When a company’s cheque is dishonoured, complainants routinely array every name on an old letterhead as an accused. A judgment of Justice Saurabh Banerjee of the Delhi High Court pronounced on 13 August 2026 in Achin Kumar Roy v. Bajaj Finance Ltd., CRL.M.C. 3877/2022 and connected petitions, is a firm reminder of the limits of that practice: prosecution under Section 141 of the Negotiable Instruments Act, 1881 requires specific averments of the accused’s role, and collapses against record proof that he had resigned before the cheques were ever issued.
The prosecutions
Bajaj Finance Ltd. filed four complaints under Sections 138, 141 and 142 of the Negotiable Instruments Act, 1881 over dishonoured cheques issued by Leel Electricals Limited in February and March 2019, together totalling about ₹5.4 crore. The petitioner, arrayed as accused no. 3, faced all four prosecutions in his capacity as a former director of the company. He approached the High Court in 2022 to quash the proceedings; the connected petitions — CRL.M.C. 3877/2022, 3878/2022, 3894/2022 and 3919/2022 — were decided by a common judgment.
The decisive facts
Two features of the record proved decisive. First, the petitioner had resigned from the company with effect from 8 January 2019 — roughly two months before the cheques in question were issued — and the resignation stood recorded in Form DIR-12 filed with the Registrar of Companies, a public document the complainant could not gainsay. Second, he was not a signatory to any of the dishonoured cheques.
What Section 141 requires
Section 141 extends liability for a company’s offence under Section 138 to every person who, at the time the offence was committed, was in charge of and responsible to the company for the conduct of its business. The provision creates vicarious criminal liability, and courts have consistently held that it must be strictly construed. The complaint must therefore contain specific averments showing how each accused answered that description when the offence occurred; a formulaic recital of the statutory words against a list of names does not suffice.
Applying that standard, the Court found the complaints wanting. There were no particulars connecting the petitioner to the transactions or to the conduct of the company’s business at the time of the offence — and there could not be, since the public record showed he had already left. Continuing the prosecutions against him would, in the Court’s assessment, be wholly vexatious and an abuse of the process of law. The proceedings against him were quashed in all four complaints.
The wider practice point
Timing is everything
The relevant date is the date of the offence. A director who demonstrably ceased office before the cheque was issued and dishonoured is outside the net of Section 141, whatever role he played earlier.
Records beat recitals
Form DIR-12 and the company’s ROC filings are unimpeachable material of a sterling quality that a quashing court can act upon, even at the pre-trial stage, without waiting for the defence to be proved at trial.
Signatures matter
The signatory of the cheque stands on a distinct statutory footing. A non-signatory’s liability depends entirely on properly pleaded and provable responsibility for the company’s business.
For companies and complainants alike
The judgment carries lessons in both directions. Persons who resign from boards should ensure that their cessation is promptly filed with the Registrar of Companies, because that public filing is precisely what a quashing court can rely upon years later. Complainant companies and financial institutions, for their part, should verify from ROC records who actually held office and bore responsibility when the cheque was issued, and plead each person’s role with particularity — arraying every historical director invites exactly the outcome that followed here, with the added cost of years of proceedings that end in quashing.
Quashing on this ground protects only the individual whose record excludes liability. The prosecution of the company itself, and of persons who were in charge of its affairs at the relevant time, proceeds unaffected. Nothing in the judgment dilutes the statutory presumptions that operate in a Section 138 trial against those properly arrayed.
Cheque prosecutions occupy a substantial share of the criminal docket in Delhi’s district courts, and directors’ liability questions arise in a large fraction of them. The present judgment does not change the law; it applies settled principle with clarity, and gives practitioners a current, directly applicable authority from the Delhi High Court for the proposition that resignation proved from public record, coupled with the absence of specific averments, entitles a former director to be relieved of the prosecution at the threshold.
Frequently Asked Questions
Is every director liable when a company cheque bounces?
No. Under Section 141 of the Negotiable Instruments Act, only persons who, at the time the offence was committed, were in charge of and responsible to the company for the conduct of its business are vicariously liable, along with the company itself. Liability follows role and responsibility, not the designation of director alone.
What must a complaint actually allege against a director?
Specific averments describing how the particular director was in charge of and responsible for the company's business at the relevant time. Bald, general statements that reproduce the statutory language against every accused, without particulars of role, are insufficient to sustain summoning in a Section 138 prosecution.
How does a resigned director prove the resignation?
Through public record: Form DIR-12 filed with the Registrar of Companies recording cessation of office is the standard proof. In this case the form established resignation weeks before the cheques were issued, and the High Court treated it as conclusive documentary material justifying quashing.
Can such proceedings be challenged before trial?
Yes. A petition under Section 528 of the BNSS, corresponding to Section 482 CrPC, lies before the High Court to quash proceedings that amount to an abuse of process — including prosecutions continued against a person whose unimpeachable record shows he could not have committed the offence.