In National Housing Bank v. Bherudan Dugar Housing Finance Ltd. & Ors. Etc. [2024] 8 S.C.R. 1 : 2024 INSC 566 on a complaint filed u/s. 200 CrPC, the Magistrate took cognizance of the complaint for the offence u/s. 29A read with s. 50 and punishable u/s. 49 (2A) of the National Housing Bank 1987 Act against the first respondent-company, second accused-Managing director and other five accused as directors. The High Court quashed the complaint in its entirety, holding that the requirements of sub-Section (1) of s. 50 of the National Housing Bank 1987 Act are similar to the requirements incorporated in s. 141 of the Negotiable Instruments Act, 1881, which were not complied with by the complainant. This was challenged in the Hon’ble Supreme Court.
The SC held that unless specific assertions are made, vicarious liability of the Directors of the first accused company are not attracted. No assertions made that the second to seventh accused at the time of the commission of the offence were in charge of, and responsible to the first accused company for the conduct of its business. In the absence of the averments, the trial court could not have taken cognizance of the offence against the third to seventh accused, who are allegedly the directors of the first accused company. However, the second accused being the Managing Director would be in charge of the company and responsible to the company for its business. Thus, High Court was not right in quashing the complaint against the second accused as no reasons have been assigned to quash the complaint against the first accused which is a company.
It was categorically held that “it is necessary to specifically aver in a complaint under Section 141 of the Negotiable Instruments Act (sub-Section (1) of Section 50 of the National Housing Bank Act 1987 is pari materia with Section 141 of the NI Act) 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. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.”