Code of Criminal Procedure, 1973: s.482 – Quashing of proceedings – Dishonour of cheque – Account Payee Cheque signed by accused no. 2, who was M.D. of the Company in favour of respondent in discharge of liability – On dishonour of cheque, respondent filed complaint u/s.138 r/w s.141 of NI Act – In the complaint, appellants who were independent/non-executive director were impleaded as accused no. 3 to 5 – Appellants unsuccessfully filed application in High Court u/s.482 praying that the proceeding be quashed – Hence instant appeal – Held: Jurisdiction u/s.482 must be exercised if the interest of justice so requires – High Court failed to appreciate that none of these appellants were Managing Director or Joint Managing Director of the Accused Company – Nor were they signatories of the cheque which was dishonoured – A Director of a company who was not in charge or responsible for the conduct of the business of the company at the relevant time, will not be liable u/s.139 r/w. 141 of NI Act – The materials on record clearly show that these appellants were independent, non-executive Directors of the company – High Court adopted a hyper technical approach in rejecting the application u/s.482 – High Court erred in law in not exercising its jurisdiction u/s.482 in the facts and circumstances of this case to grant relief to the appellants – Companies Act, 2013 – ss.2(47), 149 and 150 – Negotiable Instrument Act, 1881 – ss. 139,141.
Allowing the appeal, the Court
HELD: 1. Section 482 of the Cr.P.C. protects the inherent power of the High Court to make such orders as may be necessary to give effect to any order under the Cr.P.C or to prevent abuse of the process of any Court or otherwise secure the ends of justice. While it is true that inherent jurisdiction under Section
482 should be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specially laid down in the Section, the Court is duty bound to exercise its jurisdiction under Section 482 of the Cr.P.C. when the exercise of such power is justified by the tests laid down in the said Section. Jurisdiction under Section 482 of the Cr.P.C. must be exercised if the interest of justice so requires. [Paras 34 and 35][473-G-H; 747-A-B]
2. The High Court failed to appreciate that none of these Appellants were Managing Director or Joint Managing Director of the Accused Company. Nor were they signatories of the cheque which was dishonoured. As held by this Court in, inter alia, S.M.S. Pharmaceuticals Ltd., the liability under Section 138/141 of the NI Act arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, and not on the basis of merely holding a designation or office in a company. It would be a travesty of justice to drag Directors, who may not even be connected with the issuance of a cheque or dishonour thereof, such as Director (Personnel), Director (Human Resources Development) etc. into criminal proceedings under the NI Act, only because of their designation. [Paras 38 and 42][474-E-F; 475-E-G] S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 : [2005] 3 Suppl. SCR 371 – followed.
3. Liability depends on the role one plays in the affairs of a company and not on designation or status alone. The materials on record clearly show that these Appellants were independent, non-executive Directors of the company. A non-Executive Director is not involved in the day-to-day affairs of the company or in the running of its business. Such Director is in no way responsible for the day-to-day running of the Accused Company. Moreover, when a complaint is filed against a Director of the company, who is not the signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contention in the complaint, that such Director was in charge of and responsible for conduct of the business of the Company or the Company, unless such Director is the designated Managing Director or Joint Managing Director who would obviously be responsible for the company and/or its business and affairs. [Para 43][475-G-H; 476-A-B] Pooja Ravinder Devidasani v. State of Maharashtra and Anr. (2014) 16 SCC 1 : [2014] 14 SCR 1468- relied on.
K.K. Ahuja v. V.K. Vora (2009) 10 SCC 48 : [2009]
9 SCR 1144; National Small Industries Corporation Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330 : [2010]
2 SCR 805; Pepsi Foods Ltd. v. Special Judicial Magistrate and Ors. (1998) 5 SCC 749 : [1997] 5 Suppl. SCR 12 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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