The Punjab & Haryana High Court has reaffirmed that, in prosecutions under Section 138 read with Section 141 of the Negotiable Instruments Act, it is mandatory for the complaint to include specific averments that Directors were in charge of and responsible for the conduct of the company’s business. The absence of such averments warrants quashing of proceedings against these Directors. This position is binding within the court’s jurisdiction and follows recent Supreme Court authority.
Summary
| Category | Data |
|---|---|
| Case Name | CRM-M/7657/2024 of POONAM BHADOURIA AND OTHERS Vs STATE OF HARYANA AND OTHERS |
| CNR | PHHC010181502024 |
| Date of Registration | 09-02-2024 |
| Decision Date | 30-10-2025 |
| Disposal Nature | DISPOSED OF |
| Judgment Author | MR. JUSTICE JASJIT SINGH BEDI |
| Court | High Court of Punjab and Haryana |
| Precedent Value | Binding within jurisdiction of Punjab & Haryana High Court |
| Type of Law | Criminal Law / Negotiable Instruments Act |
| Questions of Law | Whether the absence of specific averments that Directors were responsible for the conduct of the company’s affairs in a Section 138 NI Act complaint warrants quashing proceedings against them. |
| Ratio Decidendi | The court held that to prosecute Directors (other than signatories) under Section 138 read with Section 141 of the NI Act, the complaint must contain mandatory averments that such Directors were in charge of and responsible for the conduct of the company’s business at the relevant time. In the absence of these averments, the complaint and the summoning order are liable to be quashed as regards those Directors. The judgment closely follows Supreme Court decisions in Ashok Shewakramani and Ravi Dhingra, reiterating their ratio that a generalized allegation or mere designation as Director, without specific averment of responsibility for the company’s affairs, is insufficient. |
| Judgments Relied Upon | Ashok Shewakramani & others Vs. State of Andhra Pradesh & another, Criminal Appeal No.879 of 2023; Ravi Dhingra Vs. State of NCT of Delhi & another, SLP (Crl.) No.13251 of 2023 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Followed the principles in Ashok Shewakramani and Ravi Dhingra that mandatory averments under Section 141(1) NI Act are required for prosecution of Directors. |
| Facts as Summarised by the Court | The Directors of the accused company were summoned based on a complaint regarding a dishonoured cheque. The complaint and summoning order did not state that the Directors (petitioners) were in charge of and responsible for the company’s affairs. The signatory of the cheque was another Director, Abhishek Buda Koti @ Reshu, who also replied to the statutory notice. The petitioners sought quashing on the ground of lack of mandatory averments. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts within jurisdiction of Punjab & Haryana High Court |
| Persuasive For | Other High Courts; can be cited as following the Supreme Court’s ratio in Ashok Shewakramani and Ravi Dhingra |
| Follows | Ashok Shewakramani & others Vs. State of Andhra Pradesh & another (Supreme Court, 2023); Ravi Dhingra Vs. State of NCT of Delhi & another (Supreme Court, 2023) |
What’s New / What Lawyers Should Note
- Reiterates that a complaint under Section 138 read with Section 141 NI Act must specifically aver that the Director was in charge of and responsible for the conduct of business of the company at the relevant time.
- General or vague statements are not sufficient for prosecution against Directors who are not cheque signatories.
- Directors cannot be forced to face criminal trial solely due to their designation; liability arises only if specific statutory requirements are pleaded in the complaint.
- This principle provides a ground for quashment at the summoning stage for Directors against whom such averments are absent.
- Lawyers defending company Directors in NI Act cases should carefully examine the complaint for mandatory averments before advising on quashing petitions.
Summary of Legal Reasoning
- The Court noted that the complaint and summoning order were challenged on the ground that necessary averments under Section 141(1) NI Act were missing regarding Directors’ responsibility.
- The petitioners cited Ashok Shewakramani and Ravi Dhingra, both Supreme Court decisions, which held that to maintain proceedings against a Director, the complaint must contain a specific averment that the Director was “in charge of and responsible for the conduct of the company’s business” at the relevant time.
- The Court reviewed the content of the complaint and confirmed that it did not contain any such specific averment about the petitioners, who were merely described as Directors.
- The cheque in question was signed by another Director, and the reply to notice was also given by that signatory; petitioners were not involved.
- Following the Supreme Court’s authoritative guidance, the High Court held that the absence of specific averments was fatal to the prosecution against these Directors.
- Accordingly, the complaint and all consequential proceedings against the petitioners (Directors) were quashed, reaffirming the necessity for strict statutory compliance in such prosecutions.
Arguments by the Parties
Petitioner
- Asserted that although petitioners were Directors, the complaint lacked the mandatory averment under Section 141(1) NI Act about their being in charge of, and responsible for, the conduct of the company’s business.
- Argued that the signatory of the cheque, Abhishek Buda Koti @ Reshu, was managing the company’s affairs and gave the reply to the statutory notice.
- Cited Supreme Court judgments (Ashok Shewakramani & others; Ravi Dhingra) that absent such averments, complaint and summoning order must be quashed for non-signatory Directors.
Respondent (Complainant)
- Submitted that at the summoning stage, the court need only determine if a prima facie case is made, not the sufficiency of evidence for conviction.
- Argued that as the petitioners were Directors, they could not escape liability.
- Prayed for dismissal of the quashing petition.
Factual Background
The dispute arose from a dishonoured cheque for ₹15,99,932/- issued by the authorized signatory and Director, Abhishek Buda Koti @ Reshu, of Bhadauria Carriers Pvt. Ltd. A complaint was filed by Poonam Service Station (dated 24.02.2022), and the petitioners, as Directors, were summoned. There was no allegation in the complaint that the petitioners oversaw the day-to-day affairs of the company; all acts regarding issuance and reply to notice were attributed to the signatory Director. The petition sought quashing of the complaint and summoning order against the petitioners for lack of requisite statutory averments.
Statutory Analysis
- The Court analyzed Section 141(1) of the Negotiable Instruments Act, which mandates that for prosecution of officers of a company, the complaint must specifically assert that the person was “in charge of and responsible to the company for the conduct of its business.”
- The Court interpreted the section strictly, relying on recent Supreme Court judgments, emphasizing that mere designation as Director is insufficient for vicarious liability unless the complaint pleads the required statutory responsibility.
- No reading down, reading in, or constitutional provisions were discussed.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions were recorded in the judgment.
Procedural Innovations
No new procedural innovations, evidentiary requirements, or guidelines were issued in the judgment.
Alert Indicators
- ✔ Precedent Followed – Supreme Court precedents (Ashok Shewakramani, Ravi Dhingra) on Section 141 NI Act liability were strictly followed.