Saroj Pandey v. Govt. of NCT of Delhi

 Mere designation as Director or signing a Board Resolution does not establish liability under S. 141 NI Act; specific averments of being in charge of day-to-day business are mandatory.

Facts

The appellant, a Director of a company, was summoned in proceedings under S. 138 read with S. 141 NI Act, 1881 for dishonour of cheques issued by the company.

The Magistrate issued summons. Revision was dismissed on the ground that the appellant had signed a Board Resolution, implying involvement in company affairs.

The High Court refused to quash proceedings under S. 482 CrPC, holding that after revision, inherent jurisdiction is limited. The appellant challenged this before the Supreme Court.

Issues Framed

(a) Whether mere directorship and signing of Board Resolution establishes liability under S. 141 NI Act?
(b) Whether absence of specific averments regarding day-to-day management justifies quashing of proceedings?
(c) Whether S. 482 CrPC jurisdiction is barred after dismissal of revision under S. 397 CrPC?

Court’s Reasoning

(a) Requirement under S. 141 NI Act
The Court reiterated that liability arises only when the person “was in charge of, and responsible for the conduct of the business of the company” (Para 6). Relying on S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, it held that such averment is a sine qua non.

(b) No deemed liability of Director
The Court emphasized that “merely being a director…is not sufficient” and there is no deemed liability (Para 7).

(c) Insufficiency of Board Resolution
The Court held that signing a Board Resolution does not imply involvement in day-to-day affairs; such resolutions relate to policy decisions and not routine operations (Para 8).

(d) Absence of specific allegations
The complaint lacked even a “whisper of direct allegation” regarding the appellant’s role in business conduct, making prosecution unsustainable (Para 8).

(e) Scope of quashing under S. 482 CrPC
The Court rejected the High Court’s view that S. 482 jurisdiction is curtailed after revision. It reaffirmed that inherent powers remain available to prevent miscarriage of justice (Paras 10–11).

Held

Appeal allowed. Proceedings against the appellant quashed.

Ratio

In prosecutions under S. 138 read with S. 141 NI Act, a Director cannot be prosecuted absent specific averments demonstrating that they were in charge of and responsible for the conduct of the company’s business at the relevant time (Para 8).

Case Details

Citation: 2026 INSC 324
Decided on: 7 April 2026
Case Title: Saroj Pandey v. Govt. of NCT of Delhi
Court: Supreme Court of India
Bench: Sanjay Karol, J.; Augustine George Masih, J.

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