Delhi High Court Refuses to Quash Cheque-Bounce Summons Against Company Director; Holds Specific Role Allegations Sufficient Despite Her Being Non-Signatory to Dishonoured Cheques
Delhi High Court Rejects Director’s Plea to Quash ₹12.55-Lakh Cheque-Bounce Case; Holds Detailed Section 141 Averments Require Evidence at Trial
Facts
The petitioner, Mona Jain, approached the Delhi High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking quashing of the summoning order dated 27 September 2025 passed in Complaint Case No. 1047/2025 and all consequential criminal proceedings against her.
She was a director of M/s Monica Gold Pipes Pvt. Ltd. The company had purchased material from M/s Kaycee Polymers Pvt. Ltd., and an alleged principal amount of ₹12,55,737 remained outstanding.
In December 2024, four cheques were issued. Three cheques totalling ₹12,44,410 were dishonoured, while the fourth cheque for ₹53,000 was honoured. After a legal notice dated 8 January 2025, the company sought settlement and issued three fresh cheques for ₹4 lakh, ₹4 lakh and ₹4,44,410. Those replacement cheques were also dishonoured.
A second statutory notice dated 8 April 2025 was issued. Thereafter, Kaycee Polymers filed a complaint under Section 138 of the Negotiable Instruments Act against the company and its directors, including Mona Jain, who was arrayed as accused no. 2. The Magistrate took cognizance and summoned her.
Issues
The principal questions were:
- Whether the complaint contained sufficient averments under Section 141 of the NI Act to fasten vicarious liability upon Mona Jain.
- Whether her plea that she was not involved in the day-to-day affairs of the company could justify quashing at the threshold.
- Whether the fact that she was not a signatory to the dishonoured cheques was sufficient by itself to quash the prosecution.
- Whether she had produced any sterling, incontrovertible or unimpeachable material showing that she could not have been concerned with the transactions.
Petitioner’s Arguments
The petitioner argued that the complaint contained only vague and general allegations and did not satisfy the requirements of Section 141.
She relied on National Small Industries Corporation Ltd. v. Harmeet Singh Paintal to contend that vicarious liability cannot be fastened merely because a person happens to be a director.
She further contended that:
- she was not concerned with the day-to-day affairs of the company;
- the Magistrate failed to examine her actual role; and
- she was not a signatory to the cheques in question.
Respondent’s Case as Reflected in the Complaint
The complaint alleged considerably more than Mona Jain’s formal designation as director.
It specifically stated that accused nos. 2 and 3:
- were directors of the company;
- were in charge of its day-to-day affairs;
- were personally involved in dealings with the complainant;
- purchased material on behalf of the company;
- issued the cheques;
- instructed their presentation;
- gave assurances after dishonour; and
- issued fresh replacement cheques toward the outstanding liability.
The complaint also alleged acknowledgment of liability and further replacement cheques after the first statutory notice.
Analysis of the Law
1. Section 141 Does Not Make Every Director Automatically Liable
The Court reproduced Section 141 and acknowledged the settled rule that not every director is automatically criminally liable for a company’s Section 138 offence.
Liability attaches to persons who, at the relevant time, were in charge of and responsible for the conduct of the company’s business, or where the offence occurred with their consent, connivance or neglect.
2. Harmeet Singh Paintal Requires Requisite Averments
The Court relied on Harmeet Singh Paintal, which holds that:
- there is no presumption that every director knows every transaction;
- the complaint must contain the requisite averments;
- vicarious liability must be pleaded and proved;
- a director who is not a signatory is not automatically liable merely by office; and
- the complaint must state that the person was in charge of and responsible for the company’s business at the relevant time.
3. Basic Averments Are Normally Enough to Send the Director to Trial
The Court then relied on S.P. Mani & Mohan Dairy v. Snehalatha Elangovan.
That decision clarifies that where the complaint contains the basic statutory averment, a director seeking quashing cannot succeed merely by saying the allegations are bald or that she was not concerned with issuance of the cheque.
To obtain quashing, the director must ordinarily produce sterling, incontrovertible material or acceptable circumstances demonstrating that making her stand trial would amount to abuse of process.
The Court also noted that administrative facts regarding who actually handled company affairs are often specially within the knowledge of the company and its directors, and may appropriately be tested at trial.
4. Complaint Contained Specific, Not Merely Formal, Allegations
This was the decisive finding.
The Court held that the complaint did not merely say Mona Jain was a director.
It specifically alleged that she was:
- in charge of day-to-day affairs;
- personally involved in dealings;
- involved in purchasing materials;
- involved in issuing cheques;
- involved in instructions for presentation;
- involved in assurances after dishonour; and
- involved in issuing replacement cheques.
Therefore, the statutory threshold under Section 141 was satisfied at the summoning stage.
5. Her Denial Raised a Disputed Question of Fact
Mona Jain did not place on record any sterling or unimpeachable material conclusively showing that she had no connection with the disputed transactions.
Her assertion that she was not involved in day-to-day affairs therefore directly conflicted with the allegations in the complaint and became a disputed factual issue requiring evidence at trial.
The Court also noted that she was not an independent or non-executive director.
6. She Was One of Only Two Directors
The company’s master data showed that Mona Jain was one of only two directors.
The Court treated that circumstance, together with the detailed allegations and absence of unimpeachable contrary material, as an additional reason for permitting the prosecution to proceed.
7. Non-Signatory Status Is Not Conclusive
The Court expressly rejected the argument that the prosecution should be quashed because Mona Jain had not signed the dishonoured cheques.
It held that a non-signatory director may still be prosecuted where the complaint contains the requisite averments that she was in charge of and responsible for the conduct of the company’s business.
Since the complaint also attributed specific acts to Mona Jain, her non-signatory status did not entitle her to quashing.
Precedent Analysis
National Small Industries Corporation Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC 330
This case establishes that Section 141 does not impose automatic liability upon all directors.
Specific statutory averments are required against an ordinary director unless the person is a Managing Director, Joint Managing Director or signatory to the cheque.
The Delhi High Court applied this principle but held that the complaint against Mona Jain satisfied the required pleading threshold.
S.P. Mani & Mohan Dairy v. Snehalatha Elangovan, (2023) 10 SCC 685
This precedent was central to the quashing standard.
It holds that where a complaint contains the basic Section 141 averment, the High Court should not quash merely because a director denies involvement.
The director must show, through sterling and incontrovertible material, that the prosecution is clearly untenable or abusive.
The Court found Mona Jain had produced no such material.
Court’s Reasoning
The Court’s reasoning turned on the distinction between:
mere designation as director and specific allegations of actual transactional involvement.
If the complaint had only said that Mona Jain was a director, the Section 141 objection would have been materially stronger.
But here, the complaint alleged an active role in the very transactions underlying the cheque-bounce prosecution.
At the quashing stage, the Court was not required to determine whether those allegations were ultimately true.
It only had to decide whether the complaint, read as a whole, disclosed the statutory basis for prosecution and whether unimpeachable material conclusively disproved her role.
The complaint did disclose such a basis, and no such contrary material was produced.
Conclusion
The Delhi High Court held that the case did not warrant quashing.
It found that:
- the complaint contained sufficient Section 141 averments;
- Mona Jain’s alleged role went beyond mere directorship;
- her actual involvement was a matter for evidence at trial;
- she had not produced sterling or unimpeachable material disproving involvement; and
- her non-signatory status alone did not defeat vicarious liability.
Accordingly, the petition and pending applications were dismissed.
Case Details
Case: Mona Jain v. M/s Kaycee Polymers Pvt. Ltd.
Court: High Court of Delhi at New Delhi
Case Number: CRL.M.C. 5220/2026 & CRL.M.As. 21919-20/2026
CNR No.: DLHC010330162026
Judge: Justice Prateek Jalan
Reserved on: 27 July 2026
Date: 3 September 2026
Underlying Complaint: Complaint Case No. 1047/2025
Relevant Provisions: Section 138 and Section 141, Negotiable Instruments Act, 1881; Section 528, BNSS, 2023
Outstanding Principal Alleged: ₹12,55,737
Result: Quashing petition dismissed; summoning order and Section 138 proceedings against the petitioner allowed to continue.
