Negotiable Instruments Act, 1881 – ss.141, 138 – Offence by companies – Vicarious liability – Necessary averments – Accused no.1 company along with respondent no.2 and other two directors approached the appellant-complainant for grant of credit facility for the working capital requirements – However, the accused failed to repay the outstanding dues – Cheque was issued but was dishonored – Criminal proceedings u/s.138 against the company and its directors – High Court quashed the same on the ground that there were no sufficient averments in the complaint filed by the appellant to invoke the vicarious liability against the respondent no.2 u/s.141 – Justification: Held: High Court completely unjustified in quashing the proceedings against respondent No.2 – Repetition of the exact words of the Section in the same order, like a mantra or a magic incantation is not the mandate of the law – What is mandated is that the complaint should spell out that the accused sought to be arrayed falls within the parameters of s.141(1) – Only then could vicarious liability be inferred against the said accused, so as to proceed to trial – Substance will prevail over form – Administrative role of each director would be within the special knowledge of the company or the director of the firm and it is for them to establish that they were not in charge of the affairs of the company – Submission for the respondent No.2 that the specific role attributed to the directors should be set out in the complaint does not merit acceptance – Complainant is supposed to know only generally as to who are in charge of the affairs of the company – There is no obligation on the complainant to plead in the complaint as to matters within the special knowledge of the company or the directors or firm about the specific role attributed to them in the company – Averments in the complaint set out against the respondent No.2 fulfill the requirement of s.141(1), and this is not a case where trial against her can be aborted by quashment of proceedings – Judgment of the High Court set aside. [Paras 34, 38, 39]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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