The Supreme Court has ruled that when it comes to cheque dishonour cases under Section 141 of the Negotiable Instruments Act, simply being a company director is not enough to establish liability. The Court underscored that a distinction exists between a director “in charge of” a company and one “responsible to” the company for its business conduct—both conditions must be met for prosecution.
The case in question involved a director facing allegations after a cheque issued by the company was dishonoured. He sought relief from the High Court, arguing that he neither handled the company’s daily operations nor signed the cheques. Despite this, the High Court dismissed his plea and imposed a fine. The director then approached the Supreme Court.
A bench comprising Justices Abhay S. Oka and Ujjal Bhuyan noted that for a director to be held accountable under Section 141, the complaint must specifically state that the individual was in charge of and responsible for the company’s business at the time of the alleged offence. Since the complaint lacked this assertion, the Court ruled that the director could not be prosecuted.
Consequently, the Supreme Court overturned the High Court’s order and dismissed the case against the appellant, while leaving the proceedings against other accused individuals to the discretion of the trial court.
