1

Reportable  

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.1130-31 OF 2003

K.K. Ahuja   … Appellant

Vs.

V.K. Vora & Anr.  … Respondents

J U D G M E N T

R. V. RAVEENDRAN, J.

The question as to who can be said to be persons “in-charge of, and  

was responsible to the company for the business of the company”  referred  

to in section 141 of the Negotiable Instruments Act, 1881 (for short 'the  

Act') arises for consideration in this appeal by special leave by a  

complainant.   

2. The  appellant  filed  two  complaints  (Crl.  Comp.No.58/2001  and  

59/2001) in the Court of the Metropolitan Magistrate,  Delhi, against M/s.  

Motorol  Speciality  Oils  Ltd.  (‘the  Company’  for  short)  and  eight  others  

under section 138 of the Act. The first complaint was in regard to dishonour

2

of five cheques (each for Rs.5,00,000/-, all dated 28.2.2001). The second  

complaint was in regard to dishonour of three cheques (for Rs.3 lakhs, 3  

lakhs  and  10  lakhs  dated  31.10.2000,  30.11.2000  and  20.12.2000  

respectively). The cheques were alleged to have been drawn in favour of the  

appellant’s  proprietary  concern (M/s  Delhi  Paints  & Oil  Traders)  by  the  

company represented by its Chairman. In the said complaints, the appellant  

had  impleaded  nine  persons  as  accused,  namely,  the  company (A-1),  its  

Chairman  (A-2),  four  Directors  (A-3  to  A-6)  as  also  its  Vice-President  

(Finance), General Manager and Deputy General Manager (A-7, A-8 and A-

9 respectively). In the complaint the complainant averred that “at the time of  

the commission of offence, accused 2 to 9 were in-charge of and responsible  

for the conduct of day to day business of accused No.1” and that therefore  

they  were  deemed  to  be  guilty  of  offence  under  section  138  read  with  

section  141  of  the  Act  and  section  420  of  the  Indian  Penal  Code.  The  

appellant  also alleged that  respondents  2  to  9  were  directly  and actively  

involved in the financial dealings of the company and that the accused had  

failed to make payment of the cheques which were dishonoured. In the pre-

summoning  evidence,  the  appellant  reiterated  that  accused  2  to  9  were  

responsible for the conduct of day to day business of first accused company  

at the time of commission of offence. The learned Magistrate by order dated  

3.10.2001 directed issue of summons to all the accused.

3

3. Accused  no.  9  (first  respondent  herein)  filed  two  petitions  under  

section 482 Cr.P.C. for quashing the proceedings against him on the ground  

that  as  “Deputy  General  Manager”,  he  was  not  “in-charge  of  and  was  

responsible to the company for the conduct of the business of the company”.  

He  also  contended  that  merely  stating  that  he  was  directly  and  actively  

involved in the financial dealings of the accused or was responsible for the  

conduct of day to day business would not be sufficient to fasten criminal  

liability  on  him.  He  submitted  that  neither  the  complaint  nor  the  sworn  

statement gave any particulars of the part played by him or part attributed to  

him  in  the  alleged  offence.  At  the  hearing  before  the  High  Court,  the  

Learned counsel for the appellant-complainant conceded that details as to  

how  the  first  respondent  could  be  said  to  be  “in  charge  of,  and  was  

responsible to the company for the conduct of the business of the company”  

were  not  given  in  the  complaint  or  the  statement  on  oath.   It  was  also  

conceded that the averments necessary to make out an offence under section  

420 IPC were not contained in the complaint. The High Court by order dated  

10.10.2002 allowed the said petitions and quashed the orders summoning  

the first respondent on the ground that he was not a signatory to the cheques  

nor was a party to the decision to allow the cheques to be dishonoured. The  

said order is under challenge.

4

4. The appellant contends that having regard to the specific averment in  

the complaint that the accused 2 to 9 were in charge of and responsible for  

the conduct of day to day business of the company, the order summoning the  

first respondent could not have been quashed under section 482 Cr.P.C. It is  

also submitted that at the stage of summoning the accused, when evidence  

was  yet  to  be  led  by  the  parties,  the  High Court  committed  an  error  in  

quashing  the  order  summoning  the  first  respondent,  on  the  basis  of  an  

unwarranted assumption that the first respondent was not responsible for or  

involved in the conduct of the business of the company.  Reliance is placed  

on the decision of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla   

& Anr. [2005 (8) SCC 89 for short ‘SMS Pharma (I)’].

5. Section 141 of the Act deals with offences by companies. Relevant  

portions of the said section are extracted below :

“141. Offences by companies.—(1) If the person committing an offence  under section 138 is a company, every person who, at the time the offence  was committed, was in charge of, and was responsible to the company for  the conduct of the business of the company, as well as the company, shall  be deemed to be guilty of the offence and shall be liable to be proceeded  against and punished accordingly:

xxxxx

(2) Notwithstanding  anything  contained  in  sub-section  (1),  where  any  offence under this Act has been committed by a company and it  is  proved  that  the  offence  has  been  committed  with  the  consent  or  connivance of,  or is  attributable  to, any neglect  on the part  of,  any

5

director,  manager,  secretary  or  other  officer  of  the  company,  such  director, manager, secretary or other officer shall also be deemed to be  guilty of that offence and shall be liable to be proceeded against and  punished accordingly.”

Explanation – For the purposes of this section, -  

(a) “company means any body corporate and includes a firm or other  association of individuals; and  

(b) “director” in relation to a firm, means a partner in the firm.  

6. A three-Judge Bench of this Court considered the scope of section  

141 of the Act in SMS Pharma (I) and held that it is necessary to specifically  

aver in a complaint under Sections 138 and 141 of the Act, that at the time  

when the offence was committed, the person accused was in charge of, and  

responsible  for  the  conduct  of  business  of  the  company  and  that  in  the  

absence of such averment, section 141 cannot be invoked . This Court held:  

“What is required is that the persons who are sought to be made criminally  liable under Section 141 should be at the time the offence was committed,  in  charge  of  and  responsible  to  the  company  for  the  conduct  of  the  business of the company. Every person connected with the company shall   not fall within the ambit of the provision. It is only those persons who were   in charge of and responsible for conduct of business of the company at the   time of commission of an offence, who will be liable for criminal action. It  follows from this that if a director of a Company who was not in charge of  and was not responsible for the conduct of the business of the company at  the  relevant  time,  will  not  be  liable  under  the  provision.  The  liability   arises from being in charge of and responsible for conduct of 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.  Conversely, a person not holding any office or designation in a Company  may be liable if he satisfies the main requirement of being in charge of and  responsible for conduct of business of a Company at the relevant time.  Liability depends on the role one plays in the affairs of a Company and not  on designation or status. If being a Director or Manager or Secretary was  enough to cast criminal liability, the Section would have said so. Instead of  "every person" the section would have said "every Director, Manager or  Secretary in a Company is liable"....etc. The legislature is aware that it is a

6

case of criminal liability which means serious consequences so far as the  person sought to be made liable is concerned. Therefore, only persons who  can be said to be connected with the commission of a crime at the relevant   time have been subjected to action.”

“To sum up, there is almost unanimous judicial opinion  that necessary  averments ought to be contained in a complaint before  a person can be  subjected to criminal process.  A liability under section 141 of the Act is   sought to be fastened vicariously on a person connected with a company,   the principal accused being the company itself. It is a departure from the   rule in criminal law against  vicarious liability. A clear case should be  spelled out in the complaint against the person sought to be made liable.  Section 141 of  the Act  contains the requirements  for  making a  person  liable  under  the  said  provision.  That  the  respondent  falls  within  the  parameters of section 141 has to be spelled out.  A complaint has to be  examined by the Magistrate in the first instance on the basis of averments   contained therein. If the Magistrate is satisfied that there are averments   which bring the case within section 141, he would issue the process.  We  have seen that merely being described as a director in a company is not  sufficient to satisfy the requirement of section 141. Even a non-director  can be liable under section 141 of the Act. The averments in the complaint  would also serve the purpose that  the person sought  to be made liable  would  know what  is  the  case  which  is  alleged  against  him.  This  will  enable him to meet the case at the trial.”

(emphasis supplied)

This Court then proceeded identified the nature of allegations required to be  

made against members of Board of Directors and person signing the cheque  

as follows :

7

(i) Managing Director/Joint Managing Director: By virtue of the office  they hold, these persons are in charge of and responsible for the conduct  of business of the company. Therefore, they would fall  under Section  141(1), even though there is no specific averment against them.   

(ii) Person  signing  the  cheque: The  signatory  of  a  cheque  which  is  dishonoured, is clearly responsible for the act and will be covered under  sub-section (2) of Section 141. Therefore, no special averment would be  necessary to make him liable.   

(iii) Director: The fact that a person is a director of a company is not by  itself sufficient to make him liable under Section 141 of the Act.  A  director  in  a  company  cannot  be  deemed  to  be  in  charge  of   and  responsible   to   the  company  for  the  conduct  of  its  business.  The  requirement of Section 141 is that the person sought  to  be  made liable  should be in charge of and responsible for the conduct of the business of  the company at the relevant time. This has to be averred, as there is no  deemed liability upon a director .

7. In  Sabitha Ramamurthy vs.  RBS Channabasavaradhya – 2006 (10)  

SCC 581, this Court re-stated the requirements of section 141 of Act thus, in  

the context of a petition for quashing the process under Sec.482 Cr PC:  

“It may be true that it is not necessary for the complainant to specifically  reproduce  the  wordings  of  the  section  but  what  is  required  is  a  clear  statement of fact so as to enable the court to arrive at a prima facie opinion  that the accused are vicariously liable.  Section 141 raises a legal fiction.   By reason of the said provision, a person although is not personally liable   for commission of such an offence would be vicariously liable therefor.  Such vicarious liability can be inferred so far as a company registered or  incorporated  under  the  Companies  Act,  1956  is  concerned  only  if  the  requisite  statements,  which are required to be averred in the complaint  petition, are made so as to make the accused therein vicariously liable for  the  offence  committed  by the company.  Before  a person can be  made   vicariously liable, strict compliance of the statutory requirements would   be insisted........... In a case where the court is required to issue summons  which would put the accused to some sort of harassment, the court should   insist strict compliance with the statutory requirements.”

[emphasis supplied]

8

8. In Saroj Kumar Poddar v State (NCT of Delhi)  – 2007 (3) SCC 693,  

while dealing with an appeal against the refusal to quash the order taking  

cognizance, by an Ex-Director who had resigned from the Board prior to the  

date  of  issuance  of  the  cheque,  this  Court  held  that  making  some  bald  

averment  was  not  sufficient.  In  that  case,  the  complaint  contained  the  

following averments:

“That Accused 1 is a public limited company incorporated and registered  under the Companies Act, 1956, and Accused 2 to 8 are/were its Directors  at the relevant time and the said Company is managed by the Board of  Directors and they are responsible for and in charge of the conduct and  business of the Company, Accused 1. However, cheques referred to in the  complaint  have  been signed by Accused  3  and 8 for  and on behalf  of  Accused 1 Company.”

In spite of the averment that accused were Directors at the relevant time and  

were responsible for and in charge of the conduct  of the business of the  

company, this Court held that allegations in the complaint, even if taken to  

be correct in their entirety, did not disclose any offence by the appellant, on  

the following reasoning :  

“Apart from the Company and the appellant, as noticed hereinbefore, the  Managing Director and all other Directors were also made accused. The  appellant  did  not  issue  any  cheque.  He,  as  noticed  hereinbefore,  had  resigned from the Directorship of the Company. It may be true that as to  exactly on what date the said resignation was accepted by the Company is  not known, but,  even otherwise,  there is no averment in the complaint   petitions as to how and in what manner the appellant was responsible for   the conduct of the business of the Company or otherwise responsible to it   in regard to its functioning. He had not issued any cheque. How he is   responsible  for  dishonour  of  the  cheque  has  not  been  stated. The  allegations made in paragraph 3, thus, in our opinion do not satisfy the  requirements of Section 141 of the Act.”

9

[emphasis supplied]   

9. In two subsequent decisions - SMS Pharmaceuticals v. Neeta Bhalla –  

2007 (4) SCC 70 [for short 'SMS Pharma (II)'] and Everest Advertising (P)  

Ltd.  v.  State,  Govt.  of  NCT  of  Delhi –  2007  (5)  SCC  54,  relating  to  

complaints against Directors of a company, the very same two-Judge Bench  

which decided  Saroj Kumar Poddar, clarified that the observations therein  

that ‘the complaint should contain averments as to how and in what manner   

the accused was responsible for the conduct of the business of the company,   

or  otherwise  responsible  for  its  functioning'  were  with  reference  to  the  

particular  facts  of  that  case  and  should  not  be  considered  as  a  general  

proposition of law. But latter decisions dealing with liability of directors –  

N.  K.  Wahi  vs.  Shekhar  Singh -  2007  (9)  SCC  481,   DCM  Financial   

Services Ltd. vs. J. N. Sareen – 2008 (8) SCC 1, and Ramraj Singh vs. State  

of MP (a decision of a Bench of three Judges) - 2009 (5) SCALE 670, have  

reiterated the principle laid down in  Saroj Kumar Poddar. The prevailing  

trend appears  to  require  the  complainant  to  state  how a  Director  who is  

sought to be made an accused, was in charge of the business of the company,  

as every director need not be and is not in charge of the business of the  

company.  If  that  is  the  position  in  regard  to  a  director,  it  is  needless  to  

emphasise that in the case of non-director officers, there is all the more the

10

need  to  state  what  his  part  is  with  regard  to  conduct  of  business  of  the  

company and how and in what manner he is liable.    

10. Having regard to section 141, when a cheque issued by a company  

(incorporated under the Companies Act, 1956) is dishonoured, in addition to  

the company, the following persons are deemed to be guilty of the offence  

and shall be liable to be proceeded against and punished :

(i) every  person  who  at  the  time  the  offence  was  committed,  was  in  charge of and was responsible to the company for the conduct of the  business of the company;

(ii) any Director, Manager, Secretary or other officer of the company with  whose consent and connivance, the offence under section 138 has been  committed; and    

(iii) any  Director,  Manager,  Secretary  or  other  officer  of  the  company whose negligence resulted in the offence under section 138 of  the Act, being committed by the company.

While liability of persons in the first category arises under sub-section (1) of  

Section 141,  the liability  of persons mentioned in categories (ii)  and (iii)  

arises  under  sub-section  (2).  The  scheme  of  the  Act,  therefore  is,  that  a  

person who is responsible to the company for the conduct of the business of  

the  company  and  who  is  in  charge  of  business  of  the   company   is  

vicariously liable by reason only of his fulfilling the requirements of sub-

section (1). But if the person responsible to the company for the conduct of  

business of the company, was not in charge of the conduct of the business of

11

the company, then he can be made liable only if the offence was committed  

with his consent or connivance or as a result of his negligence.

11. The criminal liability for the offence by a company under section 138,  

is fastened vicariously on the persons referred to in sub-section (1) of section  

141 by virtue of a legal fiction. Penal statutes are to be construed strictly.  

Penal statutes providing constructive vicarious liability should be construed  

much more strictly.  When conditions are prescribed  for  extending such  

constructive criminal  liability  to  others, courts will insist upon strict literal  

compliance.  There  is  no  question  of  inferential  or  implied  compliance.  

Therefore, a specific averment complying with the requirements of section  

141  is  imperative.  As  pointed  out  in  K.  Srikanth  Singh  vs.  North  East   

Securities Ltd – 2007 (12) SCC 788, the mere fact that at some point of time,  

an officer of a company had played some role in the financial affairs of the  

company,  will  not  be  sufficient  to  attract  the  constructive  liability  under  

section 141 of the Act.   

12. Sub-section  (2)  of  section  141  provides  that  a  Director,  Manager,  

Secretary  or  other  officer,  though  not  in  charge  of  the  conduct  of  the  

business of the company will be liable if the offence had been committed  

with  his  consent  or  connivance  or  if  the  offence  was  a  result  of  any

12

negligence on his part. The liability of persons mentioned in sub-section (2)  

is not on account of any legal fiction but on account of the specific part  

played – consent and connivance or negligence. If a person is to be made  

liable  under  sub-section  (2)  of  section  141,  then  it  is  necessary  to  aver  

consent and connivance, or negligence on his part.  

13. This takes us to the next question under sub-section (1) of section 141,  

as to (i) who are the persons who are responsible to the company for the  

conduct of the business of the company, and (ii) who could be said to be in  

charge and was responsible to the company for the conduct of the business  

of the company.

14. The  words  “every  person  who,  at  the  time  of  the  offence  was   

committed, was in charge of,  and was responsible for the conduct of the   

business of the company” occurs not only in section 141(1) of the Act but in  

several enactments dealing with offences by companies, to mention a few –  

Section  278 B of  the  Income Tax  Act,  1961,  Section  22C of  Minimum  

Wages Act, 1948, Section 86A of the Employees State Insurance Act, 1948,  

Section 14A of Employees Provident  Fund and Miscellaneous Provisions  

Act, 1952, Section 29 of Payment of Bonus Act, 1965, Section 40 of The Air

13

(Prevention and Control of Pollution) Act, 1981 and section 47 of Water  

(Prevention and Control of Pollution) Act, 1974.  But neither section 141(1)  

of the Act,  nor the  pari materia provisions in other enactments give any  

indication as to who are the persons responsible to the company, for the  

conduct of the business of the company. Therefore, we will have to fall back  

upon the provisions of Companies Act, 1956 which is the law relating to and  

regulating companies. Section 291 of the said Act provides that subject to  

the provisions of that Act,  the Board of Directors of a company shall  be  

entitled to exercise all such powers, and to do all such acts and things, as the  

company is authorised to exercise and do. A company though a legal entity  

can act only through its Board of Directors. The settled position is that a  

Managing  Director  is  prima  facie in  charge  of  and  responsible  for  the  

company's business and affairs and can be prosecuted for offences by the  

company.  But  insofar  as  other  directors  are  concerned,  they  can  be  

prosecuted only if they were in charge of and responsible for the conduct of  

the  company's  business.  A  combined  reading  of  Sections  5  and  291  of  

Companies Act, 1956 with the definitions in clauses (24), (26), (30), (31),  

(45) of  section 2 of that  Act would show that  the following persons are  

considered to be the persons who are responsible to the company for the  

conduct of the business of the company : --   

(a) the managing director/s;

14

(b) the whole-time director/s;  (c) the manager;  (d) the secretary;  (e) any person in accordance with whose directions or instructions the Board  of directors of the company is accustomed to act;  (f) any person charged by the Board with the responsibility of complying  with that  provision (and who has given his consent  in that  behalf  to the  Board); and  (g) where any company does not have any of the officers specified in clauses  (a) to (c), any director or directors who may be specified by the Board in this  behalf or where no director is so specified, all the directors.   

It follows that other employees of the company, cannot be said to be persons  

who are responsible to the company, for the conduct of the business of the  

company.  

15. Section 141 uses the words “was in charge of, and was responsible to  

the company for the conduct of the business of the company”. It is evident  

that a person who can be made vicariously liable under sub-section (1) of  

Section 141 is a person who is responsible to the company for the conduct of  

the business of the company and in addition is also in charge of the business  

of the company. There may be many directors and secretaries who are not  

in charge of the business of the company at all. The meaning of the words  

“person in charge of the business of the company” was considered by this  

Court in Girdhari Lal Gupta v. D.N. Mehta  [1971 (3) SCC 189] followed in  

State of Karnataka v. Pratap Chand [1981 (2) SCC 335] and Katta Sujatha

15

vs. Fertiliser & Chemicals Travancore Ltd. [2002 (7) SCC 655]. This Court  

held that the words refer to a person who is in overall control of the day to  

day business of the company. This Court pointed out that a person may be a  

director  and  thus  belongs  to  the  group  of  persons  making  the  policy  

followed by the company, but yet may not be in charge of the business of  

the company; that  a person  may be a Manager who is in charge of  the  

business but may not be in overall charge of the business; and that a person  

may be an officer who may be in charge of only some part of the business.

16. Therefore,  if  a  person  does  not  meet  the  first  requirement,  that  is  

being a person who is responsible to the company for the conduct of the  

business  of  the  company, neither  the question of his meeting the second  

requirement (being a person in charge of the business of the company), nor  

the question of such person being liable under sub-section (1) of section 141  

does  not  arise.  To  put  it  differently,  to  be  vicariously  liable  under  sub-

section (1) of Section 141, a person should fulfill the 'legal requirement' of  

being a person in law (under the statute governing companies) responsible to  

the company for the conduct of the business of the company and also fulfill  

the 'factual requirement' of being a person in charge of the business of the  

company.

16

17. Therefore, the averment in a complaint that an accused is a director  

and that he is in charge of and is responsible to the company for the conduct  

of the business of the company, duly affirmed in the sworn statement, may  

be sufficient for the purpose of issuing summons to him. But if the accused  

is not one of the persons who falls under the category of 'persons who are  

responsible to the company for the conduct of the business of the company'  

(listed in para 14 above), then merely by stating that 'he was in charge of the  

business of the company' or by stating that 'he was in charge of the day to  

day management of the company' or by stating that he was in charge of, and  

was  responsible  to  the  company  for  the  conduct  of  the  business  of  the  

company', he cannot be made vicariously liable under section 141(1) of the  

Act.

18. It should, however, be kept in view that even an officer who was not  

in charge of  and was responsible  to the  company for the conduct  of  the  

business of the company can be made liable under sub-section (2) of Section  

141.  For  making  a  person  liable  under  Section  141(2),  the  mechanical  

repetition of the requirements under Section 141(1) will be of no assistance,  

but there should be necessary averments in the complaint as to how and in

17

what  manner  the  accused  was  guilty  of  consent  and  connivance  or  

negligence and therefore, responsible under sub-section (2) of section 141 of  

the Act.

19. Another  aspect  that  requires  to  be  noticed  is  that  only  a  Director,  

Manager, Secretary or other officer can be made liable under sub-section (2)  

of section 141. But under sub-section (1) of section 141, it is theoretically  

possible to make even a person who is not a director or officer, liable, as for  

example,  a  person  falling  under  category  (e)  and  (f)  of  section  5  of  

Companies Act, 1956. When in  SMS Pharma (I), this Court observed that  

'conversely, a person not holding any office or designation in a company   

may  be  liable  if  he  satisfies  the  requirement  of  being  in  charge  of  and   

responsible  for  conduct  of  the  business  of  the  company',  this  Court  

obviously had in mind, persons described in clauses (e) and (f) of section 5  

of Companies Act. Be that as it may.    

20. The position under section 141 of the Act can be summarized thus :  

(i) If the accused is the Managing Director or a Joint Managing Director,  it is not necessary to make an averment in the complaint that he is in charge  of, and is responsible to the company, for the conduct of the business of the  company. It is sufficient if an averment is made that the accused was the  Managing Director or Joint Managing Director at the relevant time. This is  because the prefix ‘Managing’ to the word ‘Director’ makes it  clear that

18

they were in charge of and are responsible to the company, for the conduct  of the business of the company.  

(ii)In the case of a director or an officer of the company who signed the  cheque on behalf of the company, there is no need to make a specific  averment that he was in charge of and was responsible to the company,  for the  conduct  of the business of  the company or  make any specific  allegation about consent, connivance or negligence. The very fact that the  dishonoured cheque was signed by him on behalf of the company, would  give rise to responsibility under sub-section (2) of Section 141.

(iii) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24)  of  the  Companies  Act)  or  a  person  referred  to  in  clauses  (e)  and (f)  of  section 5 of Companies Act, an averment in the complaint that he was in  charge  of,  and  was  responsible  to  the  company,  for  the  conduct  of  the  business of the company is necessary to bring the case under section 141(1).  No further  averment  would  be  necessary  in  the  complaint,  though some  particulars  will  be desirable.  They can also be made liable under section  141(2) by making necessary averments relating to consent and connivance  or negligence, in the complaint, to bring the matter under that sub-section.

(iv)Other Officers of a company can not be made liable under sub-section  (1) of section 141. Other officers of a company can be made liable only  under sub-section (2) of Section 141,  be averring in the complaint their  position and duties in the company and their role in regard to the issue  and  dishonour  of  the  cheque,  disclosing  consent,  connivance  or  negligence.   

21. If  a  mere  reproduction  of  the  wording  of  section  141(1)  in  the  

complaint is sufficient to make a person liable to face prosecution, virtually  

every officer/employee of a company without exception could be impleaded  

as accused by merely making an averment that at the time when the offence  

was committed they were in charge of and were responsible to the company

19

for the conduct and business of the company. This would mean that if a  

company had 100 branches  and the  cheque issued from one branch was  

dishonoured, the officers of all the 100 branches could be made accused by  

simply  making  an  allegation  that  they  were  in  charge  of  and  were  

responsible to the company for the conduct of the business of the company.  

That  would  be  absurd  and  not  intended  under  the  Act.  As  the  trauma,  

harassment and hardship of a criminal proceedings in such cases, may be  

more serious than the ultimate punishment, it is not proper to subject all and  

sundry to be impleaded as accused in a complaint against a company, even  

when the requirements of section 138 read and section 141 of the Act are not  

fulfilled.

22. A Deputy General Manger is not a person who is responsible to the  

company for the conduct of the business of the company. He does not fall  

under any of the categories (a) to (g) listed in section 5 of the Companies  

Act (extracted in para 14 above). Therefore the question whether he was in  

charge of the business of the company or not, is irrelevant. He cannot be  

made vicariously liable under Section 141(1) of the Act.  If  he has to be  

made  liable  under  Section  141(2),  the  necessary  averments  relating  to  

consent/connivance/negligence should have been made. In this case, no such  

averment is made. Hence the first respondent, who was the Deputy General

20

Manger, could not be prosecuted either under sub-section (1) or under sub-

section (2) of Section 141 of the Act.  

23. Thus, we find no error/infirmity in the order quashing the summons as  

against the first respondent who was the Deputy General Manager of the  

company which issued the dishonoured cheque. The appeals are therefore  

dismissed.  

   ……………………….J.     (R V Raveendran)

New Delhi;      ..………………………J. July  6, 2009.      (Dr. Mukundakam Sharma)