The Calcutta High Court has quashed criminal proceedings under the Negotiable Instruments (NI) Act against a non-signatory director, observing that the “total silence” in a complaint regarding an individual’s specific role in a transaction constitutes a jurisdictional void. Justice Uday Kumar held that procedural delays or laches cannot validate a summoning order that is fundamentally deficient of factual pleadings.
Background
The case, Masud Tarif vs. State of West Bengal & Anr., originated from a commercial transaction in 2013 where the Complainant, M/s. Garvit Consultancy Services Pvt. Ltd., extended a loan of ₹40,00,000 to M/s. Amrit Feeds Ltd. (Accused No. 1). Following a default and subsequent insolvency proceedings, a Settlement Agreement was executed on February 20, 2018.
Under this “novation” of debt, post-dated cheques were issued. One such cheque for ₹6,00,000 was dishonoured due to “Funds Insufficient.” The Complainant then initiated criminal proceedings under Sections 138 and 141 of the NI Act against the company and its directors, including the Petitioner, Masud Tarif (Accused No. 4).
Arguments of the Parties
The Petitioner contended that he was a non-executive director responsible only for statutory compliance and had no nexus with the company’s financial management. His counsel, Mr. Mayukh Mukherjee, argued that the prosecution was a “classic example of over-implication,” noting that the Petitioner was neither a signatory to the cheque nor a participant in the 2018 Settlement Agreement. He relied on the Supreme Court’s ruling in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005), asserting that specific averments regarding an accused being “in charge of and responsible for” business conduct are essential.
The Complainant opposed the quashing, arguing that the petition was a “belated afterthought” filed seven years after the case began. Mr. Dipanjan Dutt, appearing for the Complainant, cited HDFC Bank Ltd. v. State of Maharashtra (2025) to argue against the “mechanical parroting” of statutory language. He further contended that the Petitioner’s long participation in the trial served as a constructive waiver of technical objections.
Court’s Analysis
The Court identified three pivotal questions, focusing on whether the silence in the complaint regarding a director’s specific role renders a summoning order unsustainable and whether jurisdictional defects override procedural delays.
Justice Kumar noted that while the law discourages “mechanical parroting,” it “absolutely mandates the presence of a factual nexus.” The Court observed that the complaint specifically identified Accused Nos. 2 and 3 as those who negotiated the loan, while the Petitioner was “conspicuously omitted.”
Regarding the “novation of debt,” the Court observed:
“In the eyes of the law, where a debt is restructured, the circle of vicarious liability narrows strictly to those who were ‘in charge of’ that specific settlement process.”
Addressing the Complainant’s argument on delay, the Court referenced Anukul Singh v. State of Uttar Pradesh (2025), stating:
“The High Court’s duty to prevent such abuse is not bound by a stopwatch. If a non-signatory director… is forced to stand trial merely because of a delayed filing, it would amount to ‘weaponizing’ criminal law for civil recovery.”
The Court further held that there is no “deemed liability” for a Director solely by virtue of their designation. It characterized the issuance of process as a “serious judicial act” and found that the summoning order in this case reflected a “failure of judicial application of mind” by failing to distinguish between signatories and non-executive directors.
Decision
The High Court allowed the revisional application (CRR 2128 of 2025), quashing the proceedings in Complaint Case No. CN/608/2018 specifically and exclusively against Masud Tarif.
The Court directed the trial to proceed against the remaining accused (the Company and Accused Nos. 2 and 3) with “utmost expedition,” emphasizing that the trial should be concluded within six months as per Section 143(3) of the NI Act. The Petitioner was discharged from his bail bonds.
Case Details
- Case Title: Masud Tarif -vs- State of West Bengal & Anr.
- Case Number: CRR 2128 OF 2025
- Bench: Justice Uday Kumar
- Date: March 20, 2026
