Independent, Non-Executive Directors Of Company Not Liable For Cheque Dishonor If There Are No Specific Allegations Against Them: Delhi HC

The case in question involved petitions challenging the summoning orders related to complaints under Section 138 of the Negotiable Instruments Act, 1881, along with Sections 141 and 142 of the Act. The complaints were filed due to the dishonor of post-dated cheques issued as part of a corporate loan agreement between the management of Sadbhav (the accused company) and the respondent company, STCI. The loan amount was ₹50 crores, and the cheques issued for repayment were returned due to insufficient funds.

A Bench of Justice Amit Mahajan said, “it is clear that a person cannot be made vicariously liable under the provisions of Section 141 of NI Act, merely by stating that he was in-charge and responsible for the day-to-day-conduct of the accused company at the relevant time when the offence was committed.”

The Court further held, “the petitioners were independent, non-executive Director and that the complaints lack the necessary averments to endorse as to what was the active role of the petitioners and as to how the petitioners were guilty or responsible for the offence, this Court is of the opinion that continuance of the proceedings would amount to abuse of the process of the Court. The present case is a fit case to exercise discretionary jurisdiction under Section 482 of the CrPC.”

Advocate Trideep Pais appeared for the Petitioners and Advocate Vinita Sasidharan appeared for the Respondents.

The Court referred to several Supreme Court judgments to support its decision as of Sunita Palita v. Panchami Stone Quarry (2022), Pooja Ravinder Devidasani v. State of Maharashtra (2014), National Small Industries Corporation Ltd. v. Harmeet Singh Paintal (2010), Pepsi Foods Ltd. v. Special Judicial Magistrate (1998).

The Delhi High Court said that the complaints against the Petitioners lacked specific allegations about their roles in the dishonored cheques. The general statements about their responsibility were deemed insufficient under Section 141. Consequently, the Court exercised its discretion under Section 482 of the Criminal Procedure Code to quash the complaints and all related proceedings against the Petitioners.

Cause Title: Sandip Vinodkumar Patel & Ors. v. STCI Finance Ltd. & Anr., [2024:DHC:6055]

Petitioners: Advocate Trideep Pais, Devika Mohan