Case Note & Summary
The petitioners, former directors of Shivmangal Ispat Private Limited, filed a criminal writ petition before the High Court under Articles 226 and 227 of the Constitution challenging an order dated 01.02.2020 issuing process against them under Section 138 of the Negotiable Instruments Act and the revisional order dated 06.03.2026 dismissing their revision. The underlying complaint was filed by respondent no.1 alleging cheque dishonour by the company. Petitioners contended they had resigned as directors on 25.10.2008 and Form 32 was filed with the Registrar of Companies; the Ministry of Corporate Affairs website showed their date of cessation. The trial court passed a cryptic non-reasoned order issuing process based solely on the complaint and statement under Section 200 CrPC. The revisional court rejected the downloaded Form 32 for want of certificate under Section 65-B of Evidence Act and dismissed the revision. Petitioners argued the complaint lacked specific averments regarding the role of each director and that general averments that all directors are responsible for day-to-day affairs are insufficient in law. Respondent no.1 argued the petitioners were directors at the relevant time, the downloaded Form 32 was not certified under Section 65-B, no board resolution accepting resignation was produced, and the trial court had rightly found all directors responsible. The High Court examined the orders and found the trial court order to be non-reasoned and passed without application of mind to the averments in the complaint. It noted that the complaint only contained general averments and no specific role was attributed to each petitioner. The court relied on Supreme Court decisions in Kamalkishor Shrigopal Taparia v. India Ener-Gen Private Limited and K.S. Mehta v. Morgan Securities and Credits Pvt. Ltd., which held that specific averments demonstrating active involvement at the relevant time are essential, and mere resignation does not conclusively establish liability but absence of specific allegations renders prosecution unsustainable. In the present case, the petitioners had resigned in 2008 and the complainant failed to show their active role. The court concluded that continuation of proceedings would amount to abuse of process of law. Accordingly, the writ petition was allowed, the order issuing process dated 01.02.2020 and the revisional order dated 06.03.2026 were quashed and set aside, and the complaint against the petitioners stood dismissed.
Headnote
A) Criminal Procedure - Issuance of Process - Non-Application of Mind - Code of Criminal Procedure, 1973, Section 200 - The trial court's order dated 01.02.2020 issuing process was cryptic, non-reasoned, and passed merely relying on the complaint and statement under Section 200, without discussing the role of each director or whether they signed the cheque; the revisional court also failed to address the specific grounds. Held that the order suffered from non-application of mind and was liable to be quashed. (Paras 8-9) B) Negotiable Instruments - Vicarious Liability of Directors - Specific Averments and Resignation - Negotiable Instruments Act, 1881, Sections 138 and 141 - The complaint only contained general averments that all directors responsible for day-to-day affairs, no specific role demonstrating active involvement at the relevant time; petitioners had resigned on 25.10.2008, information notified to ROC and MCA. Following Supreme Court in Kamalkishor Shrigopal Taparia and K.S. Mehta, mere general averments insufficient to impose liability. Held that lodging of complaint against former directors without specific allegations amounted to abuse of process, process quashed. (Paras 10-12) C) Evidence - Electronic Evidence - Certificate Requirement - Indian Evidence Act, 1872, Section 65-B - The petitioners relied on Form 32 downloaded from ROC website to prove resignation; the revisional court rejected it for want of Section 65-B certificate. The High Court noted respondent failed to produce contrary document, but the decision primarily rested on absence of specific averments. Held that unsupported electronic document may not be admissible without certificate, but lack of specific role more crucial. (Paras 5-6,9) D) Constitution - Supervisory Jurisdiction - Abuse of Process - Constitution of India, Articles 226 and 227 - In view of lack of specific averments and prior resignation, continuation of proceedings against petitioners would amount to abuse of process of law; extraordinary jurisdiction invoked. Held that writ petition allowed and impugned orders quashed. (Paras 12)
Issue of Consideration
Whether a complaint under Section 138 read with Section 141 of Negotiable Instruments Act is maintainable against former directors in absence of specific averments showing active involvement in day-to-day affairs and after their resignation; whether the order issuing process dated 01.02.2020 suffers from non-application of mind; whether the revisional court erred in rejecting Form 32 evidence for want of certificate under Section 65-B of Evidence Act.
Final Decision
Writ petition allowed. Order dated 01.02.2020 passed by 19th Joint Civil Judge, Senior Division, Nagpur and ACJM (Special 138 of NI Act), Nagpur in Criminal Complaint Case No. 30065 of 2019 issuing process quashed and set aside only as against petitioners. Order dated 06.03.2026 passed by District Judge-21 and Additional Sessions Judge, Nagpur in Criminal Revision No. 459 of 2021 quashed and set aside. Complaint as against present petitioners stands dismissed.
Law Points
- Directors of a company can be prosecuted under Section 138 read with Section 141 of Negotiable Instruments Act only if the complaint contains specific averments of active involvement in day-to-day affairs at the relevant time
- mere general averments that all directors are responsible are insufficient
- prior resignation duly notified to Registrar of Companies is relevant
- process issuing order must reflect application of mind to the complaint and statement under Section 200 CrPC
- failure to make out necessary ingredients renders continuation of proceedings an abuse of process justifying quashing under Articles 226 and 227 of Constitution
