PAWAN KUMAR GOEL versus STATE OF U. P. & ANOTHER

PAWAN KUMAR GOEL versus STATE OF U. P. & ANOTHER

The High Court rightly quashed the proceedings because the complaint did not arraign the company as an accused nor contain the mandatory averment that the director was in charge of and responsible for the company’s business at the time of the offence; therefore vicarious liability under Section 141 was not attracted and the director could not be prosecuted on that basis, and the plea to implead the company after limitation under Section 142 was not permissible.

Parties
Appellant: Pawan Kumar Goel; Respondent: State of U. P.; Respondent: Devendra Kumar Garg
Jurisdiction
India
Judgment Date
17 November 2022
Procedural Posture
Criminal Appeal / Appeal Against High Court Judgment Quashing Summoning Order and Proceedings
Legal Topics
Section 138 NI Act, Section 141 NI Act, Section 142 NI Act, Vicarious Liability, Arraignment of Company as Accused, Summoning Order Quashing
Negotiable Instruments Act, 1881 Criminal Law Company Law Section 138 NI Act Section 141 NI Act Section 142 NI Act Vicarious Liability Arraignment of Company as Accused +1 more

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Parties

Pawan Kumar Goel

Appellant

State of U. P.

Respondent

Devendra Kumar Garg

Respondent

Procedural Posture

Criminal Appeal / Appeal Against High Court Judgment Quashing Summoning Order and Proceedings

Legal Issues

  1. 1 Whether a director of a company would be liable for prosecution under Section 138 of NI Act without the company being arraigned as an accused
  2. 2 Whether a complaint under Section 138 of NI Act can proceed against a director without averments that the director was in charge of and responsible for conduct and business of the company

Ratio Decidendi

The High Court rightly quashed the proceedings because the complaint did not arraign the company as an accused nor contain the mandatory averment that the director was in charge of and responsible for the company’s business at the time of the offence; therefore vicarious liability under Section 141 was not attracted and the director could not be prosecuted on that basis, and the plea to implead the company after limitation under Section 142 was not permissible.