as signatory of a cheque which is dishonoured is concerned, he is clearly
responsible for the incriminating act and will be covered under sub-section (2) off
Section 141.
22 In the case of K.K. Ahuja v. V.K. Vora & Another reported in 2009 (10)
SCC 48, it was held that mere fact that at some point of time an officer of a
company had played some role in the financial affairs of the company, that
will not be sufficient to attract the constructive liability under Section 141 of
the NI Act. The Supreme Court summarised the legal position as follows:
27. (i) If the accused is the Managing Director or a Joint Managing Director, it is not
necessary to make an averment in the complaint that he is in charge of, and is
responsible to the company, for the conduct of the business of the company. It is
sufficient if an averment is made that the accused was the Managing Director or
Joint Managing Director at the relevant time. This is because the prefix ‘Managing’
to the word ‘Director’ makes it clear that they were in charge of and are responsible
to the company, for the conduct of the business of the company.
(ii) In the case of a Director or an officer of the company who signed the cheque on
behalf of the company, there is no need to make a specific averment that he was in
charge of and was responsible to the company, for the conduct of the business of the
company or make any specific allegation about consent, connivance or negligence.
The very fact that the dishonoured cheque was signed by him on behalf of the
company, would give rise to responsibility under sub-section (2) of Section 141.
(iii) In the case of a Director, secretary or manager as defined in Section 2(24) of the
Companies Act or a person referred to in clauses (e) and (f) of Section 5 of the
Companies Act, an averment in the complaint that he was in charge of, and was
responsible to the company, for the conduct of the business of the company is
necessary to bring the case under Section 141(1) of the Act. No further averment
would be necessary in the complaint, though some particulars will be desirable. They
can also be made liable under Section 141(2) by making necessary averments
relating to consent and connivance or negligence, in the complaint, to bring the
matter under that sub-section.
(iv) Other officers of a company cannot be made liable under sub-section (1) of
21
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
Section 141. Other officers of a company can be made liable only under sub-section
(2) of Section 141, by averring in the complaint their position and duties in the
company and their role in regard to the issue and dishonour of the cheque, disclosing
consent, connivance or negligence.
23 It was further observed that if a mere reproduction of the wording of
Section 141(1) of the Act in the complaint was sufficient to make a person
liable to face prosecution, virtually, every officer/employee of a company
without exception could be impleaded as accused by merely making an
averment that at the time, when the offence was committed, they were in
charge of and were responsible to the company for the conduct of business of
the company.
24 In the case of Harshendra Kumar D. Vs. Rebilata Koley reported in
(2011) 3 SCC 351, it was held that:
25. In our judgment, the above observations cannot be read to mean that in a
criminal case where trial is yet to take place and the matter is at the stage of issuance
of summons or taking cognizance, materials relied upon by the accused which are in
the nature of public documents or the materials which are beyond suspicion or
doubt, in no circumstance, can be looked into by the High Court in exercise of its
jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction
under Section 397 of the Code. It is fairly settled now that while exercising inherent
jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the
Code in a case where complaint is sought to be quashed, it is not proper for the High
Court to consider the defence of the accused or embark upon an enquiry in respect
of merits of the accusations. However, in an appropriate case, if on the face of the
documents, which are beyond suspicion or doubt, placed by the accused, the
accusations against him cannot stand, it would be travesty of justice if the accused is
relegated to trial and he is asked to prove his defence before the trial court. In such a
matter, for promotion of justice or to prevent injustice or abuse of process, the High
Court may look into the materials which have significant bearing on the matter at
prima facie stage.
26. Criminal prosecution is a serious matter; it affects the liberty of a person. No
greater damage can be done to the reputation of a person than dragging him in a
criminal case. In our opinion, the High Court fell into grave error in not taking into
consideration the uncontroverted documents relating to the appellant’s resignation
from the post of Director of the Company. Had these documents been considered by
the High Court, it would have been apparent that the appellant has resigned much
before the cheques were issued by the Company.
27. As noticed above, the appellant resigned from the post of Director on 2-3-2004.
22
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
The dishonoured cheques were issued by the Company on 30-4-2004 i.e. much after
the appellant had resigned from the post of Director of the Company. The
acceptance of the appellant’s resignation is duly reflected in the Resolution dated 2-
3-2004. Then in the prescribed form (Form 32), the Company informed to the
Registrar of Companies on 4-3-2004 about the appellant’s resignation. It is not even
the case of the complainants that the dishonoured cheques were issued by the
appellant. These facts leave no manner of doubt that on the date the offence was
committed by the Company, the appellant was not the Director; he had nothing to do
with the affairs of the Company. In this view of the matter, if the criminal
complaints are allowed to proceed against the appellant, it would result in gross
injustice to the appellant and tantamount to an abuse of process of the court.
25 The Supreme court in case of Sunita Palita Vs. Panchami Stone
Quarry reported in 2022 (10) SCC 152 relying on the judgments of National
Small Industries Corporation Limited and Puja Ravinder Devidasani
(supra) held as under:-
45. Even though the High Court deprecated the adoption of a hyper technical
approach in construing pleadings, to quash criminal proceedings, the High Court
adopted a hyper technical approach in rejecting the application under Section 482 of
the Cr.P.C., on a cursory reading of the formalistic pleadings in the complaint,
endorsing the contents of Section 141 of the NI Act, without any particulars. What
the High Court overlooked was, the contention of these Appellants that they were
non-Executive Independent Directors of the Accused Company, based on
unimpeachable materials on record. The High Court observed that in the petition it
had specifically been averred that all the accused persons were responsible and liable
for the whole business management of the Accused Company, and took the view that
the averments in the complaint were sufficient to meet the requirements of Section
141 of the NI Act.
46. As held by this Court in National Small Industries Corporation Ltd. v. Harmeet
Singh Paintal quoted with approval in the subsequent decision of this Court in Pooja
Ravinder Devidasani v. State of Maharashtra and Anr. (supra) the impleadment of all
Directors of an Accused Company on the basis of a statement that they are in charge
of and responsible for the conduct of the business of the company, without anything
more, does not fulfil the requirements of Section 141 of the NI Act.
47. In any event there could be no justification for not dispensing with the personal
appearance of the Appellants, when the Company had entered appearance through an
authorized officer. As held by this Court in Pepsi Foods Ltd. v. Special Judicial
Magistrate and Ors. summoning an accused person cannot be resorted to as a matter
of course and the order must show application of mind.
48. In our considered view, the High Court erred in law in not exercising its
jurisdiction under Section 482 of the Cr.P.C in the facts and circumstances of this
case to grant relief to the Appellants.
23
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
26 In Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Private
Limited and another reported in 2025 SC Online SC 321, it was contended
that appellant was a non-executive director and had no involvement in the
financial affairs of the company. The complaint did not provide any specific
averments detailing his role in the dishonoured cheques. The Supreme court
considering the law laid down in cases of National Small Industries
Corporation Limited, N.K. Wahi, S.M.S. Pharmaceuticals Ltd and Puja
Ravinder Devidasani (supra) held as under:-
18. Petitioner’s role in the accused company was limited to that of an independent
non-executive director, with no financial responsibilities or involvement in the day-
to-day operations of the company. Furthermore, he was not responsible for the
conduct of its business.
19. The legal precedents cited above, including Pooja Ravinder (supra), clearly hold
that non-executive directors cannot be held liable under section 138 NI Act unless
specific evidence proves their active involvement.
20. In view of the above observations, the Appellant cannot be held vicariously
liable under section 141 of the NI Act. The complaints do not meet the mandatory
legal requirements to implicate him.
(Also See: K.S. Mehta Vs. Morgan Securities and Creditors Pvt Ltd.
reported in 2025 SCC Online SC 492)
27 The material on record shows that the petitioner was associated with
Omaxe Infrastructure and Construction Ltd. as an independent additional
Director. He was not involved in day-to-day functioning of the company or
directly concerned with the financial affairs of the accused company. There is
no averment to the effect that with the cheques were issued with knowledge
of the petitioner attributable through Board processes and with his consent
or connivance. He was not signatory of the cheques in question, therefore,
composite liability of the petitioner under section 141 of the Negotiable
Instrument Act, 1881 cannot be inferred in absence of specific averments in
24
NEUTRAL CITATION NO. 2025:MPHC-IND:19689
the complaint as to the role and responsibility of the petitioner about the
conduct of the business of the accused company. In such a scenario, bald
allegation of the assurance to honour the cheque, aimed at implicating the
petitioner, would not make the petitioner liable for the alleged offence.
28 In view of above discussion, this court is of considered opinion that
learned Judicial Magistrate First class, Indore has committed manifest error in
taking cognizance against the petitioner Subhojit for the offence punishable
under Section 138 read with Section 141 of the Negotiable Instruments Act,
1881. The summoning orders and the subsequent proceedings in SCNIA no.
27258/2015 and SCNIA no. 1165/2016 are an abuse of the process of court.
Consequently, the MCRC no. 41874 / 2023 and MCRC no. 41879 / 2023 are
allowed. It is directed that the criminal complaint and consequent proceedings
in SCNIA no. 27258/2015 and SCNIA no. 1165/2016 stand quashed, so far as
they relate to the petitioner Subhojit.
Let a copy of this order be sent to the trial Court for information and
compliance.
(SANJEEV S KALGAONKAR)
BDJ JUDGE
Digitally signed by BHUNESHWAR DATT
BHUNESH
DN: c=IN, o=HIGH COURT OF MADHYA PRADESH
BENTCH AT INDORE, ou=HIGH COURT OF
MADHYA PRADESH BENTCH AT INDORE,
2.5.4.20=3fb5bcda9fd75d95d6c7cdcbd092ee5a
74a94a5534aed3a66d9385cfcfc201e0,
WAR DATT
postalCode=452001, st=MADHYA PRADESH,
serialNumber=89FD75A8D0C99E05779A327974
E46BC85102826CE0604B211E4C91102B4D1269,
cn=BHUNESHWAR DATT
Date: 2025.07.28 19:05:25 +05'30'