• Can the director be convicted without the company being convicted under section 138/141 of NI Act?

We have the trial court order in our favour. The convicted director has filed the appeal with the district court, that since the company is not convicted, the director should also not be convicted. (The company is named as the 1st Accused in the Complain; all the averments against the company and the directors are present in the complaint) They want that the deposit of 20% should be stayed till the time appeal is not decided. The district court ordered them to deposit the same before the appeal. Against this they went in high court, where also their petition was quashed.

Now he has filed SLP in Supreme Court. Their plea is that the company has not been convicted in the trial court judgement , hence the director should also be acquitted. The SC has asked our SC lawyer to look into the law point that if the company is not convicted can the directors be convicted? 
Our SC lawyer has asked us to file a limited purpose appeal that, “ the name of the company has been erroneously left out in the judgement “.

We were wondering what would be the effect if we appeal and if we don’t.

As per our understanding, if we don’t appeal, the SC may acquit the directors also. 
And if we file
the , SC may order the director to not deposit 20%, as we ourselves have gone into appeal.
Asked 1 year ago in Criminal Law
Religion: Hindu

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6 Answers

prosecution against the director of the company merely for the reason that the director had signed the cheque shall not sustain if the company is not arraigned as an accused in the case

2)Kerala high court has held  the cheque was issued for and on behalf of a company and the company is not arraigned as an accused. Therefore, in view of the above legal position, the entire prosecution is vitiated and accordingly, the concurrent finding of conviction and sentence are liable to be set aside.


3) in your case company is named as accused but not convicted .if company is not convicted the conviction of director would be set aside 


4) file appeal against the trial court order not convicting the company 

Ajay Sethi
Advocate, Mumbai
94689 Answers
7526 Consultations

5.0 on 5.0


since company is itself a corporate body, separate legal entity and the signatories being the directors, cannot be accused of if the company is not convicted for the offence.



in a chattisgarh HC, the court held that- "referring back to the allegations and averments made in the complaint under Section 138 of Negotiable Instrument Act, though the petitioners have been described somewhere in the petition as Director in some petition for and on behalf of *** Industries Limited would make it clear that the respondents were in know of the fact that with whom they are dealing. The copy of the cheques which are produced in few of the cases would also show that the cheques were issued on behalf of the company not in the individual capacity of the petitioners. Consequently, in the complaint when the company has not been arrayed as accused, the prosecution simplicitor against the Director without making specific averments about the role played by them would not be maintainable."

Also, in a 2012 case, the SC HELD TAHT:  "Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person, and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted."

you can any day file an appeal against the order/judgement.


Riti Gupta
Advocate, Mohali
16 Answers

Not rated

The company is supposed to know generally as to who were in-charge of the affairs of the company.

The company is expected to allege that the persons named in the complaint are in-charge of the affairs of the company.

The burden would be on the board of directors or persons in-charge of the affairs of the company to show that they are not liable to be convicted.

The reasons for this that only the directors of the company have special knowledge of the role that they play in the company. The existence of any special circumstance that makes them not liable is something that is particularly within their knowledge and it is for them to establish in the trial to show that at the relevant point in time they were not in-charge of the affairs of the company.

You can refer to SP Mani & Mohan Diary Vs. Dr. Snehalata Elangovan of supreme court.

T Kalaiselvan
Advocate, Vellore
84890 Answers
2190 Consultations

5.0 on 5.0

I think the judgment of the trial court completely overlooks s.141 of the Negotiable Instruments Act

it says that every officer of the company, 'as well as the company'.....so the latter words in colon are important...how can the director be convicted alone without the company being convicted?!!

NEGOTIABLE INSTRUMENTS ACT, 1881 Section 141 - Offences by companies

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

I dont think that if you file an appeal for convicting the company as well, the SC would waive the deposit to be made by the convicted director

your appeal would say that in addition to the director the company also ought to have been convicted considering s.141 reproduced above

so in absence of the company being convicted [which would be challenged by you] the SC would all the more require the convicted director to make the deposit before his appeal can be entertained 



Yusuf Rampurawala
Advocate, Mumbai
7509 Answers
79 Consultations

5.0 on 5.0

If company was arrained as accused and was not convicted then you need to challenge the order of trial court. Without arraining company as accused and convicting it directors cannot be convicted or made party.

Prashant Nayak
Advocate, Mumbai
31930 Answers
179 Consultations

4.1 on 5.0

Dear client I am sorry to hear that but in this case the corporate veil will be lifted and the director may be prosecuted

Anik Miu
Advocate, Bangalore
8851 Answers
110 Consultations

4.7 on 5.0

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