Judgment Title
Parekh Aluminex Ltd. & Anr. v. Venus Orchards Pvt. Ltd.
(Calcutta High Court, Judgment dated 18 June 2025 by Justice Ajay Kumar Gupta)
Court’s Decision
The Calcutta High Court allowed the criminal revision petition under Section 482 CrPC, quashing the proceedings initiated under Sections 138/141 of the Negotiable Instruments Act, 1881 against the petitioner (Company Secretary of Parekh Aluminex Ltd.). The Court held that she was neither in charge of nor responsible for the day-to-day affairs of the company and the issuance of the dishonoured cheque. The process issued by the Trial Court was declared a mechanical exercise and an abuse of process of law.
Facts
The petition arose from a complaint filed under Sections 138/141 of the Negotiable Instruments Act, 1881, involving a dishonoured cheque issued by one Mr. Amitabh Arun Parekh (now deceased) on behalf of Parekh Aluminex Ltd. The petitioner, a Company Secretary at the time, had no role in issuing the cheque or the underlying transaction. She had ceased to be associated with the company on 31 March 2013.
The complaint made vague allegations against the petitioner and other company officers. Notably, two other non-executive directors had already secured orders quashing similar proceedings. Despite these facts and her residence being outside the court’s jurisdiction (Mumbai), the Trial Court issued process without conducting the mandatory inquiry under Section 202 CrPC.
Issues
- Whether the complaint disclosed a prima facie case against the petitioner under Sections 138/141 NI Act?
- Whether a Company Secretary not involved in business management can be held liable under the NI Act?
- Whether the Trial Court erred in issuing process without compliance with Section 202 CrPC, especially for an accused outside its territorial jurisdiction?
Petitioner’s Arguments
The petitioner argued that she was merely the Company Secretary and not responsible for day-to-day operations or issuance of cheques. The complaint did not disclose her specific role or responsibility. It only made general and vague allegations that were insufficient under Section 141 of the NI Act.
It was contended that:
- The issuance of process without preliminary inquiry violated Section 202 CrPC.
- She had already resigned before the date of cheque issuance.
- Relying on Form 32, she established that she ceased to be with the company as of 31.03.2013.
- The complaint was a mechanical attempt to implicate all officers, ignoring individual responsibility.
Judgments cited:
- Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 SCC OnLine SC 311
- Sunita Palita v. Panchami Stone Quarry, (2022) 10 SCC 152
- Gunmala Sales Pvt. Ltd. v. Navkar Promoters Pvt. Ltd., Cr. A. 2228/2014
- SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89
Respondent’s Arguments
Despite service of notice, none appeared on behalf of the respondent/complainant. The matter was heard ex parte.
Analysis of the Law
The Court reiterated settled legal principles:
- A person can be held liable under Section 141 NI Act only if they were in charge of and responsible for the conduct of the company’s business at the relevant time.
- Vague or omnibus allegations are insufficient.
- Compliance with Section 202 CrPC is mandatory when the accused resides outside the jurisdiction.
The petitioner’s non-involvement in day-to-day operations and cheque issuance was evident. She was not a signatory. Her designation alone as Company Secretary could not justify criminal prosecution.
Precedent Analysis
- SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89
➤ Held that to proceed under Section 141, specific averments are essential. - Sunita Palita v. Panchami Stone Quarry, (2022) 10 SCC 152
➤ Reinforced that Directors/Officers must be shown to be in charge of business. - Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 SCC OnLine SC 311
➤ Clarified limited liability of officers not connected with issuance or dishonour of cheques.
The Court emphasized:
“It would be a travesty of justice to drag directors… only because of their designation.”
Court’s Reasoning
- The petitioner was a Company Secretary, not a Director or Managing Officer.
- She was not in charge of business or financial dealings.
- The Trial Court failed to assess her responsibility or conduct the inquiry under Section 202 CrPC.
- Issuing process without such inquiry was mechanical and improper.
Conclusion
The proceedings under Sections 138/141 NI Act against the petitioner were quashed. The revision petition was allowed. Connected applications were also disposed of.
Implications
- Company Secretaries or non-executive officers cannot be implicated under the NI Act solely based on designation.
- Trial Courts must conduct proper inquiries under Section 202 CrPC when the accused is beyond jurisdiction.
- The ruling strengthens procedural safeguards and protects individuals from vexatious criminal prosecution.
Cases Referred and Their Holding
- SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89: Specific role must be shown; designation is not enough.
- Sunita Palita v. Panchami Stone Quarry, (2022) 10 SCC 152: Liability requires active control and responsibility.
- Gunmala Sales Pvt. Ltd. v. Navkar Promoters Pvt. Ltd., Cr. A. 2228/2014: Vague allegations do not attract criminal liability.
- Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 SCC OnLine SC 311: Company Secretaries not involved in daily operations cannot be criminally tried.
