Mere Directorship Not Enough for NI Act Liability; Specific Role in Company Affairs Must Be Pleaded: Supreme Court Quashes Proceedings

Held: The Supreme Court held that mere designation as a Director or participation in Board resolutions is insufficient to attract criminal liability under Section 141 of the Negotiable Instruments Act unless there is a specific averment and material indicating that the accused was in charge of and responsible for the day-to-day conduct of the company’s business at the relevant time.

Summary: The appellant, a Director of the accused company, challenged the summoning order in a cheque dishonour case under Sections 138 and 141 of the NI Act, which had been upheld by the Sessions Court and the High Court. The primary basis for proceeding against her was that she had signed Board resolutions, which was treated as evidence of her involvement in the company’s affairs. The Supreme Court examined the settled legal position, including precedents such as S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Gunmala Sales Pvt. Ltd. v. Anu Mehta, and reiterated that liability under Section 141 is not automatic. It must be specifically pleaded and supported that the accused was actively in charge of and responsible for the conduct of business. The Court observed (notably on page 7 of the judgment) that signing Board resolutions does not imply knowledge or control over day-to-day business operations, as such resolutions relate to broader policy or management decisions. Crucially, the complaint lacked any specific allegations detailing the appellant’s role in the transaction leading to issuance of the dishonoured cheques. The Court also clarified that the High Court erred in limiting its jurisdiction under Section 482 CrPC merely because revision had been availed, reaffirming that inherent powers remain available to prevent miscarriage of justice.

Decision: The appeal was allowed, the summoning order and criminal proceedings against the appellant were quashed, and the Supreme Court clarified that its observations would not affect the trial against other accused persons, with all pending applications disposed of.