01. This Criminal Petition is filed by the petitioner-accused No.2 seeking to quash the proceedings against him by setting aside the impugned order dated 24.09.2024 passed in CRL.M.P.No.3717 of 2023 in S.T.C.NI.No.346 of 2021 on the file of the learned X Judicial Magistrate of First Class, Manoranjan Complex, Nampally, Hyderabad (for short ‘the learned trial Court’), registered for the offence under Section 138 of the Negotiable Instruments Act (for short ‘the NI Act’).

02. Heard Sri N.Ashwani Kumar, learned counsel representing Sri M.Avinash Reddy, learned counsel for petitioner and Sri K. Ravinder Reddy, learned counsel for unofficial respondent No.2. Perused the material on record.

03(a). A complaint was filed under Section 190 read with Section 200 of the Code of Criminal Procedure, (for short, “Cr.P.C.”), alleging the commission of offences under Sections 138 and 142 of the NI Act by the accused persons. The complaint was lodged by the respondent No.2 before the learned trial Court in respect of the alleged offences committed on 19.11.2020 and 08.01.2021. The gist of the private complaint is that the complainant and the accused had maintained acquaintance and association for more than 20 years. Owing to the said acquaintance, the complainant advanced certain amounts to members of the Lingamaneni family, namely L. Ramesh (the petitioner–accused No.2), LVS Rajasekhar, and their companies.

               03(b). It is further alleged that the accused Nos.2 to 4 approached the complainant seeking funds for investment in real estate ventures and, in turn, promised to deliver certain properties to the complainant for the amounts received, with a further assurance that, in the event of their failure to deliver such properties, the amount would be repaid with interest at 18% per annum. A cheque bearing No.040421, dated 03.09.2013 for an amount of Rs.2.00 crores, drawn on Axis Bank, S.R. Nagar, Hyderabad, in favour of M/s Viswaroopi Energy Private Limited i.e. accused No.1, was issued and subsequently encashed through HDFC Bank, Benz Circle, Vijayawada. The complainant asserts that after waiting for nearly three years, she repeatedly approached the accused seeking repayment of the amount. Thereafter, the accused Nos.2 to 4 executed a Memorandum of Understanding (MOU) dated 24.06.2016, signed by the petitioner–accused No.2. Under the said MOU, all creditors of the accused and their companies were collectively described as “Party A,” and the debtors, including individuals and their companies, were described as “Party B.” The complainant was reflected as the fifth member of Party A, while the accused No.4 was shown as the first member of Party B, and the company was shown as the third member. The consolidated liability of Party B towards Party A was recorded as Rs.300.00 crores, out of which the complainant’s entitlement was Rs.2.00 crores. However, the terms of the MOU were not honoured.

               03(c). It is further alleged that upon repeated demands made by the complainant, the accused Nos.2 to 4 expressed willingness to effect partial repayment, and the accused No.4 acting in the capacity of Director of the Company, issued a cheque for Rs.2.00 crores in April 2019 towards part discharge of the debt. The accused requested the complainant to await further instructions regarding the date of presentation of the cheque, assuring that she would be informed once funds were arranged. The complainant waited for approximately one and a half years and again sought confirmation for presentation of the cheque. It is stated that by the end of October 2020, the accused assured that he would intimate the complainant regarding the presentation of the cheque and, in the event of failing to do so, she could present the cheque at any time during November 2020.

               03(d). It is further alleged that as the complainant was unable to establish contact with the accused thereafter, she deposited the cheque in her bank on 23.11.2020. The cheque was returned unpaid on 24.11.2020 along with a cheque return memo bearing the endorsement “payment stopped by drawer.” Consequently, the complainant issued a statutory demand notice dated 19.12.2020 calling upon the accused to make payment of the cheque amount within 15 days. The notice was duly served on 23.12.2020. A reply notice dated 08.01.2021 was issued by the accused and received by the complainant on 10.01.2021. As the accused failed to make payment even thereafter, the complainant filed the present complaint alleging commission of the offence under Section 138 of the NI Act. Based on the said complaint, the case was taken cognizance of and numbered as S.T.C. NI No.346 of 2021.

04. It is pertinent to note that a few developments subsequent to lodging of the complaint, and number of writ petitions came to be filed in the High Court for the State of Telangana. The learned Single Judge of this Court vide common order dated 20.12.2022, passed in W.P.No.33376 of 2021 and batch and the same is as follows:

               “Since all the writ petitions are filed by the petitioners for quashing proceedings initiated under Section 138 of the Negotiable Instruments Act, they are being heard together and disposed off by way of this Common Order.

               2. Heard learned counsel for the petitioners and learned counsel for the 2nd respondent-de facto complainant.

               3. Several grounds are raised including the grounds of there being no legally enforceable debt and/or subsisting liability.

               4. All these questions are mixed questions of fact and law which can only be agitated before the trial Court during trial. If the petitioners are so advised, they can file an application seeking discharge, in accordance with law laid down by the Hon’ble Supreme court in the case of Bhushan Kumar and another v. State (NCT of Delhi) and another. All the grounds including the grounds raised in the present writ may be raised.

               5. With the above observations, all the Writ Petitions are disposed off. No order as to costs. As a sequel thereto, miscellaneous applications, if any, shall stand closed.

05. The order of the learned Single Judge was carried to the Hon’ble Supreme Court by way of SPL (CRL.) No.4330 of 2023 challenging the common order passed in W.P.No.33376 of 2021 and batch. The Honourable Supreme Court by its order dated 21.04.2023 passed the following order:

               “Since by the impugned order the High Court has given liberty to the petitioner to move the trial court for discharge, we do not find any reason to interfere with the impugned order and hence, the special leave petitions are dismissed.

               Pending application(s), if any, shall stand disposed of.”

06. Pursuant to the directions of the writ Court and the Honourable Supreme Court, a discharge petition in CRL.M.P.No.3717 of 2023 in CC.NI.No.346 of 2021 (later clarified by the learned trial Court to be STC.NI.No.346 of 2021 on a query by this Court) was filed seeking discharge of the petitioner in the present criminal petition. The learned trial Court, after hearing learned counsels for both sides and considering the case vide impugned order dated 24.09.2024, held as follows:

               “… Several grounds were raised by the accused including there is no subsisting liability and the Hon’ble High Court gave finding that all the questions were mixed question of fact and law which can be agitated before the trial Court during trial.

               The accused was an independent non-executive Director in the accused company and was never in-charge and responsible for the day to day affairs of the accused company can be decided after full fledged trial but not at this stage. It is settled law that a magistrate is devoid of powers to discharge and/or drop proceedings in summons case/summons cases instituted on a complaint, including the proceedings in cheque dishonor case. In view of the facts and circumstances of the case, the petition is hereby dismissed.

               In the result, the petition is dismissed. No costs.”

07(a). Learned counsel for the petitioner submitted that a perusal of the entire complaint does not disclose any specific averment against the petitioner–accused No.2. As per the Companies Act, a director is a person who is appointed to the Board of Directors of a company and the Board is the governing body responsible for supervising, controlling, and directing the affairs of the company and appointment of the director must be according to the Act, Articles of Association, and shareholders' resolutions. It is contended that in order to attract the offences under the NI Act, particularly under Section 141, the complaint must contain specific assertions that the petitioner-accused No.2 was, at the time of the commission of the offence, in charge of and responsible for the conduct of the business of the company. In the absence of such averments, the mere fact that the petitioner was a Director of the company cannot render him liable for the offences under the NI Act, as vicarious liability cannot be inferred in the absence of necessary pleadings indicating his role at the relevant time.

               07(b). It is further submitted that only if the petitioner– accused No.2, as a Director, was actively involved in the day- to-day affairs of the company at the time of the alleged offence, could liability be fastened upon him. It is further contended that the complaint, as presented, is devoid of any such specific averment, and therefore, initiation of proceedings is abuse of process of law. The docket order dated 07.09.2021 passed in S.T.C.No.346 of 2021 issuing summons to the accused is bereft of reasons, and the learned Magistrate is said to have erred in issuing process without recording any basis or satisfaction for doing so.

               07(c). It is further contended that the complaint of the respondent No.2 is unsustainable as it lacks any specific allegation regarding the acts or role of the petitioner–accused No.2 in the conduct of the day-to-day affairs of the company at the time of the alleged offence, which is a mandatory requirement under Section 141 of the NI Act. It is also submitted that, in view of the change in circumstances, the second petition seeking quashment of the proceedings is maintainable.

               07(d). With the above submissions, while praying to quash proceedings against the petitioner-accused No.2 the learned counsel relied upon a decision of the Honourable Supreme Court in Hitesh Verma v. Health Care at Home India Private Limited and others((2025) 7 Supreme Court Cases 623) wherein it was held at Paragraph Nos.4 and 5 that:

               “4. There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no assertion in the complaints that the appellant, at the time of commission of the offence, was in charge of the business of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the aid of sub-Section (1) of Section 141 of the 1881 Act.

               5. Accordingly, the impugned orders are set aside and the order taking cognizance of the complaints filed by the first respondent stands quashed and set aside only as against the present appellant who is arraigned as accused no.3. We make it clear that we have made no adjudication on the merits of the complaints and all issues are left open to be decided by the trial court.”

               07(e). Further, he relied upon a decision of the Honourable Supreme Court in Sunil Bharti Mittal v. Central Bureau of Investigation ((2015) 4 SCC 609) wherein it was held at Paragraph Nos.48 and 52 that:

               “48. Sine Qua Non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the Court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not.

               52. A wide discretion has been given as to grant or refusal of process and it must be judicially exercised. A person ought not to be dragged into Court merely because a complaint has been filed. If a prima facie case has been made out, the Magistrate ought to issue process and it cannot be refused merely because he thinks that it is unlikely to result in a conviction.”

               07(f). Further, he relied upon a decision of the Honourable Supreme Court in Susela Padmavathy Amma v. M/s. Bharti Airtel Limited wherein it was held at Paragraph Nos.10, 12, 19, 20, 24, 28 and 29 that:

               “10. Accused No.3, who is a female senior citizen and the Director of Fibtel Telecom Solutions, filed Crl. O.P. No. 3470 of 2019 against C.C. No. 3151 of 2017 & Crl. O.P. No. 5767 of 2019 against C.C. No. 3150 of 2017, before the High Court under Section 482 of the CrPC for quashing of the criminal complaints qua her.

               12. Aggrieved by the rejection of the petition for quashing of criminal complaints, the appellant herein filed the present appeal. Vide order dated 12th December 2022, this Court had issued notice and stay of further proceedings qua the appellant was granted.

               19. It was held that merely because a person is a director of a company, it is not necessary that he is aware about the day-today functioning of the company. This Court held that there is no universal rule that a director of a company is in charge of its everyday affairs. It was, therefore, necessary, to aver as to how the director of the company was in charge of day-to-day affairs of the company or responsible to the affairs of the company. This Court, however, clarified that the position of a managing director or a joint managing director in a company may be different. This Court further held that 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. To escape liability, 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.

               20. In Pooja Ravinder Devidasani vs. State of Maharashtra and another7 this Court observed thus: "17. Every person connected with the Company will not fall into the ambit of the provision. Time and again, it has been asserted by this Court that 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. A Director, 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 an offence under Section 141 of the NI Act. In National Small Industries Corpn. [National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330 : (2010) 1 SCC (Civ) 677 : (2010) 2 SCC (Cri) 1113] this Court observed: (SCC p. 336, paras 13-14)

               "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."

               (emphasis in original)

               18. In Girdhari Lal Gupta v. D.H. Mehta [Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 : 1971 SCC (Cri) 279 : AIR 1971 SC 2162] , this Court observed that a person "in charge of a business" means that the person should be in overall control of the day-to-day business of the Company.

               19. A Director of a company is liable to be convicted for an offence committed by the company if he/she was in charge of and was responsible to the company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned (see State of Karnataka v. Pratap Chand [State of Karnataka v. Pratap Chand, (1981) 2 SCC 335 : 1981 SCC (Cri) 453] ).

               20. In other words, the law laid down by this Court is that for making a Director of a company liable for the offences committed by the company under Section

               141 of the NI Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the company.

               21. In Sabitha Ramamurthy v. R.B.S. Channabasavaradhya [Sabitha Ramamurthy v. R.B.S. Channabasavaradhya, (2006) 10 SCC 581 : (2007) 1 SCC (Cri) 621] , it was held by this Court that: (SCC pp. 584-85, para 7)

               "7. it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused is vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned 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 the offence committed by the company."

               (emphasis supplied)

               By verbatim reproducing the words of the section without a clear statement of fact supported by proper evidence, so as to make the accused vicariously liable, is a ground for quashing proceedings initiated against such person under Section 141 of the NI Act."

               24. In the case of Ashoke Mal Bafna (supra), this Court observed thus:

               "9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of a defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action. (See Pooja Ravinder Devidasani v. State of Maharashtra [Pooja Ravinder Devidasani v. State of Maharashtra, (2014) 16 SCC 1 : (2015) 3 SCC (Civ) 384 : (2015) 3 SCC (Cri) 378 : AIR 2015 SC 675] .)

               10. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company."

               28. It can thus be seen that the only allegation against the present appellant is that the present appellant and the accused No.2 had no intention to pay the dues that they owe to the complainant. It is stated that the 2nd accused and the 3rd accused (appellant herein) are the Directors, promoters of the 1st accused being the Company. It is further averred that the 2nd accused is the authorized signatory, who is in-charge of and responsible for the day-to-day affairs of the Company, i.e., the 1st accused.

               29. It can thus be clearly seen that there is no averment to the effect that the present appellant is in- charge of and responsible for the day-to-day affairs of the Company. It is also not the case of the respondent that the appellant is either the Managing Director or the Joint Managing Director of the Company.”

               07(g). Further, he relied upon a decision of the Honourable Supreme Court in Ashoke Mal Bafna v. Upper India Steel Manufacturing and Engineering Company Limited ((2018) 14 SCC 202) wherein it was held at Paragraph Nos.9 to 13 that:

               “9. To fasten vicarious liability under Section 141 of the Act on a person, the law is well settled by this Court in a catena of cases that the complainant should specifically show as to how and in what manner the accused was responsible. Simply because a person is a Director of defaulter Company, does not make him liable under the Act. Time and again, it has been asserted by this Court that only the person who was at the helm of affairs of the Company and in charge of and responsible for the conduct of the business at the time of commission of an offence will be liable for criminal action [See : Pooja Ravinder Devidasani v. State of Maharashtra (2014) 16 SCC 1 : AIR 2015 SC 675].

               10. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company.

               11. Turning to the case on hand, admittedly the cheques dated 28-12-2004 were issued while the appellant was Director of the Company with validity for a period of six months but during that period they were not presented for realization at the bank. The appellant has resigned as Director w.e.f 2-1-2006 and the fact of his resignation has been furnished by Form 32 to the Registrar of Companies on 24-03-2006 in conformity with the rules. Thereafter, the appellant had played no role in the activities of the default Company. This fact remains substantiated with the Statement filed by the default Company on 20-02- 2006 with the Registrar of Companies that in an advertisement of the Company seeking deposits (Annexure P3), only the names of three Directors of the Company were shown as involved in the working of the Company and the name of appellant was not therein. Indisputably, therefore, the cheques bounced on 24-08-2006 due to insufficient funds were neither issued by the appellant nor the appellant was involved in the day to day affairs of the Company.

               12. Before summoning an accused under Section 138 of the Act, the Magistrate is expected to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and then to proceed further with proper application of mind to the legal principles on the issue. Impliedly, it is necessary for Courts to ensure strict compliance of the statutory requirements as well as settled principles of law before making a person vicariously liable.

               13. The Superior Courts should maintain purity in the administration of Justice and should not allow abuse of the process of Court. Looking at the facts of the present case in the light of settled principles of law, we are of the view that this is a fit case for quashing the complaint. The High Court ought to have allowed the criminal miscellaneous application of the appellant because of the absence of clear particulars about role of the appellant at the relevant time in the day to day affairs of the Company.”

               07(h). Further, he relied upon a decision of the Honourable Supreme Court in M/s. JM Laboratories and Others v. State of Andhra Pradesh and Another (2025 INSC 127) wherein it was held at Paragraph No.9 that:

               “9. In the present case also, no reasons even for the namesake have been assigned by the learned Magistrate. The summoning order is totally a non- speaking one. We therefore find that in light of the view taken by us in criminal appeal arising out of SLP (Crl.) No. 2345 of 2024 titled “INOX Air Products Limited Now Known as INOX Air Products Private Limited and Another v. The State of Andhra Pradesh”, and the legal position as has been laid down by this Court in a catena of judgments including in the cases of Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others (Supra), Sunil Bharti Mittal v. Central Bureau of Investigation (Supra), Mehmood Ul Rehman v. Khazir Mohammad Tunda and Others (Supra) and Krishna Lal Chawla and Others v. State of Uttar Pradesh and Another (Supra), the present appeal deserves to be allowed.”

               07(i). Further, he relied upon a decision of the Honourable Supreme Court in SMS Pharmaceuticals Ltd. V. Neeta Bhalla and Another ((2005) 8 SCC 89) wherein it was held at Paragraph Nos.4, 18 and 19 that:

               “4. In the present case, we are concerned with criminal liability on account of dishonour of cheque. It primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. Section 141 of the Act is an instance of specific provision which in case an offence under Section 138 is committed by a Company, extends criminal liability for dishonour of cheque to officers of the Company. Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the Company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are 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 result in criminal action being taken against the Company. It makes every person who, at the time the offence was committed, was incharge 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 sub-section 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.

               18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons 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 respondent falls within 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.

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

               (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

               (b) The answer to question posed in sub-para (b) has to be in negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct 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.

               (c) The answer to question (c) has to be in affirmative. The question notes that the Managing Director or Joint Managing Director would be admittedly in charge of the company and responsible to the company for conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as Managing Director or Joint Managing Director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section

               141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141.”

               07(j). Further, he relied upon a decision of the Honourable Supreme Court in Expeditious Trial of Cases under Section 138 of the NI Act, 1881 IN RE Suo Motu Writ Petition (Crl.) No. 2 of 2020 ((2021) 16 Supreme Court Cases 116) wherein it was held at Paragraph Nos.8, 9, 17 to 21, 24.1, 24.6 and 24.7 that:

               “8. The learned Amici Curiae submitted that Section 143 of the Act provides that Sections 262 to 265 of the Code shall apply for the trial of all offences under Chapter XVII of the Act. The second proviso empowers the Magistrate to convert the summary trial to summons trial, if he is of the opinion that a sentence of imprisonment exceeding one year may have to be passed or that it is undesirable to try the case summarily, after recording reasons. The learned Amici Curiae have brought to the notice of this Court that summary trials are routinely converted to summons trials in a mechanical manner. The suggestions made by him in his preliminary note that the High Courts should issue practice directions to the trial courts for recording cogent and sufficient reasons before converting a summary trial to summons trial have been accepted by the High Courts.

               9. Section 143 of the Act has been introduced in the year 2002 as a step-in aid for quick disposal of complaints filed under Section 138 of the Act. At this stage, it is necessary to refer to Chapter XXI of the Code which deals with summary trials. In a case tried summarily in which the accused does not plead guilty, it is sufficient for the Magistrate to record the substance of the evidence and deliver a judgment, containing a brief statement of reasons for his findings. There is a restriction that the procedure for summary trials under Section 262 is not to be applied for any sentence of imprisonment exceeding three months. However, Sections 262 to 265 of the Code were made applicable “as far as may be” for trial of an offence under Chapter XVII of the Act, notwithstanding anything contained in the Code. It is only in a case where the Magistrate is of the opinion that it may be necessary to sentence the accused for a term exceeding one year that the complaint shall be tried as a summons trial. From the responses of various High Courts, it is clear that the conversion by the trial courts of complaints under Section 138 from summary trial to summons trial is being done mechanically without reasons being recorded. The result of such conversion of complaints under Section 138 from summary trial to summons trial has been contributing to the delay in disposal of the cases. Further, the second proviso to Section 143 mandates that the Magistrate has to record an order spelling out the reasons for such conversion. The object of Section 143 of the Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent possible. The discretion conferred on the Magistrate by the second proviso to Section 143 is to be exercised with due care and caution, after recording reasons for converting the trial of the complaint from summary trial to summons trial. Otherwise, the purpose for which Section 143 of the Act has been introduced would be defeated. We accept the suggestions made by the learned Amici Curiae in consultation with the High Courts. The High Courts may issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act.

               17. In K.M. Mathew v. State of Kerala [K.M. Mathew v. State of Kerala, (1992) 1 SCC 217 : 1992 SCC (Cri) 88] , this Court dealt with the power of the Magistrate under Chapter XX of the Code after the accused enters appearance in response to the summons issued under Section 204 of the Code. It was held that the accused can plead before the Magistrate that the process against him ought not to have been issued and the Magistrate may drop the proceedings if he is satisfied on reconsideration of the complaint that there is no offence for which the accused could be tried. This Court was of the opinion that there is no requirement of a specific provision for the Magistrate to drop the proceedings and as the order issuing the process is an interim order and not a judgment, it can be varied or recalled. The observation in K.M. Mathew [K.M. Mathew v. State of Kerala, (1992) 1 SCC 217 : 1992 SCC (Cri) 88] that no specific provision of law is required for recalling an erroneous order of issue of process was held to be contrary to the scheme of the Code in Adalat Prasad v. Rooplal Jindal [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 1927] . It was observed therein that the order taking cognizance can only be subject-matter of a proceeding under Section 482 of the Code as subordinate criminal courts have no inherent power. There is also no power of review conferred on the trial courts by the Code. As there is no specific provision for recalling an erroneous order by the trial court, the judgment in K.M. Mathew [K.M. Mathew v. State of Kerala, (1992) 1 SCC 217 : 1992 SCC (Cri) 88] was held to be not laying down correct law. The question whether a person can seek discharge in a summons case was considered by this Court in Subramanium Sethuraman v. State of Maharashtra [Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 242] . The law laid down in Adalat Prasad [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 1927] was reiterated.

               18. It was contended by the learned Amici Curiae that a holistic reading of Sections 251 and 258 of the Code, along with Section 143 of the Act, should be considered to confer a power of review or recall of the issuance of process by the trial court in relation to complaints filed under Section 138 of the Act. He referred to a judgment of this Court in Meters & Instruments (P) Ltd. v. Kanchan Mehta [Meters & Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cri) 477] which reads as follows : (SCC p. 568, para 11) “11. While it is true that in Subramanium Sethuraman v. State of Maharashtra [Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 242] this Court observed that once the plea of the accused is recorded under Section 252CrPC, the procedure contemplated under Chapter XX CrPC has to be followed to take the trial to its logical conclusion, the said judgment was rendered as per statutory provisions prior to the 2002 Amendment. The statutory scheme post-2002 Amendment as considered in Mandvi Coop. Bank [Mandvi Coop. Bank Ltd. v. Nimesh B. Thakore, (2010) 3 SCC 83 : (2010) 1 SCC (Civ) 625 : (2010) 2 SCC (Cri) 1] and J.V. Baharuni [J.V. Baharuni v. State of Gujarat, (2014) 10 SCC 494 : (2015) 1 SCC (Cri) 1] has brought about a change in law and it needs to be recognised. After the 2002 Amendment, Section 143 of the Act confers implied power on the Magistrate to discharge the accused if the complainant is compensated to the satisfaction of the court, where the accused tenders the cheque amount with interest and reasonable cost of litigation as assessed by the court. Such an interpretation was consistent with the intention of legislature. The court has to balance the rights of the complainant and the accused and also to enhance access to justice. Basic object of the law is to enhance credibility of the cheque transactions by providing speedy remedy to the complainant without intending to punish the drawer of the cheque whose conduct is reasonable or where compensation to the complainant meets the ends of justice. Appropriate order can be passed by the court in exercise of its inherent power under Section 143 of the Act which is different from compounding by consent of parties. Thus, Section 258CrPC which enables proceedings to be stopped in a summons case, even though strictly speaking is not applicable to complaint cases, since the provisions of CrPC are applicable “so far as may be”, the principle of the said provision is applicable to a complaint case covered by Section 143 of the Act which contemplates applicability of summary trial provisions, as far as possible i.e. with such deviation as may be necessary for speedy trial in the context.”

               19. In Meters & Instruments [Meters & Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cri) 477] , this Court was of the opinion that Section 143 of the Act confers implied power on the Magistrate to discharge the accused, if the complainant is compensated to the satisfaction of the court. On that analogy, it was held that apart from compounding by the consent of the parties, the trial court has the jurisdiction to pass appropriate orders under Section 143 in exercise of its inherent power. Reliance was placed by this Court on Section 258 of the Code to empower the trial courts to pass suitable orders.

               20. Section 143 of the Act mandates that the provisions of summary trial of the Code shall apply “as far as may be” to trials of complaints under Section 138. Section 258 of the Code empowers the Magistrate to stop the proceedings at any stage for reasons to be recorded in writing and pronounce a judgment of acquittal in any summons case instituted otherwise than upon complaint. Section 258 of the Code is not applicable to a summons case instituted on a complaint. Therefore, Section 258 cannot come into play in respect of the complaints filed under Section 138 of the Act. The judgment of this Court in Meters & Instruments [Meters & Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cri) 477] insofar as it conferred power on the trial court to discharge an accused is not good law. Support taken from the words “as far as may be” in Section 143 of the Act is inappropriate. The words “as far as may be” in Section 143 are used only in respect of applicability of Sections 262 to 265 of the Code and the summary procedure to be followed for trials under Chapter XVII. Conferring power on the court by reading certain words into provisions is impermissible. A Judge must not rewrite a statute, neither to enlarge nor to contract it. Whatever temptations the statesmanship of policy- making might wisely suggest, construction must eschew interpolation and evisceration. He must not read in by way of creation [ J. Frankfurter, Of Law and Men : Papers and Addresses of Felix Frankfurter.] . The Judge's duty is to interpret and apply the law, not to change it to meet the Judge's idea of what justice requires [Duport Steels Ltd. v. Sirs, (1980) 1 WLR 142 : (1980) 1 All ER 529 (HL)] . The court cannot add words to a statute or read words into it which are not there [Union of India v. Deoki Nandan Aggarwal, 1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248].

               21. A close scrutiny of the judgments of this Court in Adalat Prasad [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 1927] and Subramanium Sethuraman [Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 242] would show that they do not warrant any reconsideration. The trial court cannot be conferred with inherent power either to review or recall the order of issuance of process. As held above, this Court, in its anxiety to cut down delays in the disposal of complaints under Section 138, has applied Section 258 to hold that the trial court has the power to discharge the accused even for reasons other than payment of compensation. However, amendment to the Act empowering the trial court to reconsider/recall summons may be considered on the recommendation of the Committee constituted by this Court which shall look into this aspect as well.

               24.1. The High Courts are requested to issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 of the Act from summary trial to summons trial.

               24.6. The judgments of this Court in Adalat Prasad [Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 : 2004 SCC (Cri) 1927] and Subramanium Sethuraman [Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 : 2005 SCC (Cri) 242] have interpreted the law correctly and we reiterate that there is no inherent power of trial courts to review or recall the issue of summons. This does not affect the power of the trial court under Section 322 of the Code to revisit the order of issue of process in case it is brought to the court's notice that it lacks jurisdiction to try the complaint.

               24.7. Section 258 of the Code is not applicable to complaints under Section 138 of the Act and findings to the contrary in Meters & Instruments [Meters & Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 : (2018) 1 SCC (Civ) 405 : (2018) 1 SCC (Cri) 477] do not lay down correct law. To conclusively deal with this aspect, amendment to the Act empowering the trial courts to reconsider/recall summons in respect of complaints under Section 138 shall be considered by the Committee constituted by an order of this Court dated 10-3-2021 [Expeditious Trial of Cases Under Section 138 of NI Act 1881, In re, 2021 SCC OnLine SC 354].”

               07(k). Further, he relied upon a decision of the Honourable Supreme Court in Muskan Enterprises v. State of Punjab (2024 SCC OnLine SC 4107) wherein it was held at Paragraph Nos.14 to 20 that:

               “14. The procedural laws governing criminal proceedings and civil proceedings in our country are quite dissimilar, though the rule of audi alteram partem and a procedure that is both fair and reasonable to both/all parties for rendering justice are at the heart of both the Cr. P.C. and the Civil Procedure Code, 190810. The principle of res judicata, traceable in Section 11 of the CPC, does neither apply to criminal proceedings nor is there any provision in the Cr. P.C. akin to Order XXIII Rule 1(3), CPC. While Section 114 of the CPC read with Order XLVII thereof empowers the civil courts to exercise the power of review, Section 362, Cr. P.C. bars a review. A close reading of Sections 482, Cr. P.C. and 115, CPC would also reflect that the purposes sought to be achieved by exercising the high courts' inherent powers, which the respective procedural laws save, are also at variance. Prudence and propriety in the decision-making process, thus, make it imperative for the high courts to not confuse the procedural laws governing criminal and civil proceedings.

               15. The legal position as to whether a second petition under Section 482, Cr. P.C. would be maintainable or not is no longer res integra. We may notice a few decisions of this Court on the point.

               16. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla11, a decision arising out of the N.I. Act, the relevant high court had given the party the liberty to avail any remedy in law, if available, at the time of withdrawing her petition under section 482, Cr. P.C. This Court, observed that the high court would have the inherent power to decide any successive petition under section 482 and that it is not denuded of that power by the principle of res judicata.

               17. That the principle of res judicata has no application in a criminal proceeding was reiterated by this Court in Devendra v. State of U.P.12.

               18. Recently, this Court in Bhisham Lal Verma v. State of U.P.13, has again held that there is no blanket rule against filing of successive petition under section 482, Cr. P.C. before the high court. It was also held that if such a petition is filed, it must be seen whether there was any change in facts or circumstances, necessitating the filing of such petition.

               19. Section 482, Cr. P.C., on its own terms, saves the inherent powers of the high court to make such orders as may be necessary (i) to give effect to any order under the Cr. P.C., or (ii) to prevent abuse of the process of any court, or (iii) to secure the ends of justice. Change of law can legitimately be regarded as a vital change in circumstance clothing the high court with the power, competence and jurisdiction to entertain the subsequent petition notwithstanding the fact that the earlier petition was withdrawn without obtaining any leave, subject to the satisfaction recorded by the high court that the order prayed for in the subsequent petition ought to be made, inter alia, either to prevent abuse of the process of any court or to secure the ends of justice.

               20. Thus, in our considered opinion, the constricted view taken by High Court to hold that the appellants were required to obtain the leave of the Judge who had dismissed the earlier petition prior to filing the subsequent petition is clearly untenable and not warranted in law. It is noted that the appellants had applied a second time before the High Court only when the law on interpretation of Section 148, N.I. Act was laid down somewhat differently in Jamboo Bhandari (supra) and not on any other ground. It was not a review in disguise that the appellants attempted but their endeavour was to impress the High Court to have the law, currently governing the field, to be applied in their case. In terms of the authorities referred to above, the subsequent petition was well- nigh maintainable.”

08(a). On the other hand, learned counsel for the unofficial respondent No.2 submitted that this is the fourth round of litigation, and that under the NI Act, cases are required to be disposed of within six months. It is contended that the very purpose and object of the Act would be defeated if such litigation is permitted to continue for years together. It is further submitted that the complainant’s family, being in association and acquaintance with the family of the accused, advanced money, and the same is clearly reflected in the complaint, which specifically refers to the name of the petitioner-accused No.2 and contains an averment that the petitioner-accused No.2, along with accused Nos.3 and 4, approached the complainant seeking money for investment purposes. It is further submitted that the specific role of the petitioner-accused No.2 in the transaction is evident from the averment that all the accused assured the complainant that, in the event of failure to repay the money, they would be liable to pay the amount with interest at 18% per annum, and it was only after such assurance and promise by all the accused that cheque No.040421 was issued and subsequently encashed.

               08(b). It is further submitted that an MOU, referred to as a “Consolidated MOU,” was executed between the creditors and the accused and their companies on 24.06.2016, and that the petitioner-accused No.2 was a signatory to the said MOU. It is also submitted that the petitioner-accused No.2 was fully aware of the transactions and had played an active role as a Director of the company, which is further evident from the reply notice issued by the accused to the complainant’s statutory notice. It is contended that the complaint specifically attributes a role to the petitioner-accused No.2 as a Director, which stands fortified by his execution of the MOU. As the MOU dated 24.06.2016 stood dishonoured, the accused Nos.2 to 4 came forward for partial repayment of the debt, and the accused No.4 in his capacity as Director of accused No.1-company, issued a cheque for Rs.2.00 crores in favour of the complainant in April, 2019.

               08(c). It is further submitted that upon the complainant’s request, the accused informed her that she should wait until the end of October, 2020, by which time they would intimate the date on which the cheque could be presented, and that failing such intimation, the complainant could present the cheque in November, 2020. Based on this assurance given by the accused No.4 in his capacity as Director, the cheque was presented on 23.11.2020, but it was returned unpaid, as reflected in the cheque return memo dated 24.11.2020, thereby constituting an offence under Section 138 of the NI Act. Though a statutory demand notice was issued and a reply notice was furnished, the accused failed to make payment.

               08(d). It is thus submitted that a cumulative reading of the complaint demonstrates that the petitioner-accused No.2 had complete knowledge of the transactions in his capacity as Director and that he played an active role, and that the transactions took place only on the request of the accused Nos.2 to 4. It is further submitted that the legal notice issued to all accused prior to initiation of proceedings was never denied, including the role of the petitioner-accused No.2. It is contended that for fastening vicarious liability under Section 141 of the NI Act, the specific averments in the complaint regarding the role of the petitioner-accused No.2, the nature of the transactions, the absence of denial in response to the legal notice, and the admission reflected in the reply, clearly establish that the petitioner-accused No.2 had knowledge of and participated in the transactions, being a signatory to the MOU.

               08(e). With the above submissions, while praying to dismiss the criminal petition, he relied upon a decision of the Honourable Supreme Court in HDFC Bank Limited v. State of Maharashtra and another (2025 INSC 759) wherein it was held at Paragraph Nos.4 to 6, 12, 17, 19, 23, 34, 35, 37, 39 that:

               “4. Since the complaint has been quashed on the ground of lack of adequate averments, it will be necessary to extract the crucial averments that are made in the complaint:-

               “2. That, Accused No 1 is a Company registered and incorporated under the provisions of Indian Companies Act, 2013 [existing within the purview of Companies Act, 1956] and having it registered and corporate office at the address mentioned aforesaid and engaged in the business of sale of cars and spare parts manufactured by Hyundai Motors (I) Ltd Accused Nos 2 to 4 are the Directors of Accused No 1 Company and is responsible for its day to day affairs, management and working of the Accused No 1 Company furthermore the Accused No 3 is the signatory of the dishonored cheque.

               3. That, Accused No 1, through Accused Nos 2 to 4, had approached the complainant above named for grant of credit facility in the form of Revolving Loan Facility as Inventory Funding for the working capital requirements That after due deliberation and negotiations with Accused Nos 2 to 4 the complainant granted the Revolving Loan facility initially to the extent of Rs 5,00,00,000/ (Rupees Five Crores only) [Inventory funding Rs 3.00 Crores + Inventory Funding Adhoc: Rs 2.00 Crores vide sanction letter dated 09.08.2014 Hereto annexed and marked as Exhibit B is the copy of said Sanction letter dated 09. 08.2014 for Revolving Loan Facility granted to Accused No. 1.

               4. That, upon further request made by Accused No. 1, complainant had enhanced the said facility from Rs

               5.00 Crore to Rs. 6.00 Crores vide sanction letter dated 27.10.2015 The said facilities were further enhanced from Ra 6.00 Crores to Rs 6.50 Crores vide sanction letter dated 22.02.2016 and lastly the said facility was enhanced from Rs 6.50 Crores to Rs 8.00 Crores vide sanction letter dated 12.09.2016. Hereto annexed and marked as Exhibit C-1 to Exhibit C-3 are the copies of sanction letter dated 27.10.2015, 22.02.2016 and 12.09.2016 respectively

               5. The Loan account of Accused No. 1 maintained by complainant was numbered as loan account No.02400450029354. That in consideration of grant of the said facilities, accused(s) had executed various loan and security documents in favor of Complainant from time-to time inter alia accepting the terms and conditions of respective documents It is submitted that the Accused No. 1 lastly, amongst other, entered into Loan agreement with Complainant on 17.09.2016 and executed Demand Promissory Note for a sum of Rs. 8,00,00,000/- on 20.09.2016 Hereto annexed and marked as Exhibit 'D-1 IS the copy of Supplemental and Amendatory Loan Agreement dated 17.09.2016 and Exhibit' D2" is the Demand Promissory Note dated 20 09 2016.

               6. Be that as it may, the Complainant states that the sanctioned/renewed credit facilities were duly availed and utilized by the Accused without any demur. The Complainant further states that after availing the aforementioned credit facilities, Accused No. 1 failed to maintain the account with Complainant Bank in the manner agreed to and defaulted in making timely repayments.

               7. Thus, owing to the failure on the part of Accused(s) to repay the outstanding dues on time, thereby willfully defaulting in the same, Complainant was constrained to classify the account of the Accused No. 1 as a Non-Performing Asset on 27.03.2018 in accordance with the guidelines issued by the Reserve Bank of India from time to time.

               8. That, complainant states that despite various oral and written requests, the Accused failed to regularize and maintain the account. It is submitted that Accused Company did not pay any heed to the requests and reminders of the Complainant and willfully neglected discharging their obligations thereby depriving the Complainant its legitimate dues.”

               (Emphasis supplied)

               5. It will be noticed that in Para 2 of the complaint quoted above, it has been categorically averred as under: “Accused Nos. 2 to 4 are the directors of the accused no.1 - company and is responsible for its day-to-day affairs, management and working of the accused no.1 – company. Furthermore, the accused no. 3 is the signatory of the dishonored cheque”. (Emphasis supplied)

               6. Not only this, it is further averred in Para 3 that accused no. 1 (the company) through accused nos. 2 to 4 had approached the complainant above named for grant of credit facility in the form of Revolving Loan Facility as inventory funding for the working capital requirements. It has been stated:- “That, after, due deliberation and negotiations with Accused nos. 2 to 4, the Complainant granted the Revolving Loan facility initially to the extent of……”.

               12. We have heard learned Senior Counsel/Counsel for the parties and perused the records. Learned Senior Counsel for the appellant contends that a perusal of the averments in the complaint read with the documents filed leave no manner of doubt that the respondent no.2 - Ranjana Sharma was in charge of, and was responsible for the conduct of the business of the company inasmuch as she had participated in the negotiations and was authorized to sign all the relevant documents and her performance guarantee was also taken. In view of this, learned Senior Counsel contends that the High Court was not justified in quashing the complaint insofar as the respondent no.2-Ranjana Sharma was concerned.

               17. It will be noticed that Section 141 of the NI Act employs the phrase “was in charge of, and was responsible to the company for the conduct of the business of the company”. Insofar as the aspect of vicarious liability is concerned, in the present case, the averments made are to the following effect:- “Accused Nos. 2 to 4 are the Directors of Accused No.1 Company” and “Is responsible for its day-to-day affairs, management and working of the Accused No.1-Company”

               19. Before we advert to S.M.S. Pharmaceuticals-I (supra), it will be useful to refer to the meaning of the word “in charge of”. P.Ramanatha Aiyar’s Advanced Law Lexicon defines the word “in charge of” as follows:-

               “A person “in charge of” and responsible to the company for the conduct of the business of the company must be a person in overall control of the day-to-day business of the company or firm”.

               23. The following principles are deducible from the said judgment.

               (i) “Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable”. [See Para 4]

               (ii) “There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending upon the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs”. [See Para 8] (Emphasis supplied)

               (iii) “Mere use of a particular designation of an officer without more, may not be enough by way of an averment in a complaint. When the requirement in Section 141, which extends the liability to officers of the company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that satisfies those requirements. Not every person connected with a company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction complained of. A person who is in charge of and responsible for conduct of business of a company would naturally know why the cheque in question was issued and why it got dishonoured”. [See Para 8] (Emphasis supplied)

               (iv) “What is required is that the persons who are sought to be made criminally liable under Section 141 should be, at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the Company shall not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this 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 under the provision”. [See Para 10]

               (Emphasis supplied)

               (v) “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”. [See Para 12]

               34. What is important to note is that the repetition of the exact words of the Section in the same order, like a mantra or a magic incantation is not the mandate of the law. What is mandated is that the complaint should spell out that the accused sought to be arrayed falls within the parameters of Section 141(1) of the NI Act. Only then could vicarious liability be inferred against the said accused, so as to proceed to trial. Substance will prevail over form.

               35. Strong reliance is placed on Siby Thomas (supra) by learned counsel for the respondent No.2 to contend that in the absence of the words “was in charge of”, the present case against respondent No.2 cannot be proceeded. We are unable to countenance the said submission. This Court, in Siby Thomas (supra), on facts, found that on an overall reading of the complaint it did not disclose any clear and specific role to the appellant-accused therein. It was further held that what was averred was only that the accused being partners are responsible for the day-to-day conduct of business of the company. This is vastly different from the averments in the present case as discussed hereinabove. In this case, it is clearly averred that the respondent No.2 along with the accused Nos. 3 and 4 being directors were responsible for its day-to-day affairs, management and working of accused No.1 - Company. Hence, the judgment in Siby Thomas (supra) can be of no help to the respondent No.2 as the case turned on its own facts.

               37. Recently, this Court in S.P. Mani and Mohan Dairy vs. Dr. Snehalatha Elangovan, (2023) 10 SCC 685, after reiterating the principle that it was not necessary to reproduce the language of Section 141 verbatim in the complaint further reiterated the holding in K.K.Ahuja vs. V.K. Vora and Another, (2009) 10 SCC

               48. In K.K.Ahuja (supra), it was held that insofar as the director was concerned, 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 was enough and no further averment was necessary though some particulars will be desirable. Thereafter, this Court in S.P. Mani (supra), in para 58.2 of the judgment concluded as under:-

               “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.”

               39. Applying the said legal position to the facts of the present case, it is found that the averments in the complaint set out hereinabove against the respondent No.2 – Mrs. Ranjana Sharma fulfill the requirement of Section 141(1) of the NI Act, and this is not a case where trial against her can be aborted by quashment of proceedings. The High Court was completely unjustified in quashing the proceedings against her.”

09. This Court has duly taken note of the submissions advanced by the learned counsel on both sides and has carefully perused the entire material available on record.

10. Before adverting to the facts of the case, it is pertinent to note that the petitioner had earlier filed W.P.No.33376 of 2021 and batch seeking quashment of the proceedings. The said writ petition was dismissed without entering into the merits of the matter, while granting liberty to the petitioner to approach the learned trial Court by way of a discharge petition under Section 258 of the Cr.P.C., which order was subsequently affirmed by the Hon’ble Supreme Court. At this juncture, it is relevant to observe that the Honourable Constitution Bench consisting of five Judges of the Supreme Court, in the Suo Motu proceedings (cited supra), categorically held that Section 258 of the Cr.P.C. has no application to complaints instituted under Section 138 of the NI Act. On that basis, the learned trial Court, by the impugned order dated 24.09.2024 passed in CRL.M.P.No.3717 of 2023 in S.T.C.NI No.346 of 2021, dismissed the petitioner’s discharge petition. In view of the aforesaid facts and circumstances, and having regard to the settled legal position laid down by the Hon’ble Supreme Court in Muskan (cited supra), this Court is of the considered view that owing to the changed circumstances, the present second petition seeking quashment is maintainable.

11. On perusal of the record, it is apparent that a complaint under Section 200 Cr.P.C. for the offence under Sections 138 and 142 of NI Act was presented by the complainant before the learned trial Court, and the same came to be numbered as STC.No.346 of 2021. Accused are four in number. The accused No.1 is M/s. Viswaroopi Energy Private Limited represented by the accused Nos.2 to 4. The present case is concerned with regard to the petitioner- accused No.2. It is pertinent to take note of the fact that in the entire record, there is no specific averment that the petitioner- accused No.2 was in-charge of the day-to-day affairs of the accused No.1-company and the role of the Directors is not specifically pleaded or averred in the complaint. The entire case is upon the proposition that the petitioner-accused No.2 is liable for prosecution under NI Act being a Director of the company. As per the law laid down by the Hon’ble Supreme Court in catenae of decisions, there is no dispute that the accused No.1-company is liable to be prosecuted and punished for criminal offences. It is also a settled proposition of law that the criminal intent of a group of persons who guide the business of a company can be imputed to the company itself. It is in this backdrop that Sections 138 and 141 of the Negotiable Instruments Act must be understood.

12. It is apt to extract the provisions under Sections 138 and 141 of the NI Act for better understanding:

               “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 provisions of this Act, be punished with imprisonment for 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, [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 or other liability” means a legally enforceable debt or other liability.

               Section 141 of NI Act is as follows:

               “141. Offences by companies:- (1) If the person committing an offence under Section 138 is a company, every person who, at the time of 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 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- sec(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 anybody corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.”

13. The proviso clearly stipulates that when a person, which is a company, commits an offence, certain categories of persons who are Directors, Managing Partners, Joint Managing Partners who are in-charge as well as the Company would be deemed to be punishable under Sections 138 and 141 of the Act. Thus, that being the statutory intent which is very plain and simple, it is perceptible that the provisions of the NI Act make the functionaries of the company or the company to be liable and this is by a deeming fiction. The word “deemed” used under Section 141 of NI Act applies to the company and also to the persons responsible for the acts of the company. This crystallizes the criminal liability and vicarious liability of a person who is running the affairs of the company and who is in-charge of the company. What averments should be required to make a person vicariously liable have been dealt by Judgments of the Hon’ble Supreme Court Court in SMS Pharmaceuticals Ltd.’s case cited supra holding that the criminal liability on account of dishonor of cheque under the Negotiable Instruments Act primarily falls on the company that issued the cheque and extends to its officers of the company, only if certain conditions outlined in Section 141 of the NI Act are met and as there is no specific provision extending liability to the officers, the conditions incorporated in Section 141 of NI Act have to be satisfied. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the Company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are 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 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.

14. Now coming to the facts of the present case on hand, insofar as the petitioner-accused No.2 is concerned, it is apparent that the petitioner-accused No.2 is not a signatory to the cheque in question, which was allegedly issued in discharge of part of liability of the accused No.1-company. As seen from the record, there was a MOU dated 24.06.2016 executed in favour of creditors, in which the petitioner’s name appears as a signatory.

15. In view of the facts and circumstances of the case, it is relevant to note the definitions of ‘director’ and ‘managing director’ as per the Companies Act, section 2(34) “director” means a director appointed to the Board of a company. Admittedly, the cheque upon which the complaint is founded was issued by the accused No.1-company and signed by the accused No.4 who is alleged to have been a Director. The cheque was issued as part payment and was presented only in November 2020 and returned unpaid. The complaint principally relies upon the petitioner’s position as a ‘Director’ and his being a signatory to the MOU. However, it is an admitted fact that the petitioner-accused No.2 has signed the MOU and that the underlying transaction is also undisputed. While the parties are always at liberty to pursue appropriate civil remedies for resolution of their disputes, the invocation of criminal liability requires strict satisfaction of the ingredients mandated under Section 141 of the NI Act.

16. As observed supra, in order to meet the requirement under Section 141 of the NI Act the role of the petitioner-accused No.2 that he was dealing with the day-to- day affairs of the company has to be established. But the complaint does not contain specific factual averments describing the petitioner-accused No.2 functional role in the company’s day-to-day affairs at the time the cheque was issued or at the time of presentation. There is no detailed averment as to how the petitioner-accused No.2 was “in charge of” the conduct of the business, what responsibilities he discharged, whether he was an executive or managing director, or what specific act/omission attributable to him caused or led to issuance/presentation/stop payment of the cheque. The complaint must contain specific factual averments showing how and in what manner the accused was in charge of the affairs of the company or responsible for its conduct of business at the relevant time.

17. As seen from the summoning docket order dated 07.09.2021 passed in STC No.346 of 2021, it is a non- speaking one and there are no recorded reasons addressing whether the complaint, read with the documents, discloses a prima facie case that the petitioner-accused No.2 was ‘in charge of’ or responsible for the conduct of the day-to-day affairs of the company’s business. The learned Magistrate has not recorded the application of judicial mind as to whether the particularised averments necessary to proceed against a director were present or not. The complaint does not plead the factual particulars necessary to infer that the petitioner as a ‘Director’, who was in charge of and responsible for conduct of the business of the company at the relevant time. Merely reciting the statutory language or stating the designation of ‘Director’, or relying upon execution of a consensual MOU, cannot, in absence of further particulars, sustain a prima facie conclusion of culpability under Section 141 of the NI Act. The law requires that when a Magistrate takes cognizance and issues process, there must be evidence of judicial application of mind that the averments disclose a prima facie offence against the accused. A mechanical issuance of summons without reasons in the face of the requirement of Section 141 is impermissible.

18. In view of the aforesaid facts and circumstances, and having regard to the well-settled principles of law enunciated by the Hon’ble Supreme Court in the decisions referred supra, this Court is of the considered opinion that the essential ingredients required to constitute the offence under Section 138 of the NI Act are not made out against the petitioner-accused No.2. In that view of the matter, the impugned order dated 24.09.2024 passed in CRL.M.P.No.3717 of 2023 in S.T.C.NI.No.346 of 2021 is liable to be set aside and the same is set aside. Therefore, the continuation of criminal proceedings against the petitioner- accused No.2, and subjecting him to the rigor of trial, would amount to an abuse of the process of law, and the same are liable to be quashed.

19. Accordingly, this Criminal Petition is allowed and the criminal proceedings against the petitioner-accused No.2 in S.T.C.NI.No.346 of 2021 on the file of the learned X Judicial Magistrate of First Class, Manoranjan Complex, Nampally, Hyderabad, are hereby quashed.

As a sequel, pending miscellaneous applications, if any, shall stand closed.