No Direct Allegation: Supreme Court Quashes Summoning Order In Cheque Bounce Case Against Director Booked On Ground Of Signing Board Resolution
The Supreme Court took note of the fact that there was no direct allegation against the appellant in the complaint made.
The Supreme Court has quashed a summoning order passed against a director of a company in a case registered under the Negotiable Instruments Act after noting that she was booked merely on the ground that she had signed a Board Resolution. The Apex Court took note of the fact that there was no direct allegation against the appellant in the complaint made, which is the sine qua non for Section 141 of the Negotiable Instruments Act to be attracted.
The Apex Court was considering an appeal filed against an order of the Delhi High Court refusing to exercise its inherent powers under Section 482 of the Code of Criminal Procedure, 1973, to quash the summoning order in connection with a case registered under Sections 138 and 142 of the Negotiable Instruments Act, 1881.
The Division Bench of Justice Sanjay Karol and Justice Augustine George Masih stated, “ In the instant case the substance of establishing the appellant’s day-to-day involvement in the affairs of the Company is that she had signed the Board Resolutions. To say the least, the same is not inspiring in confidence because a Board Resolution is a document that is signed by the members of the Board of Directors for decisions taken or conclusions arrived at for matters placed before the Board for consideration and decision.”
“That apart, there is not even as much as a whisper of direct allegation against the present appellant in the complaint made which, as per the judgment referred to immediately hereinabove is the sine qua non for Section 141 N.I. Act to be attracted – “accused was in charge of, and responsible for the conduct of business of the company”, it added.
Factual Background
The appellant is one of the Directors of the accused Company which issued three cheques, worth 15 lakh, 20 lakh and 15 lakh each, as payment for supply of iron and steel. Despite confirmation from the accused Company of availability of funds the same were returned unpaid at the time of deposit. Legal notice in this connection was sent through counsel, and the proceedings under the N.I. act were initiated. Summons were issued, and the appellant’s revision was rejected on the ground that she was the Director of the Company and had also signed a Board Resolution. The High Court also dismissed the petition, leading the appellant to approach the Apex Court.
Reasoning
Considering the fact that the appellant had signed a board resolution, the Bench stated that the same might be regarding hiring of personnel at management levels, acquisition or liquidation of assets affecting the overall position of the assets and liabilities of the Company or any other such major directional issue. “This, however, does not in any manner mean that each and every member of the Board of Directors is aware of all decisions taken in the everyday transactions that are involved in running a business concern”, it added.
The Bench further took note of the fact that there was no direct allegation against the appellant. “As an aside, we consider the statement of law expressed by the High Court to the effect that once a petition under Section 397 Cr.PC has been entertained, irrespective of its end result, a subsequent petition under Section 482 Cr.PC on the same grounds limits the jurisdiction of the latter and in ordinary course matters, such as the present one, are liable to be dismissed on this short ground alone”, the order read.
Thus, quashing the proceedings against the appellant. “It is clarified that any observation made herein is for the limited purpose of consideration of her case only and have no bearing or impact on the trial of the co-accused persons”, it ordered.
Cause Title: Saroj Pandey v. Govt. Of NCT of Delhi (Neutral Citation: 2026 INSC 324)