Dishonour Of Cheque: Specific Averments To Be Mentioned, Not Enough To Allege That the Accused Was CEO Or Director Of Company: Delhi High Court

The Delhi High Court has passed an order quashing criminal proceedings against the former CEO of a company in a cheque dishonour case, holding that as no specific allegations or averments against the former CEO, regarding her alleged role either in the transaction or in the conduct of business of the company were made out, the complaint against her was liable to be quashed in a cheque dishonour case. The single judge bench of Justice Jyoti Singh said that it was settled law that the mere designation of an officer in a company was not enough to make the officer vicariously liable in a case under Section 138 of Negotiable Instrument Act (NI Act) "The absence of an averment as to the transaction / specific role of the Petitioner, in my opinion, is fatal to the case of the complainant," she stated. The bench also placed reliance on the fact that the Petitioner in question had already resigned from the company before the cheque in question was even issued, and that it was not alleged anywhere that even after resigning from the company the Petitioner had continued to be associated with it in some form, or was occupying any such position which made her responsible for the conduct of its business, or for issuing instructions for the encashment of the cheque. In the absence of all the above, the court observed that vicarious liability had been imputed to the Petitioner solely on account of her being the CEO of the company, and that hence the complaint against her was liable to be quashed. The court relied on the observations made in the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla & Ors. (2005) 8 SCC 89 and Sudeep Jain vs. M/s. ECE Industries Ltd. 2013 SCC OnLine Del 1804. The brief facts of the present case were that a complaint was filed by Aryan Infratech Pvt Ltd against one M/s Ringing Bells Pvt. Ltd. and five other accused persons including the Petitioner under Sections 138/141/142 of the Negotiable Instruments Act. It was alleged in the complaint that in discharge of legal liability, Ringing Bells had issued a cheque bearing for an amount of Rs. 2 crores, signed by another accused, with the consent and knowledge of the other co-accused including the Petitioner. The cheque was dishonoured on presentation and despite a legal notice of demand the accused persons had failed to remit the alleged outstanding amount. Click Here To Download Order[Read Order]

Dishonour Of Cheque: Specific Averments To Be Mentioned, Not Enough To Allege That the Accused Was CEO Or Director Of Company: Delhi High Court

Shreya Agarwal

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