Cheque Dishonour Case Against Non-Signatory Whole-Time Directors Quashed: Calcutta HC

Pravin Kumar Agarwal And Ors Vs Ddev Plastiks Industries Limited (Calcutta High Court)

Summary: Calcutta High Court allowed the criminal revision filed by three Whole-Time Directors of M/s. Gupta Power Infrastructure Limited and quashed, insofar as they were concerned, proceedings under Sections 138 and 141 of the Negotiable Instruments Act, 1881 and the summoning order dated 6 April 2024. The Court held that vicarious criminal liability under Section 141 could not be imposed merely because the petitioners held the designation of Whole-Time Directors when the complaint lacked specific foundational averments showing how they were in charge of and responsible for the conduct of the company’s business in relation to the transactions and dishonoured cheques.

The dispute arose from supplies of polymers, polyethylene and PVC compounds by Ddev Plastiks Industries Limited to Gupta Power Infrastructure Limited. Between July 2022 and February 2023, 18 invoices aggregating Rs. 2,86,78,374/- were raised. Four cheques of Rs. 9,00,000/- each were issued towards partial discharge of the liability. All four cheques were exclusively signed and issued by Mahendra Kumar Gupta, Managing Director and authorised signatory of the accused company, and were dishonoured for “Funds Insufficient” or “Exceeds Arrangement”. Following service of the statutory demand notice dated 8 February 2024 and non-payment, the complainant instituted Case No. CS/26720 of 2024. The Metropolitan Magistrate subsequently found a prima facie case under Sections 138 and 141 and summoned the company and its co-accused, including the present petitioners.