# Kishore Shankar Signapurkar v. State of U.P. & Anr

- **Citation:** (2024) 9 ILRA 1021
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-09-19
- **Case number:** Application U/S 482 No. 4898 of 2019
- **Bench:** Anish Kumar Gupta
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/kishore-shankar-signapurkar-v-state-of-u-p-anr-52511
- **Pages:** 16

## Headnote

Criminal Law - Criminal Procedure Code,
1973 - Sections 63 & 482 -Negotiable
Instruments Act,1881 - Sections 138, 138
(2) (b), 139, 141, 141(1), 142 &
142(1)(b) -IndianEvidence Act, 1872 -
Section 114 - General Clauses Act, 1977 -
Section - 27 -Applications u/s 482 of Cr.P.C. -
arising out of the summoning orderspassed in
the complaint cases u/s 138 of N.I. Act, - 12
cheques were issued in favour of complainant -
1022 INDIAN LAW REPORTS ALLAHABAD SERIES
which were dishonoured for the reason 'stop
payment'
-
demand
notice
-Trial
court
summoned the applicant alone, who had signed
the cheques and did not summoned the
company - plea has taken, that without
summoning the company the proceedings u/s
138 cannot be proceeded only against the
applicant -court finds that, company is a juristic
person and such juristic person can be
summoned only through the person who is incharge of the affairs of company and if the
person in-charge of the company is summoned,
therefore, it can't be said that the company has
not been summoned for the trial - held,
company was also made an accused through
the applicant who was director of the company
as well as signatory of the cheque, therefore, by
summoning the applicant herein the company is
also deemed to have been summoned -
consequently, no interference is called - instant
application is dismissed - direction issued to
trial court for conclude the proceedingswithin a
period of six months. (Para - 29, 31, 32, 33, 34)

Applications Dismissed. (E-11)

List of Cases cited:

## Text

_Characters 0–39,677 of 48,990. This is a partial read: ask again with offset=39677 for what follows._

9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1021
समय दी गयी र्थी। र्ब समान्तः शाखा के अत्याभधक
िीड धनिाभश किने वाले की िहती र्थी।"

17. The above statement is
sufficient
that
applicant
No.1
has
withdrawn money from bank account of the
complainant by misusing her position of
Deputy Manager of the Bank. It would also
be relevant to refer here the Handwriting
Expert report submitted by the complainant
before the Magistrate wherein it was
opined that signature of the complainant on
the withdrawal form were forged.

18. In the aforesaid circumstances
there are sufficient evidence and grounds
that an offence under Section 420 I.P.C. is
prima facie made out against the applicant.
So far as, allegation of conspiracy is
concerned, it is on record that bank account
of the complainant was linked with phone
and email of the applicant No.2 i.e.
husband of the complainant, therefore, alert
messages were received by applicant No.2,
however, with a dishonest intention and
under a conspiracy, same were not
communicated to his wife, therefore, at this
stage, prima facie offence under Section
420 read with 120-B I.P.C. is also made
out.

19. In the aforesaid circumstances,
the Court is of a considered opinion that the
learned Magistrate has not committed any
manifest error in summoning the applicants
under Section 420 and 120-B I.P.C. The
learned Magistrate has assigned requisite
reasons that there are sufficient grounds to
proceed under Sections 204 Cr.P.C. (See
Lallan Kumar Singh and Ors. Vs. State
of Maharashtra reported in (2022) SCC
Online SC 1383).

20. As observed above, since there
is no allegation in regard to Section 406
I.P.C. against the applicants, therefore,
summoning order dated 01.07.2023 is
interfered to extent of summoning the
applicants
under
Section
406
I.P.C.,
however, so far as summoning order to
summon under Sections 420 and 120B
I.P.C.
is
concerned,
it
remained
uninterfered and the impugned order is
modified to that extent only.

21. In view of the above, instant
application is disposed of.

22. Registrar (Compliance) to take
steps.
----------
(2024) 9 ILRA 1021
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 19.09.2024

BEFORE

THE HON'BLE ANISH KUMAR GUPTA, J.

Application U/S 482 No. 4898 of 2019
Connected with
Application U/S 482 Nos. 4924 of 2019 & 4951
of 2019

Kishore Shankar Signapurkar ...Applicant
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Applicant:
Santosh Yadav

Counsel for the Respondents:
Anura Singh, G.A., Prateek Dwivedi

Criminal Law - Criminal Procedure Code,
1973 - Sections 63 & 482 -Negotiable
Instruments Act,1881 - Sections 138, 138
(2) (b), 139, 141, 141(1), 142 &
142(1)(b) -IndianEvidence Act, 1872 -
Section 114 - General Clauses Act, 1977 -
Section - 27 -Applications u/s 482 of Cr.P.C. -
arising out of the summoning orderspassed in
the complaint cases u/s 138 of N.I. Act, - 12
cheques were issued in favour of complainant -
1022 INDIAN LAW REPORTS ALLAHABAD SERIES
which were dishonoured for the reason 'stop
payment'
-
demand
notice
-Trial
court
summoned the applicant alone, who had signed
the cheques and did not summoned the
company - plea has taken, that without
summoning the company the proceedings u/s
138 cannot be proceeded only against the
applicant -court finds that, company is a juristic
person and such juristic person can be
summoned only through the person who is incharge of the affairs of company and if the
person in-charge of the company is summoned,
therefore, it can't be said that the company has
not been summoned for the trial - held,
company was also made an accused through
the applicant who was director of the company
as well as signatory of the cheque, therefore, by
summoning the applicant herein the company is
also deemed to have been summoned -
consequently, no interference is called - instant
application is dismissed - direction issued to
trial court for conclude the proceedingswithin a
period of six months. (Para - 29, 31, 32, 33, 34)

Applications Dismissed. (E-11)

List of Cases cited:

1. Shashibala Agrawal Vs St. of U.P. (2024 SCC
Online All 1216),

2. S P Mani & Mohan Dairy Vs Snehalatha
Elangovan (2023 Vol. 10 SCC 685),

3. Ashutosh Ashok Parasrampuriya Vs Gharrkul
Industries (P) Ltd. (2021 SCC Online SC 915),

4. Sunita Palita Vs Panchami Stone Quarry
(2022 vol. 10 SCC 152),

5. Aneeta Hada Vs Godfather Travels & Tours
(P) Ltd. (2012 vol. 5 SCC 661),

6. National Small Industries Corpn. Ltd. Vs
Harmeet Singh Paintal (2010 vol. 3 SCC 330),

7. K K Ahuja Vs V K Vora (2009 Vol. 10 SCC 48),

8. S M S Pharmaceuticals Ltd. Vs Neeta Bhalla
and another (2005 Vol. 8 SCC 89),

9. C.C. Alavi Haji Vs Palapetty Muhammed and
Another (2007 vol. 6 SCC 555),
10. Modi Cements Ltd. Vs Kuchil Kumar Nandi
(1998 vol. 3 SCC 249),

11.
Electronics
Trade
and
Technology
Development
Corpn.
Ltd.
Vs
Indian
Technologists and Engineers (Electronics) (P)
Ltd. (1996 vol. 2 SCC 739),

12. Sarabjit Singh Vs St. of NCT Delhi &
ors.(2018 SCC Online Del 12557),

13. Jang Singh Vs Brijlal (AIR 1996 SC 1631),

14. Anil Gupta Vs Star India Pvt. Ltd. (2014 vol.
10 SCC 373),

15. N. Harihara Krishnan Vs J Thomas (2018
vol. 13 SCC 663),

(Delivered by Hon'ble Anish Kumar Gupta, J.)

1. Heard Sri Santosh Yadav,
learned counsel for the applicant, Sri
Prateek
Dwivedi,
learned
counsel
appearing on behalf of opposite party No.2
and Sri Prem Prakash Tiwari, learned AGA
for the State.

2. The instant application under
Section 482 Cr.P.C. No. 4898 of 2019 has
been filed seeking quashing of summoning
order dated 31.10.2015 as well as the entire
criminal proceedings in Case No. 1723 of
2015 (M/s Indcoat Shoe Component Ltd.
vs. M/s Signapurkar's Leather House Pvt.
Ltd. and Others) under Section 138 of the
Negotiable Instruments Act, 1881 (in short,
'the N.I. Act'), Police Station- Kakadev,
District- Kanpur Nagar, pending before the
Metropolitan
Magistrate-
III,
District-
Kanpur Nagar, the instant application under
Section 482 Cr.P.C. No. 4924 of 2019 has
been filed seeking quashing of summoning
order dated 04.12.2015 as well as the entire
criminal proceedings in Case No. 2342 of
2015 (M/s Indcoat Shoe Component Ltd.
vs. M/s Signapurkar's Leather House Pvt.
Ltd. and Others) under Section 138 of the
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1023
N.I. Act, Police Station- Kakadev, District-
Kanpur
Nagar,
pending
before
the
Metropolitan
Magistrate-
III,
District-
Kanpur Nagar, the instant application under
Section 482 Cr.P.C. No. 4924 of 2019 has
been filed seeking quashing of summoning
order dated 04.12.2015 as well as the entire
criminal proceedings in Case No. 2342 of
2015 (M/s Indcoat Shoe Component Ltd.
vs. M/s Signapurkar's Leather House Pvt.
Ltd. and Others) under Section 138 of the
N.I. Act, Police Station- Kakadev, District-
Kanpur
Nagar,
pending
before
the
Metropolitan
Magistrate-
III,
District-
Kanpur Nagar and the instant application
under Section 482 Cr.P.C. No. 4951 of
2019 has been filed seeking quashing of
summoning order dated 31.10.2015 as well
as the entire criminal proceedings in Case
No. 1725 of 2015 (M/s Indcoat Shoe
Component Ltd. vs. M/s Signapurkar's
Leather House Pvt. Ltd. and Others) under
Section 138 of the N.I. Act, Police Station-
Kakadev, District- Kanpur Nagar, pending
before the Metropolitan Magistrate- III,
District- Kanpur Nagar and the instant
application under Section 482 Cr.P.C. No.
4878 of 2019 has been filed seeking
quashing of summoning order dated
08.09.2015 as well as the entire criminal
proceedings in Case No. 1724 of 2015 (M/s
Indcoat Shoe Component Ltd. vs. M/s
Signapurkar's Leather House Pvt. Ltd. and
Others) under Section 138 of the N.I. Act,
Police Station- Kakadev, District- Kanpur
Nagar, pending before the Metropolitan
Magistrate- III, District- Kanpur Nagar.

3. All the aforesaid applications,
are arising out of the summoning orders
passed in the complaint cases under Section
138 of N.I. Act filed by opposite party No.2
whereby the trial court has summoned only
the applicant herein and has not summoned
the Company, which is also made the
accused No.1 in all the complaint cases.

4. Since the parties are same in all
the applications, all these matters are taken
up together and heard together.

5. Brief facts of the case are that
the applicant herein is the Director of M/s
Signapurkar's
Leather
House
Pvt.Ltd.
(herein after referred to as 'the company')
along with other directors, who have been
made party to the complaint case under
Section 138 N.I. Act filed by the opposite
party No.2 in each complaint case. The
applicant being authorized signatory of the
company had issued 12 cheques in favour
of opposite party No.2 in discharge of
lawful liability for material supplied by
opposite party No.2. The aforesaid cheques
were presented for encashment, which were
dishonourned for the reason 'stop payment'
by the applicant herein. Thereafter, the
demand notice was sent by the opposite
party No.2 and when the demand notice
was not complied with, the instant
complaint case under Section 138 of N.I.
has been filed by the opposite party No.2
against the company as well as its Directors
including the applicant herein. Thereafter,
trial court having found the prima facie
case made out under Section 138 of N.I.
Act against the applicant herein has
summoned the applicant herein alone, who
had signed the cheques and did not
summon the company.

6. The aforesaid summoning
orders have been challenged by the
applicant in these applications mainly on
the ground that without summoning the
company the proceeding under Section 138
of N.I. Act cannot be proceeded only
against the applicant herein. In support of
his submissions, learned counsel for the
1024 INDIAN LAW REPORTS ALLAHABAD SERIES
applicant has relied upon the judgment of
Apex Court in Anil Gupta vs. Star India
Pvt. Ltd. : (2014) 10 SCC 373 and also the
judgment of N.Harihara Krishnan vs.
J.Thomas : (2018) 13 SCC 663.

7. Learned counsel for the
applicant has further submitted that in the
proceedings under Section 138 of N.I. Act,
the Magistrate takes the cognizance of the
offenders not of the offence, therefore, the
summoning order only against the applicant
is unwarranted. He further relies upon the
judgment of Aneeta Hada vs. M/s.
Godfather Travels & Tours Pvt. Ltd. :
(2012) 5 SCC 661. Therefore, learned
counsel for the applicant submits that the
summoning order is bad in law and could
not survive and, therefore, he seeks
quashing of the summoning order against
the applicant herein in all the aforesaid
cases.

8. Per contra, learned counsel
appearing for opposite party No.2 submits
that the complaints under Section 138 of
the N.I. Act were filed by opposite party
No.2 against the company as well as all the
known directors and they were made party
to
the
said
complaints
and
proper
averments in compliance of Section 141 of
the N.I. Act have also been made in the
complaints. However, the trial court has
issued summons only against the applicant
herein in its discretion for which the
opposite party No.2 cannot be held
responsible. Learned counsel for the
opposite party No.2 while relying upon the
judgment of Jang Singh vs. Brijlal : AIR
1966 SC 1631 submitted that for the
mistakes of the court, the complainant
cannot
be held
responsible. Learned
counsel for the opposite party No.2 has
further submitted that at the most nonsummoning
of
the
company
is
an
irregularity, which can be cured by the trial
court by summoning the company as well if
so directed by this Court. Learned counsel
for the opposite party No.2 has further
relied upon the judgment of Sarabjit Singh
vs. State of NCT Delhi and others : (2018)
SCC Oniline Del 12257 wherein it was
held by Delhi High Court that even though
if the company is not made party, however,
the allegations are made in the complaint.
The company can be summoned by the trial
court by curing the defect if there are
sufficient allegations against the company.
Therefore, learned counsel for the opposite
party No.2 further submits that it is the
applicant herein, who has issued the
cheques and also the instructions to stop the
payment of the cheque, therefore, he was
responsible for day to day affairs of the
company. The signatures on the cheque has
not been denied by the applicant nor the
issuance of the cheque, therefore, relying
upon the judgment of Modi Cements Ltd.
vs. Kuchil Kumar Nandi : (1998) 3 SCC
249, learned counsel for the opposite party
No.2 has submitted that the provisions of
Section 138 of the N.I. Act are attracted
even in the cases of 'stop payment'
instructions issued by the drawer of the
cheque. In view thereof, he submits that no
interference is called for in the instant case
at the most, these applications may be
disposed of with a direction to trial court to
issue a fresh summoning order against the
company as well without interfering with
the summoning order qua the applicant
herein. Learned counsel for the opposite
party No.2 has also submitted that in the
instant case, the complaints were filed in
the year 2015 and the summoning orders
were issued in the year 2015 and instant
application is nothing, but a dilatory tactics
on the part of the applicant herein to delay
the proceedings without disputing the
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1025
issuance of cheque and the signatures
thereon.

9. To appreciate the arguments
advanced by learned counsels for the
parties it would relevant to take note of the
provisions of Sections 138 and 141 of the
N.I.Act, which reads as under:

"138.
Dishonour
of
cheque for insufficiency, etc., of
funds in the account.-Where any
cheque drawn by a person on an
account maintained by him with a
banker for payment of any amount
of money to another person from
out of
that
account
for
the
discharge, in whole or in part, of
any debt or other liability, is
returned by the bank unpaid, either
because of the amount of money
standing to the credit of that
account is insufficient to honour
the cheque or that it exceeds the
amount arranged to be paid from
that account by an agreement made
with that bank, such person shall
be deemed to have committed an
offence and shall, without prejudice
to any other provision of this Act,
be punished with imprisonment for
4[a term which may be extended to
two years'], or with fine which may
extend to twice the amount of the
cheque, or with both:
Provided
that
nothing
contained in this section shall
apply unless-

(a) the cheque has been
presented to the bank within a
period of six months from the date
on which it is drawn or within the
period of its validity, whichever is
earlier;
(b) the payee or the holder
in due course of the cheque, as the
case may be, makes a demand for
the payment of the said amount of
money by giving a notice; in
writing, to the drawer of the
cheque, 5[within thirty days] of the
receipt of information by him from
the bank regarding the return of the
cheque as unpaid; and
(c) the drawer of such
cheque fails to make the payment of
the said amount of money to the
payee or, as the case may be, to the
holder in due course of the cheque,
within fifteen days of the receipt of
the said notice.
Explanation.-For
the
purposes of this section, "debt of
other liability" means a legally
enforceable debt or other liability.
141.
Offences
by
companies.- 1) If the person
committing
an
offence
under
section 138 is a company, every
person who, at the time the offence
was committed, was in charge of,
and
was
responsible
to,
the
company for the conduct of the
business of the company, as well as
the company, shall be deemed to be
guilty of the offence and shall be
liable to be proceeded against and
punished accordingly:
Provided
that
nothing
contained in this sub-section shall
render
any
person
liable
to
punishment if he proves that the
offence was committed without his
knowledge,
or
that
he
had
exercised all due diligence to
prevent the commission of such
offence:
[Provided
further
that
where a person is nominated as a
1026 INDIAN LAW REPORTS ALLAHABAD SERIES
Director of a company by virtue of
his
holding
any
office
or
employment
in
the
Central
Government or State Government
or a financial corporation owned
or
controlled
by
the
Central
Government
or
the
State
Government, as the case may be, he
shall not be liable for prosecution
under this Chapter.]
(2)
Notwithstanding
anything contained in sub-section
(1), where any offence under this
Act has been committed by a
company and it is proved that the
offence has been committed with
the consent or connivance of, or is
attributable to, any neglect on the
part of, any director, manager,
secretary or other officer of the
company, such director, manager,
secretary or other officer shall also
be deemed to be guilty of that
offence and shall be liable to be
proceeded against and punished
accordingly.
Explanation.-For
the
purposes of this section, -
(a) "company" means any
body corporate and includes a firm
or other association of individuals;
and
(b) "director", in relation to
a firm, means a partner in the firm.
"
10. From the plain reading
of the provisions of Section 138 of
the N.I. Act, it is apparent that the
offence under Section 139 of the
N.I Act would be constituted after
fulfilment
of
the
following
conditions:
1) the cheque has been
presented to the Bank within its
validity period and the said cheque
has been dishonoured for the
reasons:
(i) the amount outstanding
in account is insufficient to honour
the cheque; or
(ii) it exceeds the amount
arranged to be paid from that
account by an agreement made
with that bank.
2) After the dishonour of
cheque for the aforesaid reasons
the holder in due course of the
cheque give notice to the drawer of
the cheque within a period of 30
days and makes a demand for
payment of the cheque amount.
3) the payee or the holder
in due course of the cheque gives
notice to the drawer of the cheque
within a period of thirty days and
makes a demand for payment of the
cheque amount.
4) The drawer of the
cheque fails to make the payment of
the cheque amount within fifteen
days from the receipt of the said
notice.

11. In Electronics Trade and
Technology Development Corpn. Ltd. vs
Indian
Technologists
and
Engineers
(Electronics) (P) Ltd. : (1996) 2 SCC 739,
the Apex Court has held that the dishonour of
cheque with the endorsement like refer to the
drawer, instructions of stop payment and
exceeds arrangement are well covered within
the meaning of dishonour of cheque under
Section 138 of the N.I. Act.

12. In Modi Cements Ltd. vs.
Kuchil Kumar Nandi : (1998) 3 SCC 249,
the Three Judges' Bench of the Apex Court
has held that the dishonour of cheque for the
reason stop payment is well covered within
the meaning of Section 138 of the N.I. Act.
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1027
13. Further, in C.C. Alavi Haji vs.
Palapetty Muhammed and Another :
(2007) 6 SCC 555, the Apex Court has
categorically held that where the payee
dispatches the demand notice by registered
post with correct address of the drawer of
the cheque, the principle incorporated in
Section 27 of the General Clauses Act,
1977
would
be
attracted
and
the
requirement of Clause (b) of proviso 2 to
Section 138 of the N.I. Act stands complied
with and the cause of action to file a
complaint arises on expiry of the period
prescribed in Clause (c) of the said proviso
for payment by the drawer of the cheque.

14. In view of the aforesaid
authoritative pronouncement of the Apex
Court once the demand notice issued by the
payee of the cheque was dispatched on the
correct address of the drawer of the cheque,
the presumption shall be drawn and after
the expiry of 15 days from such dispatch, it
shall be presumed that the demand notice
was served on the opposite party no.2,
however, such presumption is a rebuttable
presumption and the drawer of the cheque
may prove during the trial that he had no
notice with regard to the aforesaid
dishonour of cheque and demand notice
issued by the payee of the cheque.
However, in the aforesaid judgement of
C.C. Alavi Haji (supra), it has been further
clarified that a person who does not pay
within 15 days from the receipt of the
summons from the court alongwith the
copy of the complaint under Section 138 of
the N.I. Act, cannot obviously contend that
there is no proper service of notice as
required under Section 138 of the N.I. Act,
by ignoring the statutory presumption to
the contrary under Section 27 of the
General Clauses Act, 1977 and Section 114
of
the
Indian
Evidence Act,
1872.
Therefore, the offence under Section 138 of
the N.I. Act, would be constituted after
expiry of 15 days period from the date of
dispatch of the notice to the drawer of the
cheque and as per Section 142 (1)(b) of the
N.I. Act, the complaint under Section 138
of the N.I. Act, is required to be filed
within a period of one month from the
cause of action so arises in favour of the
payee of the cheque.

15. So far as the requirement under
Section 141 of the N.I. Act is concerned,
which deals with the offences under
Section 138 of the N.I. Act, committed by
the companies, provides that the person,
who at the time of the offence was
responsible for the conduct of the business
of the company shall be deemed to be
guilty of the offence and shall be liable to
be proceeded against for the punishment,
accordingly. The provisions of sub-section
(1) of Section 141 of the N.I. Act, makes
out an exception and holds that if a person
is able to prove that when the offence was
committed, he was not in-charge of the
day-to-day affairs of the company or such
offence
was
committed
without
his
knowledge, despite he has exercised all due
diligence to prevent the commission of
such offence, such person cannot be
punished for the offence.

16. In S.M.S. Pharmaceuticals
Ltd. vs. Neeta Bhalla and Another : (2005)
8 SCC 89, the Apex Court has held as
under:

"4. ....................A company
being a juristic person, all its deeds
and functions are the result of acts
of others. Therefore, officers of a
company who are responsible for
acts done in the name of the
company are sought to be made
personally liable for acts which
1028 INDIAN LAW REPORTS ALLAHABAD SERIES
result in criminal action being
taken against the company. It
makes every person who, at the
time the offence was committed,
was
in
charge of, and
was
responsible to the company for the
conduct of business of the company,
as well as the company, liable for
the offence. The proviso to the subsection contains an escape route
for persons who are able to prove
that the offence was committed
without their knowledge or that
they had exercised all due diligence
to prevent commission of the
offence.
9.
The
position of
a
managing director or a joint
managing director in a company
may be different. 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. In order to escape
liability such persons may have to
bring their case within the proviso
to Section 141(1), that is, 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."
(Emphasis Supplied)

17. Following the aforesaid
principles in K.K. Ahuja vs. V.K. Vora :
(2009) 10 SCC 48, the Apex Court has held
as under:

"27. The position under
Section 141 of the Act can be
summarised thus:
(i) If the accused is the
Managing Director or a Joint
Managing Director, it is not
necessary to make an averment in
the complaint that he is in charge
of, and is responsible to the
company, for the conduct of the
business of the company. It is
sufficient if an averment is made
that
the
accused
was
the
Managing
Director
or
Joint
Managing Director at the relevant
time. This is because the prefix
"Managing"
to
the
word
"Director" makes it clear that they
were
in
charge
of
and
are
responsible to the company, for the
conduct of the business of the
company.
(ii) In the case of a
Director or an officer of the
company who signed the cheque on
behalf of the company, there is no
need to make a specific averment
that he was in charge of and was
responsible to the company, for the
conduct of the business of the
company or make any specific
allegation
about
consent,
connivance or negligence. The very
fact that the dishonoured cheque
was signed by him on behalf of the
company,
would
give
rise
to
responsibility under sub-section (2)
of Section 141.
(iii) In the case of a
Director, secretary or manager [as
defined in Section 2(24) of the
Companies Act] or a person
referred to in clauses (e) and (f) of
Section 5 of the Companies Act,
an averment in the complaint that
he was in charge of, and was
responsible to the company, for
the conduct of the business of the
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1029
company is necessary to bring the
case under Section 141(1) of the
Act. No further averment would be
necessary
in
the
complaint,
though some particulars will be
desirable. They can also be made
liable under Section 141(2) by
making
necessary
averments
relating
to
consent
and
connivance or negligence, in the
complaint, to bring the matter
under that sub-section.
(iv) Other officers of a
company cannot be made liable
under sub-section (1) of Section
141. Other officers of a company
can be made liable only under subsection (2) of Section 141, by
averring in the complaint their
position and duties in the company
and their role in regard to the issue
and dishonour of the cheque,
disclosing consent, connivance or
negligence."
(Emphasis Supplied)

18. In National Small Industries
Corpn. Ltd. v. Harmeet Singh Paintal,
(2010) 3 SCC 330, the Apex Court has held
as under:

"39. From
the
above
discussion, the following principles
emerge:
(i)
The
primary
responsibility is on the complainant
to make specific averments as are
required under the law in the
complaint so as to make the
accused vicariously liable. For
fastening the criminal liability,
there is no presumption that every
Director
knows
about
the
transaction.
(ii) Section 141 does not
make all the Directors liable for the
offence. The criminal liability can
be fastened only on those who, at
the time of the commission of the
offence, were in charge of and were
responsible for the conduct of the
business of the company.
(iii) Vicarious liability can
be inferred against a company
registered or incorporated under
the Companies Act, 1956 only if the
requisite statements, which are
required to be averred in the
complaint/petition, are made so as
to
make
the
accused
therein
vicariously
liable
for
offence
committed by the company along
with averments in the petition
containing that the accused were in
charge of and responsible for the
business of the company and by
virtue of their position they are
liable to be proceeded with.
(iv) Vicarious liability on
the part of a person must be
pleaded and
proved and
not
inferred.
(v) If the accused is a
Managing Director or a Joint
Managing Director then it is not
necessary
to
make
specific
averment in the complaint and by
virtue of their position they are
liable to be proceeded with.
(vi) If the accused is a
Director or an officer of a
company who signed the cheques
on behalf of the company then
also it is not necessary to make
specific
averment
in
the
complaint.
(vii) The person sought to
be made liable should be in charge
of and responsible for the conduct
1030 INDIAN LAW REPORTS ALLAHABAD SERIES
of the business of the company at
the relevant time. This has to be
averred as a fact as there is no
deemed liability of a Director in
such cases."
(Emphasis Supplied)

19. In Aneeta Hada v. Godfather
Travels & Tours (P) Ltd., (2012) 5 SCC
661, the Apex Court has held as under:

"53. It is to be borne in
mind that Section 141 of the Act is
concerned with the offences by the
company. It makes the other
persons
vicariously
liable
for
commission of an offence on the
part of the company. As has been
stated by us earlier, the vicarious
liability gets attracted when the
condition precedent laid down in
Section 141 of the Act stands
satisfied. There can be no dispute
that as the liability is penal in
nature, a strict construction of the
provision would be necessitous
and, in a way, the warrant.
56. We have referred to the
aforesaid
passages
only
to
highlight that there has to be strict
observance of the provisions regard
being
had
to
the
legislative
intendment because it deals with
penal provisions and a penalty is
not to be imposed affecting the
rights of persons, whether juristic
entities or individuals, unless they
are arrayed as accused. It is to be
kept in mind that the power of
punishment
is
vested
in
the
legislature and that is absolute in
Section 141 of the Act which
clearly speaks of commission of
offence by the company. The
learned counsel for the respondents
have vehemently urged that the use
of the term "as well as" in the
section is of immense significance
and, in its tentacle, it brings in the
company as well as the Director
and/or other officers who are
responsible for the acts of the
company
and,
therefore,
a
prosecution against the Directors
or other officers is tenable even if
the company is not arraigned as an
accused. The words "as well as"
have to be understood in the
context.
58. Applying the doctrine of
strict construction, we are of the
considered
opinion
that
commission of offence by the
company is an express condition
precedent to attract the vicarious
liability of others. Thus, the words
"as
well
as
the
company"
appearing in the section make it
absolutely unmistakably clear that
when
the
company
can
be
prosecuted, then only the persons
mentioned in the other categories
could be vicariously liable for the
offence subject to the averments in
the petition and proof thereof. One
cannot be oblivious of the fact that
the company is a juristic person
and it has its own respectability. If
a finding is recorded against it, it
would create a concavity in its
reputation.
There
can
be
situations when the corporate
reputation is affected when a
Director is indicted.
59. In view of our aforesaid
analysis,
we
arrive
at
the
irresistible conclusion that for
maintaining the prosecution under
Section 141 of the Act, arraigning
of a company as an accused is
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1031
imperative. The other categories of
offenders can only be brought in
the drag-net on the touchstone of
vicarious liability as the same has
been stipulated in the provision
itself. We say so on the basis of the
ratio laid down in C.V. Parekh
[(1970) 3 SCC 491 : 1971 SCC
(Cri) 97] which is a three-Judge
Bench decision. Thus, the view
expressed in Sheoratan Agarwal
[(1984) 4 SCC 352 : 1984 SCC
(Cri) 620] does not correctly lay
down the law and, accordingly, is
hereby overruled. The decision in
Anil Hada [(2000) 1 SCC 1 : 2001
SCC (Cri) 174] is overruled with
the qualifier as stated in para 51.
The decision in Modi Distillery
[(1987) 3 SCC 684 : 1987 SCC
(Cri) 632] has to be treated to be
restricted to its own facts as has
been explained by us hereinabove."
(Emphasis Supplied)

20. Relying upon the judgement of
Aneeta Hada (supra), the Division Bench
of Apex Court had held that once the High
Court had quashed the summons against
the company, the proceedings against the
Director cannot continue.

21. In the judgement of Sunita
Palita v. Panchami Stone Quarry, (2022)
10 SCC 152, referring to the judgement of
K.K. Ahuja (supra), the Apex Court has
held as under:

"29. ..................As held in
K.K. Ahuja v. V.K. Vora [K.K.
Ahuja v. V.K. Vora, (2009) 10 SCC
48 : (2009) 4 SCC (Civ) 1 : (2010)
2 SCC (Cri) 1181] when the
accused is the Managing Director
or a Joint Managing Director of a
company, it is not necessary to
make
an
averment
in
the
complaint that he is in charge of,
and is responsible to the company
for the conduct of the business of
the company. This is because the
prefix "Managing" to the word
"Director" makes it clear that the
Director was in charge of and
responsible to the company, for the
conduct of the business of the
company. A Director or an officer
of the company who signed the
cheque renders himself liable in
case of dishonour. Other officers
of a company can be made liable
only under sub-section (2) of
Section 141 of the NI Act by
averring in the complaint, their
position and duties in the company,
and their role in regard to the issue
and dishonour of the cheque,
disclosing consent, connivance or
negligence."
(Emphasis Supplied)

22.

In
Ashutosh
Ashok
Parasrampuriya v. Gharrkul Industries
(P) Ltd., 2021 SCC OnLine SC 915, the
Apex Court has held as under:

"23. In the light of the ratio
in S.M.S. Pharmaceuticals Ltd.
(supra) and later judgments of
which a reference has been made
what is to be looked into is whether
in the complaint, in addition to
asserting that the appellants are the
Directors of the Company and they
are incharge of and responsible to
the Company for the conduct of the
business of the Company and if
statutory compliance of Section 141
of the NI Act has been made, it may
not open for the High Court to
1032 INDIAN LAW REPORTS ALLAHABAD SERIES
interfere under Section 482 CrPC
unless
it
comes
across
some
unimpeachable,
incontrovertible
evidence which is beyond suspicion
or doubt or totally acceptable
circumstances which may clearly
indicate that the Director could not
have been concerned with the
issuance of cheques and asking him
to stand the trial would be abuse of
process of Court. Despite the
presence of basic averment, it may
come to a conclusion that no case
is made out against the particular
Director for which there could be
various reasons."
(Emphasis Supplied)

23. In the recent judgement of S.P.
Mani & Mohan Dairy v. Snehalatha
Elangovan, (2023) 10 SCC 685, the Apex
Court has held as under:

"58.1. The
primary
responsibility of the complainant is
to make specific averments in the
complaint so as to make the
accused vicariously liable. For
fastening the criminal liability,
there is no legal requirement for the
complainant to show that the
accused partner of the firm was
aware about each and every
transaction. On the other hand, the
first proviso to sub-section (1) of
Section 141 of the Act clearly lays
down that if the accused is able to
prove to the satisfaction of the
Court
that
the
offence
was
committed
without
his/her
knowledge or he/she had exercised
due
diligence
to
prevent
the
commission of such offence, he/she
will not be liable of punishment.
58.2. The complainant is
supposed to know only generally as
to who were in charge of the affairs
of the company or firm, as the case
may be. The other administrative
matters would be within the special
knowledge of the company or the
firm and those who are in charge of
it. In such circumstances, the
complainant is expected to allege
that the persons named in the
complaint are in charge of the
affairs of the company/firm. It is
only the Directors of the company
or the partners of the firm, as the
case may be, who have the special
knowledge about the role they had
played in the company or the
partners in a firm to show before
the Court that at the relevant point
of time they were not in charge of
the
affairs
of
the
company.
Advertence to Sections 138 and
Section 141, respectively, of the NI
Act shows that on the other
elements of an offence under
Section 138 being satisfied, the
burden is on the Board of
Directors or the officers in charge
of
the
affairs
of
the
company/partners of a firm to
show that they were not liable to
be convicted. The existence of any
special circumstance that makes
them not liable is something that
is
peculiarly
within
their
knowledge and it is for them to
establish at the trial to show that
at the relevant time they were not
in charge of the affairs of the
company or the firm.
58.3. Needless to say, the
final judgment and order would
depend on the evidence adduced.
Criminal liability is attracted only
9 All. Kishore Shankar Signapurkar Vs. State of U.P. & Anr.
1033
on those, who at the time of
commission of the offence, were in
charge of and were responsible for
the conduct of the business of the
firm.
But
vicarious
criminal
liability can be inferred against
the partners of a firm when it is
specifically
averred
in
the
complaint about the status of the
partners "qua" the firm. This
would make them liable to face the
prosecution but it does not lead to
automatic conviction. Hence, they
are not adversely prejudiced if
they are eventually found to be not
guilty, as a necessary consequence
thereof would be acquittal.
58.4. If any Director wants
the process to be quashed by filing
a petition under Section 482 of the
Code on the ground that only a
bald averment is made in the
complaint and that he/she is really
not concerned with the issuance of
the cheque, he/she must in order to
persuade the High Court to quash
the process either furnish some
sterling incontrovertible material
or acceptable circumstances to
substantiate his/her contention.
He/she must make out a case that
making him/her stand the trial
would be an abuse of process of
Court."
(Emphasis Supplied)

24. Thus, from above judgements it
is crystal clear that when the offence is
committed under Section 138 of the N.I. Act
by the companies, then, the Joint Managing
Director and signatory of the cheque are
liable for the offence alongwith the company.
So far as the other Directors are concerned it
is required to be stated in the complaint that
they were in-charge of the day-to-day affairs
of the company and this is, if such assertion is
made in the complaint, then, the Magistrate is
competent to summon them for the trial and
during the trial they can prove otherwise.

25. From the aforesaid judgements it
is also categorically held that the company is
a necessary party and must be impleaded as
an accused in the complaint under Section
138 of the N.I. Act, for the offence committed
by the company. Now, the question which is
relevant to be decided in the instant case is if
the complainant has arrayed the company in
his complaint case and has also made the
necessary assertions with regard to the
signatory of the cheque, Managing Director
of the company and also the Directors who
were allegedly in-charge of the day-to-day
affairs of the company and thereupon having
found a prima facie case the trial court
summoned the signatory of the cheque or the
Managing Director of the company. Without
summoning the company as such what would
be the effect of such a summoning order?

26. Learned counsel for the
applicant submitted that for the offences
under the N.I. Act, the principle that the
Magistrate takes the cognizance of the
offence and not of the offender, is not
applicable. For the offences under Section
138 of the N.I. Act, the Magistrate must take
cognizance not only of the offence but also of
the offenders and since in the instant cases
the Magistrate has not summoned the
company as such, therefore, the prosecution
against the Director alone cannot be sustained
as the company is the principal offender and
its Directors and signatories are liable
vicariously in view of the provisions of
Section 141 of the N.I. Act.

27.