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Criminal LawSupreme Court of India

Kamalkishor Shrigopal Taparia v. India Ener-Gen Private Limited & Anr.

Criminal Appeal · 2025 INSC 223Decided 13 Feb 2025
Crl.A. No.-000758-000761 - 2025 (arising out of SLP (Crl.) Nos. 4051-4054 of 2020)
Mrs. Justice B.V. Nagarathna · Justice Satish Chandra Sharma

Background

The appellant was an independent non-executive director of a company that took two loans and later issued cheques toward repayment, all of which bounced for insufficient funds. He was made an accused in four criminal complaints under Section 138 of the Negotiable Instruments Act even though he had not signed any of the cheques and had already resigned from the board (with the resignation formally filed with the Registrar of Companies) before the relevant events fully played out. The Bombay High Court had refused to quash the proceedings against him, holding that his role as director was a matter to be examined at trial.

Decision Breakdown

The Supreme Court held that merely being a director does not automatically create criminal liability for a company's dishonoured cheques - the complaint must contain specific factual averments showing the accused was actually in charge of and responsible for the company's business at the relevant time. Relying on its earlier rulings (including National Small Industries Corporation v. Harmeet Singh Paintal and Pooja Ravinder Devidasani v. State of Maharashtra), the Court found that the complaints against the appellant contained no such specific allegations, and noted he was a non-executive director with no financial role, was not a signatory to the cheques, and had resigned before the relevant transactions matured into dishonour. It therefore set aside the High Court's order and quashed all four criminal complaints against him.

Lesson Learnt

Simply holding the title of "director" - especially a non-executive, independent director - does not by itself expose a person to criminal liability for a company's bounced cheques; a complainant must specifically plead how that individual was actually in charge of the company's day-to-day business.

Kamalkishor Shrigopal Taparia v. India Ener-Gen Private Limited & Anr. – Legal Case Shots | LegalAware