Complaint against directors requires specific averments on their role
A vicarious liability under Section 138 read with Section 141 cannot be assumed from directorship alone, the Supreme Court holds, quashing a batch of cheque dishonour complaints.
What Happened
Four directors of a payments company were arrayed as accused in a batch of cheque dishonour complaints. The complaints described them only as 'directors of the accused company' without stating what part any of them played in the conduct of its business. The directors moved the High Court under the quashing jurisdiction and were unsuccessful.
Legal Issue
Whether a complaint under Section 138 read with Section 141 discloses an offence against a director where it pleads directorship but no role in the conduct of the company's business.
Court Held
The Court held that the averment required by Section 141(1) is a jurisdictional fact and not a matter of evidence to be filled in at trial. A complaint that merely reproduces the statutory language, or that relies on the fact of directorship, does not disclose an offence. The complaints against the non-signatory directors were quashed; proceedings against the company and the signatory director were allowed to continue.
Key takeaways
- Section 141 averments must state the role of each accused in the conduct of the business.
- Reproducing the statutory language without particulars is not sufficient pleading.
- The signatory of the cheque stands on a different footing and remains liable.
- Quashing is available at the threshold where the complaint discloses no role.
Why It Matters
Payee-side counsel drafting complaints must now plead role-specific particulars for every director named, and defence counsel gain a clean threshold objection. The ruling is likely to reduce the number of directors routinely arrayed in cheque bounce prosecutions.