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Indian Judgements

Dishonour of cheque: No Liability of non-executive Directors – Complaint against quashed

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The core issue revolves around whether non-executive directors can be held vicariously liable under the Negotiable Instruments Act, 1881, for dishonored cheques issued by a company. The appellants, former non-executive directors, argued they was not involved in the company’s financial transactions or the issuance of the cheques. The Court ultimately quashed the criminal proceedings against them, emphasizing that mere directorship does not create automatic liability; specific allegations of active involvement in the company’s financial affairs are required to establish such liability.

Negotiable Instruments Act, 1881, Section 138 and 141 – Dishonour of cheque – Liability of non-executive Directors – Held that non-executive and independent director(s) cannot be held liable under Section 138 read with Section 141 of the NI Act unless specific allegations demonstrate their direct involvement in affairs of the company at the relevant time- Appellant(s) neither issued nor signed the dishonoured cheques, nor had any role in their execution – There is no material on record to suggest that they were responsible for the issuance of the cheques in question – Their involvement in the company’s affairs was purely non-executive, confined to governance oversight, and did not extend to financial decision- making or operational management –

The complaint lacks specific averments that establish a direct nexus between the Appellant(s) and the financial transactions in question or demonstrate their involvement in the company’s financial affairs – Additionally, the CGR(s) and ROC records unequivocally confirm their non-executive status, underscoring their limited role in governance without any executive decision-making authority – Held that the mere fact that Appellant(s) attended board meetings does not suffice to impose financial liability on the Appellant(s), as such attendance does not automatically translate into control over financial operations – Given the lack of specific allegations and in view of the aforesaid observations, the Appellant(s) cannot be held vicariously liable under Section 141 of the NI Act – Impugned Judgment and Order of the High Court liable to be set aside, and the criminal proceedings against the Appellant(s) in Complaint liable to be  quashed.

(Para 16 to 20)

K.S.Mehta V. M/S Morgan Securities And Credits Pvt.

Supreme Court: 2025 INSC 315: (DoJ 04-03-2025)

2025 INSC 315 Click here to View Full Text of Judgment

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Trust Betrayed: Deceased Appellant’s Fortune Redirected to Child Welfare

July 7, 2025 No Comments

The appellant was convicted by the trial court on charges of criminal breach of trust, criminal breach of trust by public servant, criminal breach of trust by banker, merchant or agent, and criminal misappropriation. These charges stemmed from the misappropriation of funds designated for welfare schemes aimed at children with disabilities. The funds were reportedly sanctioned for non-existent schools and children without proper audit or inspection, with the incident occurring between 2004 and 2007. The total misappropriated amount cited in court discussions reached Rs. 7,00,00,000.

Trial Court Sentence: The appellant was sentenced to 7 years of rigorous imprisonment and a fine of Rs. 1,00,000. Failure to pay the fine would result in an additional 6 months of simple imprisonment. Other co-accused individuals were acquitted.

Appeal and Abatement: The appellant filed an appeal against her conviction and sentence. However, during the pendency of the appeal, Annapurani, the appellant, passed away in 2022. Consequently, her appeal stood abated.

Law Involved

The primary legal provisions cited in the case were from the Indian Penal Code (IPC), specifically:

Section 409 IPC: Dealing with criminal breach of trust by a public servant, or by a banker, merchant, or agent.

Section 34 IPC: Pertaining to acts done by several persons in furtherance of a common intention.

The Juvenile Justice (Care and Protection of Children) Act, 2015 (JJ Act) was referenced in relation to the utilisation of the fine amount for the welfare and rehabilitation of children in need of care and protection, or those in conflict with the law.

Reasoning and Holding of the Judgment

Abatement of Proceedings: The appeal formally abated due to the death of the appellant, Annapurani, while the appeal was still under consideration.

Court’s Direction on Funds: Despite the abatement, the Court acknowledged the large-scale criminal misappropriation and breach of trust involved in the case. It was noted that the appellant had voluntarily offered to deposit an enhanced fine amount of Rs. 7,00,00,000. This amount comprised an initial Rs. 1,00,00,000 and a subsequent direction for an additional Rs. 6,00,00,000.

Utilisation for Child Welfare: The Court directed that the entire deposited sum of Rs. 7,00,00,000, including any interest it accrues, should be utilised for the benefit of Government-aided or Government-managed childcare institutions in the State of Odisha. This was intended to serve the rehabilitation and welfare needs of children. The Juvenile Justice Committee of the High Court of Odisha was specifically authorised to oversee and direct the utilisation of these funds. The amount has been complied with and deposited.

Tr. A. Babu V. State of Tamil Nadu

Supreme Court: 2025 INSC 799: (DoJ 18-03-2025)

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“Discretionary Dismissal: Supreme Court Declines CBI Probe into Alleged Multi-Crore Infrastructure Fraud”

July 7, 2025 No Comments

The petition concerned allegations of fraudulent re-raising or revision of the value of Electro Mechanical (EME) Equipments for the Palamuru Ranga Reddy  lift irrigation Schemes.

The estimated value, initially between Rs. 5960.79 Crores and Rs. 8386.86 Crores as estimated by the Engineering Staff College of India, was allegedly inflated.

This alleged inflation was deemed to have caused a significant loss to the public/exchequer.

The fraudulent actions were attributed to official respondents (U to V, or Nos. 1 to 4), who were accused of colluding with contractors to artificially inflate these estimates.

Law Involved

The petitioner sought a Writ of Mandamus to declare the actions of the respondents (Nos. 1 to 4) as fraudulent.

A primary prayer was for an investigation by the Central Bureau of Investigation (CBI) into the alleged illegal, unreasonable, and capricious actions of the official respondents. The petitioner also sought the submission of the CBI report to the High Court.

The case subsequently proceeded as a Special Leave Petition (SLP) before a higher court, challenging the High Court’s decision to dismiss the writ petition.

Reasoning

High Court’s Stance: The High Court considered the two prayers but ultimately dismissed the writ petition. The High Court’s decision was based on its discretion not to intervene. It was deemed justified in not exercising its discretion or jurisdiction to order further investigation or grant the CBI probe. The reasons for dismissal were outlined in the impugned order and possibly related to the maintainability of the writ petition.

Petitioner’s Argument: The petitioner contended that the High Court should not have summarily dismissed the writ petition. They argued that the High Court ought to have:

Delved into the records of the case.

Considered referring the matter for investigation to the CBI.

Devised a procedure to uncover the truth regarding the alleged fraud in the estimates.

The petitioner highlighted that documents, papers, and records clearly indicated fraud in the revised estimates, resulting in a grave loss to the State exchequer, which warranted the granting of their prayers.

Holding

Upon challenge via Special Leave Petition, the Supremer Court affirmed the High Court’s decision, stating that it would not ordinarily interfere with the non-exercise of discretion by the High Court in favour of the petitioner.

Consequently, the Special Leave Petition was dismissed, thereby upholding the High Court’s original decision.

Nagam Janardhan Reddy V. State Of Telangana And Others

Supreme Court: 2025 INSC 798: (DoJ 21-05-2025)

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Conviction Affirmed, Sentence Reduced: A Key POCSO Act Appeal

July 7, 2025 No Comments

The appellants were convicted concurrently under Section 8 of the POCSO Act and Section 294 of the Indian Penal Code (IPC). While the High Court affirmed the conviction, the appellants had previously been acquitted of charges under Section 6 of the POCSO Act. The Trial Court had originally imposed a sentence of life imprisonment for the remainder of the appellants’ natural life.

At the time the incident occurred, the appellants were in their twenties. By the time of the appeal, they had already served a little over five years of incarceration.

Law Involved:

Protection of Children from Sexual Offences Act (POCSO Act):

Section 8 (Sexual Assault): This section relates to sexual assault.

Section 6 (Aggravated Penetrative Sexual Assault): This section deals with aggravated penetrative sexual assault. The punishment specified is rigorous imprisonment for not less than ten years but which may extend to life imprisonment, with a fine. If the victim is a child below twelve years, the punishment can be rigorous imprisonment for the remainder of natural life or even the death penalty.

Indian Penal Code (IPC):

Section 294: The appellants were also convicted under this section.

Reasoning

The learned counsel for the appellants presented a two-fold submission, initially contending that the very conviction by the Additional Sessions Judge was flawed.

A primary argument was that the life imprisonment sentence imposed by the Trial Court was a “harsh punishment”, particularly considering the appellants had been acquitted under the more severe Section 6 of the POCSO Act.

The appellants’ counsel emphasised that they were young, in their twenties, at the time of the incident and had already completed over five years of imprisonment, suggesting that the appeal “may be allowed”.

In contrast, the learned standing counsel for the respondent “vehemently objected” to the appellants’ contentions, arguing that the High Court had “rightly affirmed the Judgment of conviction” and that the life imprisonment sentence was “in accordance with Section 8 of the POCSO Act”.

The Court ultimately determined that the “interest of justice would be served” by reducing the sentence.

Holding of this Judgment

The appeals were allowed in part.

The sentence imposed on the appellants was reduced to ten years.

Pintu Thakur @ Ravi V. State Of Chhattisgarh

Supreme Court: 2025 INSC 797: (DoJ 27-05-2025)

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Bail Overturned: Supreme Court Sets Aside High Court’s Grant of Regular Bail

July 7, 2025 No Comments

Bail Cancelled. The Appellant filed a complaint alleging that on 11 August 2023, around 11:30 PM, they received a call about the Respondents (accused) and 6-7 others being present on the Appellant’s land in Village Karial, Haripur.

It was alleged that the Respondents used abusive language, threatened the Appellant, and dismantled a barbed wire fence on his property.

Later, when the Appellant, his driver (Anil Thatheria – the deceased), and others went to the land, the Respondents allegedly rammed their car into the Appellant’s car.

When the Appellant exited his car, Accused No. 1 (along with others) allegedly hit the deceased (Anil Thatheria) with their car and threw him down, then hit the deceased on the head with a wooden stick.

All the accused were reportedly armed with wooden sticks.

The deceased was taken to the hospital where he was declared dead.

An FIR was registered, and subsequently, a chargesheet and a supplementary chargesheet were filed by the Police.

The Respondents sought regular bail from the Trial Court, but their applications were dismissed.

The High Court then granted regular bail to the Respondents via an order dated 06 October 2023.

The Appellant subsequently filed an appeal before the Supreme Court challenging the High Court’s bail order.

Law Involved: 

The case involved offences under various sections of the Indian Penal Code (IPC) and considerations under the Code of Criminal Procedure (Cr.P.C.):

IPC Sections: The FIR and chargesheets included sections such as 302 (murder), 307 (attempt to murder), 120-B (criminal conspiracy), 34 (acts done by several persons in furtherance of common intention), 147 (rioting), 148 (rioting, armed with deadly weapon), 149 (unlawful assembly guilty of offence committed in prosecution of common object), 323 (voluntarily causing hurt), 504 (intentional insult with intent to provoke breach of peace), and 506 (criminal intimidation).

Cr.P.C. Sections: The respondents’ applications for bail were made under Section 439 (special powers of High Court or Court of Session regarding bail) of the Cr.P.C.. The High Court’s order also included a direction to the Trial Court to adjourn proceedings under Section 309 of the Cr.P.C..

Reasoning

The Supreme Court noted that the High Court had set aside the Trial Court’s order which had refused regular bail to the Respondents.

Despite previously dismissing bail applications by the Respondents, the High Court later allowed their petition, leading to their enlargement on bail.

The High Court granted bail even though Accused No. 1 was identified as a “habitual offender” with eight other criminal cases registered against him.

The Supreme Court highlighted that the High Court’s order was “cryptic” and lacked sufficient reasoning to justify the grant of bail, especially given the gravity of the offences.

The reasoning provided by the High Court was considered “inadequate” and did not establish a proper case for granting bail.

The Supreme Court found that the High Court’s order suffered from a “patent non-application of mind”.

Furthermore, the Supreme Court stated that the High Court’s direction to the Trial Court to adjourn proceedings beyond a fixed date (25 October 2023) constituted interference with the trial process.

Holding

The Supreme Court, in its judgment dated 08 November 2023, set aside the High Court’s order dated 06 October 2023, which had granted regular bail to the Respondents.

Consequently, the effect of the High Court’s bail order was reversed.

The Supreme Court directed the Respondents (accused) to surrender and be taken into custody by the police on or before 16 June 2025.

They were also directed to deposit their passports at the Police Station.

The Supreme Court clarified that its decision to set aside the bail order should not influence the merits of the case during the trial.

The Trial Court was directed to proceed with and conclude the trial without being swayed by the Supreme Court’s order, and to endeavour to conclude the trial within one year and eight months.

Baljnder Singh Alias Aman V. State Of Punjab

Supreme Court: 2025 INSC 796: (DoJ 16-05-2025)

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