Case Title: Sunita Palita & Ors V. M/S Panchami Stone Quarry
The Supreme Court stated that Section 141 of the Negotiable Instruments Act, of 1881 does not need an allegation that a Managing Director or Joint Managing Director was in charge of and accountable for the conduct of a company's operations.
The court reaffirmed that the criteria of Section 141 of the NI Act are not met by impleading independent and non-executive directors of a company only on the basis of a declaration that they are in control of and accountable for the conduct of the company's activities. Unless the director is the designated Managing Director or Joint Managing Director, who would obviously be responsible for the company and/or it's business and affairs, specific averments in the pleadings must be made to support the contention that such Director was in charge of and responsible for the conduct of the Company's business or the Company.
The bench further stated that it would be unfair to subject Directors—including Directors (Personnel), Directors (Human Resources Development), and others—to criminal prosecution under the NI Act simply because of their position. These individuals may not even have been involved in the issuance or dishonour of a check.
The Calcutta High Court's dismissal of a plea under Section 482 CrPC by the directors of MBL Infrastructure Limited, a public limited company, who were identified as defendants in a check bounce case brought by Panchami Stone Quarry, was overturned by the court, and an appeal was allowed. The Accused Company's daily activities were not the responsibility of the Accused Company, according to the Accused, who claimed to be independent non-executive directors of the Company. According to the court, a director of a corporation who at the relevant time was not in control of or accountable for the firm's business operations would not be held accountable under those laws.
The Court also observed that despite the petition expressly stating that each and every accused person was accountable and answerable for the whole business management of the Accused Company, the High Court declined to dismiss the case against the accused. The criminal case's other accused, namely the Accused Company, its managing director/additional managing director, and/or the signer of the disputed check, may still face legal action, the court made clear.