2024 INSC 206 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO S.___________OF 2024

[Arising out of Special Leave Petition (Criminal) No.12390-

12391 of 2022]

SUSELA PADMAVATHY AMMA ...APPELLANT (S)

VERSUS

M/S BHARTI AIRTEL LIMITED ...RESPONDENT (S)

J U D G M E N T

B.R. GAVAI, J.

1. Leave granted.

2. The present appeals challenge the common judgment and

order dated 26

th April, 2022 passed by the High Court of

Judicature at Madras (hereinafter referred to as “High Court”), in

Crl. O.P. Nos. 3470 & 5767 of 2019 and Crl. M.P. Nos. 2224,

2225 & 3255 of 2019, whereby the High Court rejected the prayer

2

for quashing of C.C. Nos. 3151 & 3150 of 2017, on the file of

learned XVIII Metropolitan Magistrate, Saidapet, Chennai (now

transferred to the learned Metropolitan Magistrate, Fast Track

Court-III, Saidapet, Chennai), in connection with the offence

punishable under Section 138 read with Section 142 of the

Negotiable Instruments Act, 1881 (hereinafter referred to as “the

N.I. Act”).

3. The facts, in brief, giving rise to the present appeals are as

follows:

3.1 M/s. Bharti Airtel Limited (hereinafter referred to as,

“complainant” or “respondent”), is a company engaged in the

business of providing telecommunication services, under a

license issued by the Government of India, in various telecom

circles in India.

3.2 One M/s. Fibtel Telecom Solutions (India) Private Limited

(hereinafter referred to as, “Fibtel Telecom Solutions” or

“Company”), a company registered with the Telecom Regulatory

Authority of India (TRAI) as a telemarketer, had approached the

3

respondent intending to obtain telecom resources for the purpose

of transactional communication and requested the complainant

for allotment of telecom resources for the said purpose. One

Manju Sukumaran Lalitha is the Director & Authorized Signatory

of Fibtel Telecom Solutions and one Susela Padmavathy Amma,

the appellant herein, is the Director of Fibtel Telecom Solutions.

3.3 Based on the representation made by Fibtel Telecom

Solutions, the respondent had agreed to provide the required

services, whereupon the parties entered into a Service

Agreement, vide which Fibtel Telecom Solutions had to pay Rs.

14,00,000/- as fixed monthly recurring charges to the

respondent. It is the thus the case of the respondent that Fibtel

Telecom Solutions owes a sum of Rs. 2,55,08,309/-, in lieu of the

service provided to it by the respondent.

3.4 However, the grievance of the respondent is that in-spite of

regular follow-ups and reminders, Fibtel Telecom Solutions failed

and neglected to clear the respondent’s dues. Only thereafter,

upon repeated demands made by the respondent, Fibtel Telecom

4

Solutions furnished five post-dated cheques to the complainant,

on 17

th June 2016, details of which are as given below:

Sr. No. Cheque No. Cheque Dated Cheque Amount

1 414199 25.06.2016 Rs. 25,00,000/-

2 414196 31.08.2016 Rs. 50,00,000/-

3 414204 31.08.2016 Rs. 80,00,000/-

4 414195 31.07.2016 Rs. 45,00,000/-

5 414205 30.09.2016 Rs. 80,00,000/-

3.5 On deposit of the cheque mentioned at Sr. No. 1 in the table,

bearing cheque no. 414199 and dated 25

th June 2016, by the

respondent, the said cheque was returned to it unpaid with

reason “payment stopped by drawer”. Aggrieved thereby, the

respondent issued a legal notice to Fibtel Telecom Solutions, on

receipt of which & following an oral agreement between them, a

payment schedule was agreed to and a cheque for an amount of

Rs. 25,00,000/- drawn by Fibtel Telecom Solutions was

honoured by it. However, when the complainant deposited the

5

remaining four cheques as mentioned at Sr. No. 2 to 5 in the

table, the same were returned to it unpaid with reason “payment

stopped by drawer”. Details of deposit & return of cheques are as

given below:

Cheque

No.

Cheque

Presented

On

Cheque

Returned

On

Legal

Notice

Reply

414196 23.09.2016 26.09.2016 13.10.2016 12.11.2016

414204 23.09.2016 26.09.2016 13.10.2016 12.11.2016

414195 25.10.2016 26.10.2016 09.11.2016 No reply

414205 17.10.2016 18.10.2016 10.11.2016 29.11.2016

3.6 Accordingly, the respondent filed two complaints under

Section 190(i)(a) of the Code of Criminal Procedure, 1973 (“CrPC”

for short) for offences punishable under Section 138 & 142 of the

N.I. Act, being C.C. No. 3151 of 2017 dated 30

th November, 2016

and C.C. No. 3150 of 2017 dated 23

rd December, 2016, before the

learned XVIII Metropolitan Magistrate, Saidapet, Chennai.

6

3.7 Both the complaints have been filed against three accused

persons namely, Fibtel Telecom Solutions, arrayed as Accused

No. 1; Manju Sukumaran Lalitha, arrayed as Accused No. 2 &

Susela Padmavathy Amma, the appellant herein, arrayed as

Accused No. 3.

3.8 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.

3.9 Vide impugned judgment and order, dated 26

th April, 2022,

the High Court dismissed Crl. O.P. Nos. 3470 & 5767 of 2019

and Crl. M.P. Nos. 2224, 2225 & 3255 of 2019, but directed the

concerned trial court to dispose of the case within a period of

three months.

7

3.10 Aggrieved by the rejection of the petition for quashing of

criminal complaints, the appellant herein filed the present

appeal.

3.11 Vide order dated 12

th December 2022, this Court had issued

notice and stay of further proceedings qua the appellant was

granted.

4. We have heard Shri Manoj V. George, learned counsel for

the appellant and Shri Lakshmeesh S. Kamath, learned counsel

appearing for the respondent.

5. Shri Manoj V. George, learned counsel for the appellant

submitted that the appellant is an aged -lady and was not

involved in the day-to-day affairs of the Company. It is submitted

that even in the complaint there are no averments that the

appellant was in-charge of day-to-day affairs of the Company. It

is further submitted that the appellant was also not a signatory

to the cheque in question. It was only the accused No.2 who was

the signatory to the cheque. It is, therefore, submitted that the

High Court has grossly erred in not allowing the petition for

8

quashing of criminal complaints qua the appellant. Learned

counsel relied on the judgments of this Court in the cases of N.K.

Wahi vs. Shekhar Singh and others

1, S.M.S.

Pharmaceuticals Ltd. vs Neeta Bhalla and another

2 Ashoke

Mal Bafna vs. Upper India Steel Manufacturing and

Engineering Company Limited

3, Krishi Utpadan Mandi

Samiti and others vs Pilibhit Pantnagar Beej Ltd. and

another

4 and Laxmi Dyechem vs. State of Gujarat and

others

5 in support of his submissions.

6. Shri Lakshmeesh S. Kamath, learned counsel for the

respondent, on the contrary, submitted that the learned judge of

the High Court has rightly, after considering the material on

record, dismissed the petition for quashing of criminal

complaints qua the appellant. It is submitted that the grounds

raised are the defense of the accused and it can only be raised at

1

(2007) 9 SCC 481

2

(2005) 8 SCC 89

3

(2018) 14 SCC 202

4

(2004) 1 SCC 391

5

(2012) 13 SCC 375

9

the stage of the trial. It is, therefore, submitted that no

interference is warranted in the present appeal.

7. In the case of State of Haryana vs. Brij Lal Mittal and

others

6, this Court observed thus:

“8. Nonetheless, we find that the impugned

judgment of the High Court has got to be upheld

for an altogether different reason. Admittedly,

the three respondents were being prosecuted as

directors of the manufacturers with the aid of

Section 34(1) of the Act which reads as under:

“34. Offences by companies.—(1) Where an

offence under this Act has been committed by

a company, every person who at the time the

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 such person

liable to any punishment provided in this

Act if he proves that the offence was

committed without his knowledge or that

he exercised all due diligence to prevent the

commission of such offence.”

It is thus seen that the vicarious liability of a

person for being prosecuted for an offence

committed under the Act by a company arises if

at the material time he was in charge of and was

6

(1998) 5 SCC 343

10

also responsible to the company for the conduct

of its business. Simply because a person is a

director of the company it does not necessarily

mean that he fulfils both the above requirements

so as to make him liable. Conversely, without

being a director a person can be in charge of and

responsible to the company for the conduct of its

business. From the complaint in question we,

however, find that except a bald statement that

the respondents were directors of the

manufacturers, there is no other allegation to

indicate, even prima facie, that they were in

charge of the company and also responsible to

the company for the conduct of its business.”

8. It could thus be seen that this Court had held that simply

because a person is a director of the company, it does not

necessarily mean that he fulfils the twin requirements of Section

34(1) of the said Act so as to make him liable. It has been held

that a person cannot be made liable unless, at the material time,

he was in-charge of and was also responsible to the company for

the conduct of its business.

9. In the case of S.M.S. Pharmaceuticals Ltd. (supra), this

Court was considering the question as to whether it was

sufficient to make the person liable for being a director of a

company under Section 141 of the Negotiable Instruments Act,

11

1881. This Court considered the definition of the word “director”

as defined in Section 2(13) of the Companies Act, 1956. This

Court observed thus:

“8. ……. 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 on the peculiar

facts in each case. There is no universal rule

that a director of a company is in charge of its

everyday affairs. We have discussed about the

position of a director in a company in order to

illustrate the point that there is no magic as

such in a particular word, be it director,

manager or secretary. It all depends upon the

respective roles assigned to the officers in a

company. …..”

12

10. 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-to-

day 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.

13

11. In the case of Pooja Ravinder Devidasani vs. State of

Maharashtra and another

7 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 c harge of and

7

(2014) 16 SCC 1

14

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.

15

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 wh at 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

16

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.”

12. It could thus clearly be seen that this Court has held that

merely reproducing the words of the section without a clear

17

statement of fact as to how and in what manner a director of the

company was responsible for the conduct of the business of the

company, would not ipso facto make the director vicariously

liable.

13. A similar view has previously been taken by this Court in

the case of K.K. Ahuja vs. V.K. Vora and another

8.

14. In the case of State of NCT of Delhi through Prosecuting

Officer, Insecticides, Government of NCT, Delhi vs. Rajiv

Khurana

9, this Court reiterated the position thus:

“17. The ratio of all these cases is that the

complainant is required to state in the

complaint how a Director who is sought to be

made an accused, was in charge of the

business of the company or responsible for

the conduct of the company's business. Every

Director need not be and is not in charge of

the business of the company. If that is the

position with regard to a Director, it is

needless to emphasise that in the case of non-

Director officers, it is all the more necessary

to state what were his duties and

responsibilities in the conduct of business of

the company and how and in what manner he

is responsible or liable.”

8

(2009) 10 SCC 48

9

(2010) 11 SCC 469

18

15. 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

19

the Director was responsible for the

conduct of the business of the Company.”

16. A similar view has been taken by this Court in the case of

Lalankumar Singh and others vs. State of Maharashtra

10 to

which one of us (B.R. Gavai, J.) was a party.

17. In the light of this settled legal position, let us examine the

averments made in the complaints.

18. It will be relevant to refer to para 16 of the complaint bearing

No. CC 3151/2017 filed by the respondent before the Court of

XVIII Metropolitan Magistrate, Saidapet, Chennai dated 30

th

November 2016, which reads thus:

“16. The Complainant states that the

Accused has an intention of cheating the

Complainant. The 2

nd and 3

rd Accused

herein has no intention to pay the dues that

they owe to the Complainant. Instead,

making the complainant believe that the

same would be paid and through which

trying to push the liability to future. It is

also pertinent to note that the 2

nd and 3

rd of

the Accused herein are the Directors,

promoters of the 1

st Accused being the

Company. The 2

nd of the Accused herein is

the authorized signatory, who is in-charge

10

2022 SCC OnLine SC 1383

20

of and responsible for the day to day affairs

of the Company, the 1

st Accused.”

19. 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 2

nd accused and the 3

rd accused

(appellant herein) are the Directors, promoters of the 1

st accused

being the Company. It is further averred that the 2

nd accused is

the authorized signatory, who is in-charge of and responsible for

the day-to-day affairs of the Company, i.e., the 1

st accused.

20. 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.

21. It can thus clearly be seen that the averments made are not

sufficient to invoke the provisions of Section 141 of the N.I. Act

qua the appellant.

21

22. In the result, we find that the present appeals deserve to be

allowed. It is ordered accordingly. The judgment and order

passed by the High Court dated 26

th April, 2022 is quashed and

set aside. The proceedings in CC Nos. 3151 and 3150 of 2017 on

the file of learned XVIII Metropolitan Magistrate, Saidapet,

Chennai (now transferred to the learned Metropolitan Magistrate,

Fast Track Court-III, Saidapet, Chennai) in connection with the

offence punishable under Section 138 read with Section 142 of

the N.I. Act are quashed and set aside qua the present appellant.

…….........................J.

[B.R. GAVAI]

…….........................J.

[SANDEEP MEHTA ]

NEW DELHI;

MARCH 15, 2024