Isabella Mariam

The High Court of Delhi, Single Bench of Justice Neena Bansal Krishna, quashed a complaint filed under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The court found that a Director who had resigned more than a year prior to the issuance of the dishonoured cheques could not be held vicariously liable, due to the absence of specific averments regarding his involvement in the conduct of the company at the relevant time.

M/s Dadheech Infrastructure Pvt. Ltd., headquartered in West Bengal, was engaged in the construction business. Respondent No.2, Rohit Chauhan, the complainant and proprietor of M/s Shri Ram Builders, supplied construction materials to the accused company. The company, through its directors, placed regular orders and maintained ongoing transactions with the complainant.

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In September 2014, a reconciliation of accounts revealed an outstanding amount of Rs. 22,53,968/- due from the accused company. This amount was acknowledged by Director Sanjeev Kumar Sharma and two employees—Jitender (Accountant) and Laxmi Aggarwal (Purchase Department)—who signed the ledger.

Despite repeated requests between October and December 2014, the directors cited financial constraints and sought extensions. Eventually, on 20.03.2015, Sanjeev Kumar Sharma executed a promissory note on behalf of the company acknowledging the debt and promised repayment within 20 days. He also assured that their client HSCC (India) Ltd. would be instructed to make direct payment to the complainant.

On 23.09.2015, a part payment of Rs. 5,00,000/- was made. Later, two cheques were issued to the complainant:

1. Cheque No. 521021 dated 04.10.2016 for Rs. 12,53,968/-

2. Cheque No. 521020 dated 20.12.2016 for Rs. 10,00,000/-

Both cheques were drawn on SBI, Ballygunge Branch, Kolkata. When presented for encashment on 10.11.2016, the first cheque was returned on 20.11.2016 marked "Funds Insufficient." Following the accused persons’ request, both cheques were re-presented on 20.12.2016, but were again dishonoured on 27.12.2016.

Legal Notice dated 24.01.2017 was issued to all accused, demanding repayment. Although received on 28.01.2017 and 30.01.2017, no payment was made, prompting the filing of a complaint under Sections 138 and 141 of the NI Act. The Magistrate took cognizance on 16.03.2017 and issued summons to all accused, including the petitioner Uttam Kumar Daga.

Uttam Kumar Daga filed the present petition under Section 482 Cr.P.C. seeking quashing of the complaint, asserting that he had resigned from the company on 14.05.2015—well before the issuance of the cheques. He relied on Form DIR-11, filed with the Registrar of Companies, which recorded his appointment on 25.09.2014 and resignation on 19.05.2015, approved in a board meeting.

The petitioner argued that vicarious liability under Section 141 NI Act mandates specific pleadings outlining the role and responsibility of the accused. He stressed that the complaint lacked any particular assertion regarding his involvement in the conduct of the business at the time of cheque issuance.

Rohit Chauhan opposed the petition, maintaining that the complaint clearly stated the petitioner was among the directors responsible for day-to-day affairs during the transactions. He submitted that the petitioner had knowledge of the outstanding liabilities and had attempted to avoid them by resigning. He contended that the promissory note was executed during the petitioner’s tenure, and the petitioner’s resignation was a means to evade legal responsibility.

The court noted the resignation of the petitioner was not disputed. It stated: “The resignation of the Petitioner as the Director of the accused Company on 14.05.2015, is not in dispute. The Petitioner had sent his resignation letter to the Board of Directors... This fact is also corroborated by the Form No. DIR-11...”

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Referring to the Supreme Court's judgement in Adhiraj Singh vs. Yograj Singh and Ors., the court cited: “Once the facts are plain and clear that when the cheques were issued by the Company, the appellant had already resigned and was not a director in the Company and was not connected with the company, he cannot be held responsible for the affairs of the Company in view of the provisions as contained in Section 141 of the NI Act.”

The High Court further recorded: “From the perusal of the Complaint, it is evident that the Appellant was neither a signatory to the dishonoured cheques nor the promissory note. There are general averments... but the Complaint conspicuously lacks any specific averment articulating the precise manner in which the Petitioner bore the responsibility of the two dishonoured cheques.”

The court concluded that the petitioner could not be held vicariously liable. It ordered:

“The Criminal Complaint bearing No. 879/17 and all consequential proceedings arising therefrom, are hereby quashed against the Petitioner.”

The petition was allowed and disposed of accordingly.

Advocates Representing the Parties

For the Petitioner: Mr. Mrinal Beri

For Respondents: Mr. Shoaib Haider, APP, Mr. Abhishek Kaushik and Dr. Navin Kumar Sehrawat

Case Title: Uttam Kumar Daga vs. The State (NCT of Delhi) and Anr.

Neutral Citation: 2025: DHC:3228

Case Number: CRL.M.C. 3878/2018

Bench: Justice Neena Bansal Krishna

[Read/Download order]