Calcutta HC Confirms KMC Can Revise Property Valuation to Levy Tax In ?11.24 Crore Dispute  ||  Bom HC Cancels Bail of Accused Supplying Fake Medicines, Says it Weakens Public Trust in Healthcare  ||  MP HC: Oral, Anal Sex Between Married Couples Not Punishable under Section 377 IPC  ||  SC Says Respect For Higher Court Orders a Basic Principle, Rebukes Authority For Revisiting Order  ||  SC: Merits of Foreign Arbitral Awards Cannot be Re-Examined During Enforcement Proceedings  ||  SC: Failure to Sign Charge Sheet Doesn’t Invalidate Trial if Charges Were Properly Read to Accused  ||  Delhi HC: Bipolar Disorder Alone Does Not Qualify as Medical Disability Without Benchmark Criteria  ||  Kerala HC: Excommunicating Knanaya Catholics For Marrying Outside the Community is Unconstitutional  ||  Kerala HC: Temporary Use of Religious Land For Public Infrastructure is Not a ‘Transfer’ under Law  ||  P&H HC: Habeas Plea in Child Custody Case Not Maintainable if Child is With Natural Guardian and Safe    

Susela Padmavathy Amma vs. Bharti Airtel Limited (Neutral Citation: 2024 INSC 206) - (Supreme Court) (15 Mar 2024)

Director of Company can be liable for dishonour of cheque, if he was in charge of day-to-day affairs of the company or a signatory to the cheque

MANU/SC/0202/2024

Banking

The present appeals challenge the common judgment and order passed by the High Court, whereby the High Court rejected the prayer for quashing of complaint case in connection with the offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (“the N.I. Act”).

The Appellant submitted that, the Appellant is an aged-lady and was not involved in the day-to-day affairs of the Company. It is submitted that even in the complaint there are no averments that the Appellant was in-charge of day-to-day affairs of the Company. It is further submitted that, the appellant was also not a signatory to the cheque in question. It was only the accused No.2 who was the signatory to the cheque. It is, therefore, submitted that the High Court has grossly erred in not allowing the petition for quashing of criminal complaints qua the appellant.

Merely because a person is a director of a company, it is not necessary that he is aware about the day-today functioning of the company. This Court held that there is no universal rule that, a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. The position of a managing director or a joint managing director in a company may be different. This Court further held that these persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. To escape liability, they will have to prove that when the offence was committed, they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.

It could thus clearly be seen that this Court has held that, merely reproducing the words of the section without a clear statement of fact as to how and in what manner a director of the company was responsible for the conduct of the business of the company, would not ipso facto make the director vicariously liable.

The only allegation against the present appellant is that the present appellant and the accused No.2 had no intention to pay the dues that they owe to the complainant. It is stated that the 2nd accused and the 3rd accused (appellant herein) are the Directors, promoters of the 1st accused being the Company. It is further averred that the 2nd accused is the authorized signatory, who is in-charge of and responsible for the day-to-day affairs of the Company, i.e., the 1st accused.

There is no averment to the effect that the present appellant is in-charge of and responsible for the day-to-day affairs of the Company. It is also not the case of the respondent that the appellant is either the Managing Director or the Joint Managing Director of the Company. It can thus clearly be seen that the averments made are not sufficient to invoke the provisions of Section 141 of the N.I. Act qua the appellant. The judgment and order passed by the High Court is quashed and set aside. Appeals allowed.

Tags : CHEQUE DISHONOUR   LIABILITY   DIRECTOR  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved