M.Cr.C. No. 41874 of 2023 is filed for quashing criminal complaint and subsequent criminal proceedings at SCNIA No. 27258/2015 pending before Judicial Magistrate First Class Indore. M.Cr.C. No. 41879 of 2023 is filed for quashing criminal complaint and subsequent criminal proceedings at SCNIA No. 1165/2016 pending before Judicial Magistrate First Class Indore. Both the matters involve identical issue, therefore, they are being considered together.

2 The exposition of facts, in brief, giving rise to present petitions is as 2 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 under:-

b. It is alleged in the complaint that the accused company placed purchase orders for Thermo Mechanically Treated (TMT) steel to the complainant company in December, 2013. The complainant company supplied TMT steel on credit pursuant to purchase order. The accused No.1 company handed over post-dated cheques to the complainant. The cheques in question were presented for payment with Bank of India, but the cheques were returned with objection 'payment stopped by drawer'. After correspondence between the complainant and the accused, new cheques No. 232328 dated 25.06.2015 and 232329 dated 25.07.2015 (in MCRC No. 41879/2023) and 232327 dated 25.05.2015 and 232330 dated 25.4.2015 (in MCRC No. 41874/2023) were issued. When the complainant presented the cheques with the bank, the cheques were dishonoured for the reason of insufficient funds. The accused No. 4 Pinaki Roy was the Managing Director of accused No. 1, Omaxe Infrastructure and Construction Ltd. and signatory of cheques in question. Accused no. 2, 3 and 5 were directors of the complainant company, who were incharge and responsible for day to day financial affairs of the company and had personally assured Mr. Amitabh Mandloi of the complainant company that said chequess would be 3 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 honoured on presentation. Despite service of statutory notices dated 15.10.2015 (in MCRC No. 41879/2023) and 25.11.2014 (in MCRC No. 41874/2023), the accused failed to make payment of due amount, therefore, the complaint for offence punishable under Sections 138 read with 141 and 142 of the Act was filed before the learned Judicial Magistrate First Class, Indore.

c. The learned JMFC vide impugned orders dated 14.09.2015 in SCNIA No. 27258/15) (MCRC No. 41874/2023) and dated 18.01.2016 in SCNIA No. 1165/2016) (MCRC No. 41879/2023), took cognizance against all the accused for offence punishable u/S 138 of the Act and directed issuance of process against them. The identical orders passed in both the matters read as under:-

Gunmala Sales Pvt Ltd. Vs. Anul Mehta and others reported in (2015) 1 SCC 103; Pooja Ravinder Devidasani Vs. State of Maharashtra reported in AIR 2015 SC 675; Sunita Palita Vs. Panchami Stone Quarry reported in AIR Online 2022 SC 1198; M.A. Alagappan Vs. PVT Ltd reported in 2024 SCC Online Delhi 698; Bharat Dhirajilal Mehta Vs. OXYZO Financial Services Pvt Ltd. reported in 2024 SCC Online Del 3589; Sandip Vinodkumar Patel and others Vs. STCI Finance Ltd reported in 2024 SCC Online Del 5586; Seema Asthana Vs. Jaideep Arora reported in 2024 SCC Online Del 6844, K.S. Mehta Vs. Morgan Securities and Credits Pvt Ltd. reported in 2025 SCC Online SC 492 and Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Private Limited reported in 2025 SCC Online SC 321 contended that the complainant has failed to make specific allegations in the complaint that the petitioner was in-charge of and was responsible to the accused company for conduct of its business. Further, no averments have been made in the complaint that the alleged offence was committed with consent or connivance or any neglect on the part of applicant. The general and omnibus allegations with regard to the assurance to honour the cheque, allegedly given by the petitioner, would not make the petitioner responsible to the accused company for conduct of business. Therefore, the petitioner cannot be prosecuted with the help of Section 141 of the Act, 1881. 5 Per contra learned counsel for the respondents, referred the judgment 5 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 of the Supreme court in case of S.V. Muzumdar and others Vs. Gujarat State Fertilizer Co. Ltd. reported in (2005) 4 SCC 173 to contend that burden to prove that offence was not committed with consent or connivance or neglect of the petitioner is on the petitioner/accused. The question has to be adjudicated at the trial. Whether a person was incharge or responsible to the company for conduct of its business will be adjudicated on the basis of material appearing in evidence. Therefore, the proceedings cannot be quashed at the initial stage.

6 Learned counsel for the respondent relying on the judgment of Supreme Court in the cases of N.K. Wahi Vs. Shekhar Singh and another reported in (2007) 9 SCC 481 contended that the provisions contained in Section 141 of the Act makes all the functionaries and the company liable for the offence punishable u/S 138 of the Act. Section 141(2) of the Act provides for vicarious liability of other officers also. The petitioner had given assurance for honor of cheques issued towards supply of TMT Steel bars, therefore, the petitioner is liable u/S 141(2) of the Act for the alleged offence. 7 Heard learned counsel for the parties. Perused the record. 8 In case of State of Haryana v. BhajanLal reported in 1992 Supp (1) SCC 335, the Supreme Court laid down the principles for the exercise of the jurisdiction by the High Court under Section 482 Cr.P.C to quash the proceedings, as under :

9 The Supreme Court in the case of Rajiv Thapar v. Madan Lal Kapoor , (2013) 3 SCC 330, laid down the steps to be followed for exercise of jurisdiction under Section 482 of Cr.P.C, for quashing of proceedings as under:-

10 In the case of Lalankumar Singh v. State of Maharashtra reported in 2022 SCC OnLine SC 1383, it was held that:

11 Section 141 of the Act, 1881 postulates constructive liability of the Directors of the Company and other persons responsible for the conduct of it's business. It provides as under:

12 Thus, every person, who was in charge of and was responsible to the company for the conduct of the business of the company, shall be liable to be proceeded against. So far as, sub-section (2) of Section 141 of the Act, 1881 is concerned, specific averments are required that the offence was committed with the consent of or in connivance with, is attributable to the Director, Manager, Secretary or other officer of the company.

13 Section 149 of the Companies Act, 2013 provides for Board of Director. It further provides for the duties and responsibilities of an independent Director as under:-

NEUTRAL CITATION NO. 2025:MPHC-IND:19689

(c) who has or had no pecuniary relationship, other than remuneration as such director or having transaction not exceeding ten per cent. of his total income or such amount as may be prescribed,] with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

(d) none of whose relatives--

(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year:

Explanation.--For the purposes of this section, "nominee director" means a director nominated by any financial institution in pursuance of the provisions of any law for the time being in force, or of any agreement, or appointed by any Government, or any other person to represent its interests.

(8) The company and independent directors shall abide by the provisions specified in Schedule IV.

(9) Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members.

[Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under sub-section (5) of section 197, in accordance with the provisions of Schedule V.] (10) Subject to the provisions of section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board's report.

(11) Notwithstanding anything contained in sub-section (10), no independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director:

14 Schedule IV of the Companies Act, 2013 lays down the code for 12 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 independent Director and his roles and functions.

II. Role and functions:

III. Duties :

NEUTRAL CITATION NO. 2025:MPHC-IND:19689 (11) report concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy;

(12) acting within their authority, assist in protecting the legitimate interests of the company, shareholders and its employees;

(13) not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.

15 The roles, functions and the duties of an independent director show that an independent Director does not indulge in day to day functioning of a company. Therefore, an independent Director is made liable only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes and with his consent or connivance or where he had not acted diligently.

16 Learned counsel for the petitioner referring to copy of Form DIR-12 pursuant to Section 7(i)(c) , 168 , 170(2) of Companies Act, 2013 and Rule 17 of Companies (Incorporation) Rules, 2014 and Sections 8 , 15 and 18 of Company (Appointment and Qualification of Directors) Rules, 2014 ( Annexure A-5) submitted that the petitioner Subhojit Dutta has resigned from M/s Reom Infrastructure and Construction Ltd w.e.f. 10.12.2015 as Additional Director. Learned counsel further referred to copy of Form No. 32 pursuant to Section 303(2) , 264(2) , 266(1)(a) and 266 (1)(b)(iii) of Companies Act, 1956 (Annexure P-4) and submitted that Shubhojit Dutta was inducted in Omaxe Infrastructure and Construction Ltd. as Additional Director (independent) w.e.f. 28.03.2013. The above information is verifiable from the official website of the Ministry of Corporate Affairs. Thus, at the most, it can be inferred that petitioner Subhojit Dutta was associated with Omaxe Infrastructure and Construction Ltd. as an independent Additional Director.

NEUTRAL CITATION NO. 2025:MPHC-IND:19689 17 The respondent did not submit any documents to dispute the above information. In the case of Anita Malhotra v. Apparel Export Promotion Council and Another , reported in (2012) 1 SCC 520, the Apex court has held as under:-

Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330). In the case on hand, particularly, in Para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day-to-day affairs of the Company. We have verified the averments as regards to the same and we agree with the contention of Mr Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day-to-day affairs of the Company. On this ground also, the appellant is entitled to succeed.

23. In the light of the above discussion and of the fact that the appellant has established that she had resigned from the Company as a Director in 1998, well before the relevant date, namely, in the year 2004, when the cheques were issued, the High Court, in the light of the acceptable materials such as the certified copy of the annual return dated 30-9-1999 and Form 32 ought to have exercised its jurisdiction under Section 482 and quashed the criminal proceedings. We are unable to accept the reasoning of the High Court and we are satisfied that the appellant has made out a case for quashing the criminal proceedings. Consequently, Criminal Complaint No. 993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein (A-

3) is concerned, is quashed and the appeal is allowed.

18 In the case of Sabitha Ramamurthy and another v. R.B.S. Channabasavaradhya , reported in (2006) 10 SCC 581, it has been held that:-

Learned counsel for the respondent complainants contended that a copy of the partnership deed was also filed which would show that the appellants were active in the business. No such document was filed with the complaint or made part thereof. The filing of the partnership deed later is of no consequence for determining the point in issue. Section 141 does not make all partners liable for the offence. The criminal liability has been fastened on those who, at the time of the commission of the offence, were in charge of and were responsible to the firm for the conduct of the business of the firm. These may be sleeping partners who are not required to take any part in the business of the firm; they may be ladies and others who may not know anything about the business of the firm. The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when first the complainant makes necessary averments in the complaint and establishes that fact. The present case is of total absence of requisite averments in the complaint."

NEUTRAL CITATION NO. 2025:MPHC-IND:19689 19 In the matter of National Small Industries Corporation Ltd. v. Harmeet Singh Paintal and another reported in (2010) 3 SCC 330, the Supreme Court observed as under:-

Only those persons who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.

13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.

14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section 141 .

15. In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company. *************

39. From the above discussion, the following principles emerge:

This has to be averred as a fact as there is no deemed liability of a Director in such cases.

20 In case of Pooja Ravinder Devidasani Vs State of Maharashtra and another reported in AIR 2015 SC 675, it has been held :-

21 The Supreme court in the matter of S.M.S. Pharmaceuticals Ltd Vs. Neeta Bhalla , reported in AIR 2005 SC 3512 (Three Judges Bench) has held as under:-

Provision has been made for directors, managers, secretaries and other officers of a company to cover them in cases of their proved involvement.

14. The conclusion is inevitable that the liability arises on account of conduct, act or omission on the part of a person and not merely on account of holding an office or a position in a company. Therefore, in order to bring a case within Section 141 of the Act the complaint must disclose the necessary facts which make a person liable. ********** **********

19. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141 , he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141 . Even a non- director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.

20. In view of the above discussion, our answers to the questions posed in the Reference are as under:

22 In the case of K.K. Ahuja v. V.K. Vora & Another reported in 2009 (10) SCC 48, it was held that mere fact that at some point of time an officer of a company had played some role in the financial affairs of the company, that will not be sufficient to attract the constructive liability under Section 141 of the NI Act. The Supreme Court summarised the legal position as follows:

(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 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 21 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 Section 141 . Other officers of a company can be made liable only under sub-section (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.

23 It was further observed that if a mere reproduction of the wording of Section 141(1) of the Act in the complaint was sufficient to make a person liable to face prosecution, virtually, every officer/employee of a company without exception could be impleaded as accused by merely making an averment that at the time, when the offence was committed, they were in charge of and were responsible to the company for the conduct of business of the company.

24 In the case of Harshendra Kumar D. Vs. Rebilata Koley reported in (2011) 3 SCC 351, it was held that:

25. In our judgment, the above observations cannot be read to mean that in a criminal case where trial is yet to take place and the matter is at the stage of issuance of summons or taking cognizance, materials relied upon by the accused which are in the nature of public documents or the materials which are beyond suspicion or doubt, in no circumstance, can be looked into by the High Court in exercise of its jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction under Section 397 of the Code. It is fairly settled now that while exercising inherent jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents, which are beyond suspicion or doubt, placed by the accused, the accusations against him cannot stand, it would be travesty of justice if the accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage.

26. Criminal prosecution is a serious matter; it affects the liberty of a person. No greater damage can be done to the reputation of a person than dragging him in a criminal case. In our opinion, the High Court fell into grave error in not taking into consideration the uncontroverted documents relating to the appellant's resignation from the post of Director of the Company. Had these documents been considered by the High Court, it would have been apparent that the appellant has resigned much before the cheques were issued by the Company.

27. As noticed above, the appellant resigned from the post of Director on 2-3-2004.

NEUTRAL CITATION NO. 2025:MPHC-IND:19689 The dishonoured cheques were issued by the Company on 30-4-2004 i.e. much after the appellant had resigned from the post of Director of the Company. The acceptance of the appellant's resignation is duly reflected in the Resolution dated 2- 3-2004. Then in the prescribed form (Form 32), the Company informed to the Registrar of Companies on 4-3-2004 about the appellant's resignation. It is not even the case of the complainants that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date the offence was committed by the Company, the appellant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of the court.

25 The Supreme court in case of Sunita Palita Vs. Panchami Stone Quarry reported in 2022 (10) SCC 152 relying on the judgments of National Small Industries Corporation Limited and Puja Ravinder Devidasani (supra) held as under:-

NEUTRAL CITATION NO. 2025:MPHC-IND:19689 26 In Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Private Limited and another reported in 2025 SC Online SC 321, it was contended that appellant was a non-executive director and had no involvement in the financial affairs of the company. The complaint did not provide any specific averments detailing his role in the dishonoured cheques. The Supreme court considering the law laid down in cases of National Small Industries Corporation Limited, N.K. Wahi, S.M.S. Pharmaceuticals Ltd and Puja Ravinder Devidasani (supra) held as under:-

to-day operations of the company. Furthermore, he was not responsible for the conduct of its business.

19. The legal precedents cited above, including Pooja Ravinder (supra), clearly hold that non-executive directors cannot be held liable under section 138 NI Act unless specific evidence proves their active involvement.

20. In view of the above observations, the Appellant cannot be held vicariously liable under section 141 of the NI Act. The complaints do not meet the mandatory legal requirements to implicate him.

(Also See: K.S. Mehta Vs. Morgan Securities and Creditors Pvt Ltd. reported in 2025 SCC Online SC 492) 27 The material on record shows that the petitioner was associated with Omaxe Infrastructure and Construction Ltd. as an independent additional Director. He was not involved in day-to-day functioning of the company or directly concerned with the financial affairs of the accused company. There is no averment to the effect that with the cheques were issued with knowledge of the petitioner attributable through Board processes and with his consent or connivance. He was not signatory of the cheques in question, therefore, composite liability of the petitioner under section 141 of the Negotiable Instrument Act, 1881 cannot be inferred in absence of specific averments in 24 NEUTRAL CITATION NO. 2025:MPHC-IND:19689 the complaint as to the role and responsibility of the petitioner about the conduct of the business of the accused company. In such a scenario, bald allegation of the assurance to honour the cheque, aimed at implicating the petitioner, would not make the petitioner liable for the alleged offence. 28 In view of above discussion, this court is of considered opinion that learned Judicial Magistrate First class, Indore has committed manifest error in taking cognizance against the petitioner Subhojit for the offence punishable under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The summoning orders and the subsequent proceedings in SCNIA no. 27258/2015 and SCNIA no. 1165/2016 are an abuse of the process of court. Consequently, the MCRC no. 41874 / 2023 and MCRC no. 41879 / 2023 are allowed. It is directed that the criminal complaint and consequent proceedings in SCNIA no. 27258/2015 and SCNIA no. 1165/2016 stand quashed, so far as they relate to the petitioner Subhojit.

Let a copy of this order be sent to the trial Court for information and compliance.