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Susela Padmavathy Amma vs M/s. Bharti Airtel Limited

Not available · 2024 INSC 206Decided 15 Mar 2024
Not available
Justice B.R. Gavai · Justice Sandeep Mehta

Background

Bharti Airtel had filed cheque-dishonour complaints under Section 138 of the Negotiable Instruments Act against a telemarketing company (Fibtel Telecom Solutions) and its directors after dishonoured cheques issued towards outstanding dues. The appellant, one of the accused, was arrayed as a director/promoter of the company. She sought quashing of the complaints before the Madras High Court, arguing she was not in charge of, or responsible for, the day-to-day affairs of the company, but the High Court refused to quash the proceedings against her.

Decision Breakdown

The Supreme Court examined the complaint's averments against the settled requirements of Section 141 of the NI Act, which makes a person vicariously liable for a company's cheque-bounce offence only if they were "in charge of, and responsible to the company for the conduct of its business" at the relevant time. The Court found that the complaint contained no averment that the appellant was in charge of or responsible for the company's day-to-day affairs, nor was she alleged to be the Managing Director or Joint Managing Director. Since the statutory ingredients for vicarious liability were not pleaded, the prosecution against her could not be sustained. The Court allowed the appeals and quashed the criminal proceedings against the appellant.

Lesson Learnt

Merely being a director or promoter of a company is not enough to be held criminally liable for the company's dishonoured cheque: a complaint must specifically allege that the individual was in charge of and responsible for the company's day-to-day business, or the case against them can be quashed.

Official source (sci.gov.in)View Judgment (PDF)

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