Saroj Pandeyv.Govt of NCT of Delhi & Ors

Citation:: 2026 INSC 324
Date:: 7 April 2026
Reading time:: 15 min read

Legal Analysis: Saroj Pandey vs. Govt of NCT of Delhi & Ors

Citation: 2026 INSC 324
Court: Supreme Court of India
Coram: Justice Sanjay Karol and Justice Augustine George Masih (Division Bench)
Judgment Author: Justice Sanjay Karol
Date of Decision: April 7, 2026
Nature of Judgment: This is a judgment by a Division Bench of the Supreme Court in its criminal appellate jurisdiction, arising from a Special Leave Petition against an order of the Delhi High Court refusing to quash summons issued to the appellant – a director of a company – in a complaint under Section 138 of the Negotiable Instruments Act, 1881. The Court quashed the proceedings against the appellant, holding that mere signing of board resolutions does not make a director “in charge of and responsible for the conduct of the business” under Section 141 of the NI Act, and that a revision petition under Section 397 CrPC does not bar a subsequent petition under Section 482 CrPC.

1. Synopsis of the Judgment

This judgment quashes criminal proceedings against a director of a company who was summoned in a cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881. The appellant, Saroj Pandey, was one of the directors of the accused company. Cheques issued by the company were dishonoured with the reason “drawer’s signatures differs and alterations/corrections on instruments other than date”. The Metropolitan Magistrate issued summons against all directors, including the appellant. The revision petition filed by the appellant was dismissed, and the High Court also refused to exercise its inherent powers under Section 482 CrPC, holding that once a revision is preferred, a subsequent Section 482 petition on the same grounds is circumscribed. The Supreme Court reversed the High Court, holding that: (a) the High Court erred in law in limiting the scope of Section 482 merely because a revision had been filed; (b) the complaint lacked the essential averment that the appellant was “in charge of and responsible for the conduct of the business” of the company at the time of the offence; and (c) the mere fact that the appellant signed board resolutions does not satisfy the requirement of Section 141 of the NI Act. The Court quashed the summons and all proceedings against the appellant.

2. Basic Information of the Judgment

Case Title Saroj Pandey vs. Govt of NCT of Delhi & Ors. Criminal Appeal No. Arising out of SLP (Crl.) No. 21322 of 2025 Bench Justice Sanjay Karol and Justice Augustine George Masih Date of Decision April 7, 2026 Citation 2026 INSC 324 Appeal From Order dated 07.08.2025 of the High Court of Delhi in Criminal MC No. 8110/2023 and Criminal M.A. No. 30210/2023

3. Legal Framework

This judgment involves the interpretation of Section 138 and Section 141 of the Negotiable Instruments Act, 1881 (NI Act) – specifically the liability of directors of a company for cheque dishonour – and the scope of inherent powers under Section 482 of the Code of Criminal Procedure, 1973 (CrPC) when a revision petition under Section 397 CrPC has already been filed.

A. Key Provisions of Law

Negotiable Instruments Act, 1881 – Section 138 (dishonour of cheque for insufficiency of funds), Section 141 (offences by companies – liability of directors and officers).
Code of Criminal Procedure, 1973 – Section 397 (revisional powers), Section 482 (inherent powers to prevent abuse of process or to secure ends of justice).

B. Related Precedents (Discussed in the Judgment)

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 (Three‑Judge Bench) – Held that it is necessary to specifically aver in a complaint that at the time the offence was committed, the person accused was in charge of and responsible for the conduct of the business of the company. Merely being a director is not sufficient.
Gunmala Sales (P) Ltd. v. Anu Mehta (2015) 1 SCC 103 – Reiterated that the basic averment of being in charge and responsible is required; however, the High Court may quash if unimpeachable evidence shows the director could not have been concerned with the issuance of cheques.
Krishnan v. Krishnaveni (1997) 4 SCC 241 (Three‑Judge Bench) – Held that though revision under Section 397(1) is prohibited by Section 397(3), inherent power under Section 482 is still available.
Dhariwal Tobacco Products Ltd. v. State of Maharashtra (2009) 2 SCC 370 – Held that the maintainability of a revision petition does not constitute a bar for entertaining an application under Section 482 CrPC.
Prabhu Chawla v. State of Rajasthan (2016) 16 SCC 751 – Followed Dhariwal Tobacco.

4. Relevant Facts of the Case

Accused Company: Project Engineering Private Limited, of which the appellant (Saroj Pandey) was a director.
Cheques Issued: Three cheques dated 20th April 2021 for amounts of ₹15 lacs, ₹20 lacs, and ₹15 lacs, issued as payment for supply of iron and steel.
Dishonour: The cheques were returned unpaid with the reason: “DRAWERS SIGNATURES DIFFERS AND ALTERATIONS/CORRECTIONS ON INSTRUMENTS OTHER THAN DATE”.
Legal Notice: Sent on 12th May 2021 through counsel and on 18th May 2021 by speed post.
Complaint under NI Act: Filed on 25th June 2021.
Summons: Metropolitan Magistrate (NI Act), Dwarka Courts, New Delhi, issued summons on 23rd September 2021, fixing appearance on 15th December 2021.
Revision: The appellant filed revision before the Sessions Court, which was dismissed on the ground that she was a director and had signed board resolutions.
High Court (Section 482 CrPC): The appellant then filed a petition under Section 482 CrPC before the Delhi High Court. The High Court dismissed it, observing that when a revision has already been preferred, a petition under Section 482 on the same grounds is circumscribed to a much narrower jurisdiction. The High Court also held that signing of board resolutions indicated the appellant’s involvement in the affairs of the company.
Appeal to Supreme Court: Aggrieved, the appellant filed Special Leave Petition, which was converted into Criminal Appeal.

5. Issues Identified by the Supreme Court

Whether the High Court was correct in holding that once a revision petition under Section 397 CrPC has been entertained, a subsequent petition under Section 482 CrPC on the same grounds is circumscribed and liable to be dismissed on that short ground alone.
Whether the appellant – a director of the accused company – can be summoned under Section 138 read with Section 141 of the NI Act in the absence of a specific averment in the complaint that she was “in charge of and responsible for the conduct of the business” of the company at the time of the offence.
Whether the mere fact that the appellant signed board resolutions is sufficient to establish her day‑to‑day involvement in the affairs of the company so as to attract vicarious liability under Section 141 of the NI Act.

6. Ratio Decidendi (The Reasoning and Decision of the Court)

Holding 1 – Revision does not bar Section 482 petition

“In view of the above discussion, we hold that though the revision before the High Court under subsection (1) of Section 397 is prohibited by subsection (3) thereof, inherent power of the High Court is still available under Section 482 of the Code and as it is paramount power of continuous superintendence of the High Court under Section 483, the High Court is justified in interfering with the order leading to miscarriage of justice…” (Para 10, quoting Krishnan v. Krishnaveni)

Reasoning:

The inherent power under Section 482 is not conferred by statute but is saved thereunder.
Even where a second revision is barred, the High Court can still exercise Section 482 powers.
The High Court’s statement of law – that filing a revision limits the scope of a subsequent Section 482 petition – is incorrect and is set aside.

Holding 2 – Mere signing of board resolutions does not satisfy Section 141

“To say the least, the same is not inspiring in confidence because a Board Resolution is a document that is signed by the members of the Board of Directors for decisions taken or conclusions arrived at for matters placed before the Board for consideration and decision… This, however, does not in any manner mean that each and every member of the Board of Directors is aware of all decisions taken in the everyday transactions that are involved in running a business concern.” (Para 8)

Reasoning:

Section 141 requires a specific averment that the accused director was “in charge of and responsible for the conduct of the business of the company” at the time of the offence.
The complaint in this case lacked even a whisper of such a direct allegation against the appellant.
Signing board resolutions is an act of collective decision‑making on major policy matters; it does not prove day‑to‑day involvement or awareness of every transaction, including the issuance of cheques.
The three‑judge bench decision in S.M.S. Pharmaceuticals and Gunmala Sales makes it clear that merely being a director does not create deemed liability.

Holding 3 – Proceedings quashed

The Court found that the essential averment required under Section 141 was absent, and there was no unimpeachable evidence to show the appellant’s role in the issuance of the cheques. The continuation of proceedings against her would be an abuse of the process of court.

7. New Legal Principles Established / Reiterated

Section 482 jurisdiction not barred by prior revision: The High Court’s observation that a Section 482 petition is “circumscribed” simply because a revision was filed is erroneous. The inherent powers of the High Court under Section 482 are independent and can be invoked even after a revision is dismissed, especially where there is a miscarriage of justice.
Board resolution signing does not prove day‑to‑day management: This judgment clarifies that signing board resolutions – even if the director is a signatory to such resolutions – is not sufficient to infer that the director was “in charge of and responsible for the conduct of the business” for the purpose of Section 141 of the NI Act. Something more specific is required.
Need for specific averment reaffirmed: The judgment reiterates the settled law from S.M.S. Pharmaceuticals that a complaint under Section 138 read with Section 141 must contain a specific factual averment about the director’s role; otherwise, the director cannot be summoned.

8. The Court’s Analysis and Examination of Concepts

A. Scope of Section 482 after dismissal of revision

The Court examined the line of authorities starting from Krishnan v. Krishnaveni, Dhariwal Tobacco Products, and Prabhu Chawla. It held that the High Court had erroneously restricted its own inherent jurisdiction. The Court emphasised that Section 482 is a “paramount power of continuous superintendence” and is available regardless of whether a revision was filed or dismissed. The only restriction is that the power must be exercised sparingly and to prevent abuse of process.

B. Meaning of “in charge of and responsible for the conduct of the business”

The Court analysed Section 141(1) of the NI Act and the three‑judge bench decision in S.M.S. Pharmaceuticals. The law is clear: a director is not automatically liable. The complainant must aver that the director was in charge of and responsible for the conduct of the business at the time of the offence. In the present case, the complaint was silent. The High Court’s reliance on the fact that the appellant signed board resolutions was misplaced because board resolutions relate to high‑level policy decisions, not day‑to‑day transactions like issuance of cheques.

C. Absence of specific allegation – fatal to prosecution

The Court noted that there was not even a whisper of a direct allegation against the appellant in the complaint. The mere fact that she was a director and signed some resolutions could not fill this lacuna. Therefore, the summoning order and the High Court’s refusal to quash were both unsustainable.

9. Critical Analysis of the Judgment

Strengths

Clarifies an important procedural point: The judgment corrects the High Court’s erroneous view that a prior revision limits the scope of a Section 482 petition. This will prevent High Courts from mechanically dismissing quashing petitions on that ground.
Protects directors from frivolous prosecutions: By holding that signing board resolutions does not prove day‑to‑day management, the Court saves passive or nominee directors from being dragged into cheque bounce cases where they had no role. This is a practical and just outcome.
Reaffirms the S.M.S. Pharmaceuticals principle: The judgment reinforces the requirement of a specific averment, which is a vital safeguard against the abuse of the NI Act by complainants who name all directors without any basis.
Concise and clear reasoning: The judgment is short but addresses both the procedural and substantive issues effectively.

Potential weaknesses / criticisms

No discussion of the proviso to Section 141: The Court did not discuss the first proviso (defence of lack of knowledge or due diligence) or the second proviso (government directors). While not necessary for the decision, a brief mention would have added completeness.
No analysis of the “signature differs” ground: The cheques were dishonoured because the drawer’s signatures differed. The appellant was not even the signatory of the cheques (presumably). The Court could have noted this as additional grounds, but it was not necessary.
Limited precedential value on the board resolution point: The judgment holds that signing board resolutions does not prove day‑to‑day management. However, it does not lay down a test for what would constitute sufficient evidence. This may leave room for future litigation.

Unresolved questions

Can a director be held liable if the complaint avers that she signed the cheque or authorised its issuance? (Presumably yes, but the judgment does not address this.)
Does the same principle apply to other officers like “manager” or “secretary” under Section 141(2)? (Likely yes, but not expressly decided.)

10. Final Outcome

The Supreme Court allowed the appeal and set aside the impugned order of the Delhi High Court dated 07.08.2025. The proceedings against the appellant – Saroj Pandey – arising from CC NI Act complaint, including the summoning order dated 23rd September 2021, were quashed and set aside. The Court clarified that the observations are limited to the case of the appellant and have no bearing on the trial of the co‑accused persons. Pending applications were disposed of.

11. Practical Application, Court Lines, and Legal Strategy

Use in Court (Practical Application)

For directors summoned under Section 138 NI Act: If the complaint does not contain a specific averment that the director was “in charge of and responsible for the conduct of the business” at the time of the offence, file a quashing petition under Section 482 CrPC (or under Section 528 of BNSS, 2023). Cite S.M.S. Pharmaceuticals and this judgment. Also argue that signing board resolutions does not prove day‑to‑day management.
For accused who have already lost a revision: Even if your revision under Section 397 CrPC has been dismissed, you are not barred from filing a Section 482 petition. Cite Para 10 of this judgment (Krishnan v. Krishnaveni and Dhariwal Tobacco Products) to argue that the High Court’s inherent powers remain available.
For complainants (payees): When filing a complaint against a company and its directors, ensure that the complaint contains a specific factual averment about the role of each director. A generic statement that “all directors are in charge of the business” may be insufficient. Name the directors who actually signed the cheques or authorised the transaction.

Court Lines

“It is necessary to specifically aver in a complaint under 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. 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.” (Para 7, quoting S.M.S. Pharmaceuticals v. Neeta Bhalla)

“Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business.” (Para 7)

“To say the least, the same is not inspiring in confidence because a Board Resolution is a document that is signed by the members of the Board of Directors for decisions taken or conclusions arrived at for matters placed before the Board for consideration and decision. … This, however, does not in any manner mean that each and every member of the Board of Directors is aware of all decisions taken in the everyday transactions that are involved in running a business concern.” (Para 8)

Legal Strategy Insight

For the accused (director): Immediately upon receipt of summons in a cheque bounce case, examine the complaint. If the complaint does not contain a specific averment about your role as being “in charge of and responsible for the conduct of the business” – or if the only allegation is that you were a director – file a quashing petition under Section 482 CrPC (or Section 528 BNSS). Attach the complaint and the summoning order. Argue that the essential requirement of Section 141 is missing. Additionally, if you have signed board resolutions, argue that this does not prove day‑to‑day management, relying on Para 8 of this judgment. Do not wait for trial; quashing at the initial stage saves time and harassment.

For the complainant (payee): Before filing a complaint under Section 138 NI Act against a company, identify the specific director(s) who were actually responsible for the conduct of the business at the relevant time – typically the managing director, whole‑time directors, or those who signed the cheques. In the complaint, specifically aver that such director(s) were in charge of and responsible for the conduct of the business. Avoid naming all directors indiscriminately, as this may lead to quashing of proceedings against passive directors and delay the case against the real offenders.

For the High Court: When a Section 482 petition is filed after dismissal of a revision, do not dismiss it summarily on the ground that a revision was already filed. Instead, examine whether the revision court considered the core issue (e.g., absence of Section 141 averment). If there is a manifest error or abuse of process, exercise inherent powers to quash. Use the structured approach of examining the complaint and any unimpeachable material.

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