Summary
A company director could not face vicarious prosecution for dishonoured cheques on her designation and a general allegation of non-payment alone. The complaints specifically attributed signing authority and day-to-day management to another director, and did not allege that the appellant was in charge of and responsible for the company’s business. She was neither managing nor joint managing director. The Court set aside the High Court’s refusal to intervene and quashed both complaints only against her.
Issues
- Whether the complaints sufficiently pleaded the appellant director’s responsibility under Section 141.
- Whether directorship and an allegation of unwillingness to pay sufficed for vicarious liability.
- What limited quashing relief followed.
Provisions considered
- Sections 138 and 141, Negotiable Instruments Act, 1881Corporate cheque-dishonour liability could not automatically extend to every director. The complaints lacked the necessary averments concerning this appellant’s relevant management role. (¶¶ 9, 10, 11, 12, 13, 14, 15, 18, 19, 20, 21, 22)
- Section 482, Code of Criminal Procedure, 1973The inadequate allegations of the statutory basis for vicarious liability warranted quashing proceedings against the appellant without requiring her to await trial. (¶¶ 3.8, 5, 6, 17, 20, 21, 22)
Held
- Directorship alone does not establish control of the company’s everyday business. Vicarious liability depends on the person’s role at the relevant time, and the complaint must supply the requisite factual averments showing how that person was in charge of and responsible for the conduct of business. A label or mechanical reproduction of statutory words is insufficient without the necessary foundation. (¶¶ 7, 8, 9, 10, 11, 12, 14, 15, 16)
- The Court distinguished managing and joint managing directors, whose office itself indicates management responsibility. The respondent did not allege that the appellant held either position; the case concerned an ordinary director, who was also not the cheque signatory. (¶¶ 5, 10, 20)
- The complaints alleged that the appellant and another director did not intend to pay and described them as directors or promoters. Crucially, they identified only the other director as authorised signatory in charge of and responsible for day-to-day affairs. No corresponding management allegation was made against this appellant. (¶¶ 18, 19, 20)
- Those averments did not invoke Section 141 liability against the appellant. Both appeals were allowed, the High Court judgment set aside and proceedings in CC 3151 and CC 3150 of 2017 quashed only insofar as they concerned her. (¶¶ 21, 22)
Result
Appeals allowed; High Court judgment set aside. Both cheque-dishonour complaint proceedings quashed only against the appellant director; no corresponding relief granted to the company or other director.