S.141 NI Act | 'Director Who's In Charge Of Company' & 'Director Who's Responsible To Company' Are Different Aspects: Supreme Court
The Supreme Court recently observed that there are twin requirements for an offence to fall under Section 141 of the Negotiable Instruments Act, which talks about the dishonour of a cheque committed by a company. Elucidating, the Court said that the accused person should be in charge of and responsible to the company for the conduct of the business.“There are twin requirements under...
The Supreme Court recently observed that there are twin requirements for an offence to fall under Section 141 of the Negotiable Instruments Act, which talks about the dishonour of a cheque committed by a company. Elucidating, the Court said that the accused person should be in charge of and responsible to the company for the conduct of the business.
“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.,” the Court said.
Essentially, a complaint for dishonour of cheque was filed against a company and its directors, including the present appellant. The appellant approached the High Court seeking quashing of this complaint. Inter-alia, it was argued that he is/was not responsible for the day-to-day affairs of the company. Further, he was not a signatory of the cheques. However, the High Court refused to interfere in the proceedings and dismissed the appeal. It also imposed a cost of 20,000/- to be paid by the appellant. Thus, the present appeal.
At the outset, the Bench of Justices Abhay S. Oka and Ujjal Bhuyan observed that it is only the signatory of a cheque that could be made liable for the alleged offence. However, nowhere in the complaint, it is asserted that the appellant was in charge of the business of the company.
“Admittedly, there is no assertion in the complaints that the appellant, at the time of 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.”
In view of this, the Court set aside the impugned orders and allowed the present appeal. While doing so, the Court also made it clear that it has not touched upon the merits of the complaint with respect to other accused persons, which is open for the Trial Court to adjudicate.
Appearances:
Petitioner: Mr. Abhishek Atrey, AOR Mr. Rupesh Kumar Tyagi, Adv. Ms. Ambika Atrey, Adv. Ms. Jyoti Verma, Adv
Respondent: Mr. Alok Krishna Agarwal, Adv. Mrs. Petal Chandhok, Adv. Mr. Gaichangpou Gangmei, Adv. Mr. Yimyanger Longkumer, Adv. For M/S. Trust Legal, AOR Mr. Awanish Sinha, AOR
Case Name: HITESH VERMA vs. M/S HEALTH CARE AT HOME INDIA PVT. LTD.,Diary No. - 29293/2019
Citation : 2025 LiveLaw (SC) 176