Case Name : SMS Pharmaceuticals Ltd vs Neeta Bhalla
Case Reference: (2005) Supp 3 SCR 371 :
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Court: Supreme Court
Bench: 03
Coram: YK Sabharwal, Arun Kumar, BN Srikrishna
Date: 20.09.2005
It must be specifically averred in the complaint under NI Act - Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. (Page 386,G)
Merely being a director is not sufficient to make the person liable under NI Act - Section 141. A director cannot be deemed to be in charge of and responsible to the company for conduct of its business. There is no deemed liability. The person must be in charge of and responsible for the conduct of the business at the relevant time (Page 386,H - 387,A-B)
However, with respect to the Managing Director or Joint Managing Director, they can be proceeded against even in the absence of a specific averment since they would clearly be responsible for the incriminating act. So also for the signatory of a dishonoured cheque (Page 387,B-D)
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See also: NI Act - Section 138 Act, Section
PDF: SMS Pharmaceuticals Ltd vs Neeta Bhalla, (2005) Supp 3 SCR 371.pdf