SUPREME COURT: Section 141 NI Act Specific Managerial Functions of Directors Not Mandatory in Cheque Dishonour Pleadings

The Supreme Court held that a complaint need not state the director's specific administrative role for initiating proceedings against a company director under Section 141(1) of the Negotiable Instruments Act. It suffices at the stage of filing a complaint to generally aver that the individual was “in charge of and responsible for” the affairs of the company.

In the present case, the complainant, HDFC Bank Ltd., proceeded against M/s R Square Shri Sai Baba Abhikaran Pvt. Ltd., alleging cheque dishonour. and its directors, including Mrs. Ranjana Sharma, after a cheque was dishonoured. Though process was issued by the Magistrate, the Bombay High Court intervened and quashed the case against Sharma on the ground that her specific role was not detailed in the complaint.

A Bench of Justices Manoj Misra and K.V. Viswanathan reversed the High Court’s decision. Justice Viswanathan noted that details of a director’s role lie within the company’s special knowledge, and it is for the accused to rebut such averments during trial.

Observing that the complaint described Sharma as “responsible for the day-to-day affairs, management and working” of the company, the Court found this to meet the standard under Section 141.

The judgment relied on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. [(2005) 8 SCC 89], which held that general averments about responsibility are sufficient, and mere designation as a director does not create deemed liability.

Other precedents cited included:

• K.K. Ahuja v. V.K. Vora & Anr. [(2009) 10 SCC 48] — general averment is enough at complaint stage;
• National Small Industries Corp. Ltd. v. Harmeet Singh Paintal [(2010) 3 SCC 330] — emphasized specific allegations for vicarious liability;
• S.P. Mani & Mohan Dairy v. Snehalatha Elangovan [(2022) 6 SCC 220] — only general pleading of control is required.

The Court harmonized these rulings, holding that complainants are not required to plead facts within the exclusive knowledge of the accused. It is sufficient for the Magistrate to take cognizance if the complaint discloses material and substantive allegations. The High Court's order was set aside and the Magistrate’s direction to proceed against Sharma was restored.