In a significant ruling on corporate criminal liability, the Supreme Court set aside proceedings against a company director in a cheque dishonour case, holding that simply being a director or signing board resolutions does not automatically make one responsible for day-to-day business affairs.
Background of the Case
The case, Saroj Pandey vs Govt. of NCT of Delhi & Ors., arose from a complaint under Sections 138 and 142 of the Negotiable Instruments Act, 1881. The company, Projtech Engineering Private Limited, had issued three cheques totaling ₹50 lakh for the supply of iron and steel.
However, the cheques were returned unpaid due to discrepancies in signatures and alterations. Following this, legal notices were issued, and criminal proceedings were initiated in 2021.
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A Metropolitan Magistrate in Dwarka Courts summoned the accused, including Saroj Pandey, a director of the company. Her challenge before the Sessions Court and later the Delhi High Court failed, with both courts relying on her role as a director and her signature on a board resolution.
Hearing the appeal, the bench of Justice Sanjay Karol and Justice Augustine George Masih closely examined whether Saroj Pandey could be held liable under Section 141 of the Negotiable Instruments Act.
The Court reiterated that liability of a director is not automatic. It emphasized that a complaint must clearly state that the accused was “in charge of and responsible for the conduct of the business” at the time of the offence.
“The mere fact that the appellant signed a Board Resolution does not inspire confidence to conclude involvement in day-to-day affairs,” the bench observed.
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The judges explained that board resolutions typically relate to major decisions and do not imply knowledge or control over routine business transactions.
Importantly, the Court noted that there was “not even as much as a whisper of direct allegation” against the appellant in the complaint regarding her active role in the company’s operations.
The bench also clarified the legal position regarding the High Court’s powers under Section 482 of the CrPC. It disagreed with the High Court’s view that such powers are restricted if a revision petition has already been filed.
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“The inherent powers of the High Court remain available to prevent miscarriage of justice,” the Court stated, reaffirming earlier precedents.
Allowing the appeal, the Supreme Court quashed the criminal proceedings against Saroj Pandey.
It held that the essential requirement of establishing her responsibility for the company’s day-to-day affairs was not met.
The Court clarified that its observations were limited to the appellant and would not affect the ongoing trial against other accused persons.
Case Details
Case Title: Saroj Pandey vs Govt. of NCT of Delhi & Ors.
Case Number: Criminal Appeal arising out of SLP (Crl.) No. 21322 of 2025
Judges: Justice Sanjay Karol, Justice Augustine George Masih
Decision Date: April 7, 2026
