The Calcutta High Court has ruled that a company director cannot be held vicariously liable for a dishonored cheque under Section 141 of the Negotiable Instruments Act, 1881, solely by virtue of their designation. Deciding a revisional application, Justice Shampa Dutt (Paul) quashed the criminal proceedings pending against petitioner Sanjeeva Shukla (also known as Sanjiv Shukla), emphasizing that complaints must contain specific and unambiguous allegations detailing the active role played by a director in the transaction.
Background of the Case
The case originated from a complaint (Case No. C-2371 of 2021) filed by Neelanjana Sen under Sections 138 and 141 of the Negotiable Instruments Act, 1881, which was pending before the Court of the Learned Judicial Magistrate, 2nd Court, Alipore. The petitioner, Sanjeeva Shukla, was arraigned as an accused in his capacity as one of the directors of Accused No. 1 Company, Credforce Asia Limited.
The petitioner approached the High Court seeking the quashing of these proceedings, arguing that he had been implicated solely because of his designation. The complaint did not allege that he was in charge of, or responsible for, the business conduct of the company at the relevant time, nor did it attribute any specific role to him in the transaction that led to the cheque’s dishonor.
Arguments of the Parties
Senior Advocate Mr. Sandipan Ganguly, appearing alongside Ms. Priyanka Sarkar for the petitioner, contended that the complainant failed to satisfy the mandatory requirements of Section 141 of the Negotiable Instruments Act. He argued that Section 141 creates a legal fiction of vicarious criminal liability and, being a penal provision, must undergo strict construction.
The petitioner’s counsel submitted that the sine qua non for invoking vicarious liability is a specific averment that the accused was “in charge of and responsible to the Company for the conduct of its business” at the time of the offense. He emphasized that the terms “was in charge of” and “was responsible to the Company” must be read conjunctively, as the Legislature purposely used the word “and.”
Furthermore, the petitioner relied on several precedents, including Ashok Shewakramani & Ors. Vs. State of Andhra Pradesh & Anr., Siby Thomas V. Somany Ceramics Limited, and Rahul Tantia V. State of West Bengal, to argue that a director is not automatically deemed to be in charge of a company’s affairs. The complaint in question was completely silent on the petitioner’s participation in the transaction, the issuance of the cheque, or any oversight of the business concerning the dispute.
No representative appeared on behalf of the opposite party and complainant, Neelanjana Sen, despite service of notice.
Court’s Analysis and Precedents
Justice Shampa Dutt (Paul) examined the complaint and observed that while the company and its three directors were named as accused, the complainant only made a general statement that the directors were engaged in managing day-to-day affairs. There were no specific allegations or acts attributed to individual directors. The complaint even asserted that the cheque was issued collectively “by accused persons” without identifying who actually signed it.
Analyzing the legal framework, the Court noted:
“For launching a prosecution against the Directors of a Company under Section 138 read with Section 141 of the NI Act, there has to be a specific allegation in the complaint in regard to the part played by them in the transaction in question.”
The Court added:
“In absence of the specific role qua the participation of a director in the alleged transaction with the complainant, no director can be implicated by virtue of Section 141 of the NI Act.”
The Court extensively analyzed multiple Supreme Court judgments to clarify the requirements of Section 141:
- Pawan Kumar Goel v. State of U.P. & Anr. (citing N. Harihara Krishnan v. J. Thomas): The apex court held that a director cannot be deemed to be in charge of and responsible for the company’s business. Unlike Managing Directors or Joint Managing Directors, who are responsible by virtue of their office, or the actual signatory of the cheque, other directors require specific factual allegations to be held liable.
- Shaleen Khemani & Ors. Vs. The State of West Bengal & Anr.: The High Court had held that merely being a director does not support an inference of being in charge of company affairs without specific overt acts being articulated.
- Sunil Todi & Ors. V. State of Gujarat & Anr.: The Supreme Court clarified that vicarious liability cannot be imputed automatically to directors unless they played an active role with criminal intent or the statutory conditions under Section 141 are strictly met.
- Sunita Palita vs M/s. Panchami Stone Quarry: The Supreme Court reiterated that liability depends on the role played in the affairs of the company, not on designation or status alone, confirming that non-executive directors are not involved in day-to-day business.
- Ashok Shewakramani & Ors. vs. State of Andhra Pradesh & Anr.: The Supreme Court confirmed that the requirements under Section 141(1) are strict, and: “On a plain reading, it is apparent that the words ‘was in charge of’ and ‘was responsible to the company for the conduct of the business of the company’ cannot be read disjunctively and the same ought be read conjunctively in view of use of the word ‘and’ in between.”
Applying these principles, Justice Shampa Dutt (Paul) observed that the allegations against the petitioner were purely general, and the complaint failed to disclose who signed the cheque. Pointing to N. Harihara Krishnan vs. J. Thomas, the Court highlighted that disclosing the name of the person drawing the cheque is an essential factual allegation.
Decision of the Court
The High Court concluded that the mandatory requirements under Section 141 of the Negotiable Instruments Act, as established by the Supreme Court, were entirely absent in the complaint. Consequently, the Court held that allowing the criminal proceedings to continue against the petitioner would amount to an abuse of the process of law.
The Court allowed the revisional application (CRR 2625 of 2024) and quashed the proceedings of Case No. C-2371 of 2021 pending before the Learned Judicial Magistrate, 2nd Court, Alipore, specifically in respect of the petitioner, Sanjeeva Shukla. All connected applications were disposed of, and interim orders were vacated.
Case Details
Case Title: Sanjeeva Shukla @ Sanjiv Shukla Vs Neelanjana Sen
Case No.: CRR 2625 of 2024
Bench: Justice Shampa Dutt (Paul)
Date: 17.07.2026
