Director Involved in Day-to-Day Functions With Knowledge of Cheque Issuance Liable u/s 138 & 141 of NI Act, Upon Dishonour

Case Details: Jyoti Siwach vs. State - [2025] 170 taxmann.com 773 (Delhi)

Judiciary and Counsel Details

• Chandra Dhari Singh, J.
• H.C. Suri & Ms Payal Agrawal, Advs. for the Petitioner.
• Yudhvir Singh Chauhan, APP, Sonal Anand, Aayush Sai & Ms Surbhi Singh, Advs. for the Respondent.

Facts of the Case

In the instant case, the respondent-company had sold its property to complainant and issued a cheque for refund of sale consideration. However, said cheque was dishonoured on presentation.

Later, the complainant filed complaint under section 138 against company and its directors including the petitioner. The Petitioner filed an instant petition seeking quashing of complaint and summoning order on ground that the petitioner was not involved in day-to-day activities and affairs of company.

It was noted that the petitioner was one of the promoters and director of the company and was responsible for day-to-day discharge of functions of respondent company. Further, it was observed that the petitioner had knowledge of issuance of cheque in question to complainant and had been involved in sale transaction of subject property since initial stages.

High Court Held

The High Court observed that not being an authorised signatory would not absolve the petitioner from liability of commission of offence as long as requisites under Section 138 and 141 were met.

Therefore, the High Court held that the summons were rightly issued against petitioner as a prima facie case was made out under Section 138. Thus, instant petition was to be dismissed.

List of Cases Reviewed

• Indian Oil Corporation v. NEPC India Limited (2006) 6 SCC 736 [Para 18]
• Kusum Ignots & Alloys Ltd v. Pennar Peterson Securities Ltd, 2000 (SCC) Cri 546 [Para 22]
• Susela Padmavathy Amma v. Bharti Airtel Limited, 2024 SCC OnLine SC 311[Para 27]; followed.

List of Cases Referred to

• Indian Oil Corporation v. NEPC India Limited and Others (2006) 6 SCC 736 (para 18)
• Susela Padmavathy Amma v. Bharti Airtel Limited 2024 SCC OnLine SC 311 (para 26).