Ms. Counsel for the appellant, the High Court held that the averments in paragraph 7 of the complaint are omnibus and lack specificity. How do you respond to that finding?

My Lord, the High Court erred in isolating paragraph 7 of the complaint without reading it in conjunction with the antecedent documents. The complaint must be read as a whole. Paragraph 7 states that all the accused persons were in charge of and responsible for the day-to-day affairs and financial management of the Society. That is a specific averment. Moreover, the promissory notes and the MoU bear the signatures of respondent Nos. 1, 2 and 4. Those documents are part of the complaint. When the complaint is read along with these documents, the factual foundation is clear. In HDFC Bank v. State of Maharashtra, this Court held that the complaint need not mechanically reproduce the exact phraseology of Section 141. The substance is what matters.

Respondent No. 3 — the Executive Member — has not signed any document. Why should he be prosecuted?

My Lord, the petitioner does not dispute that respondent No. 3's signature does not appear on the antecedent documents. However, the complaint specifically alleges that he was an office bearer and a member of the Managing Committee entrusted with the affairs of the Society. The question of whether his position as Executive Member makes him liable under Section 141 is a disputed question of fact that can only be determined at trial after evidence is led. The trial court can examine the bye-laws of the Society to determine the role of an Executive Member. At the quashing stage, the court should not embark upon such an inquiry. The existence of the allegation is sufficient to proceed.

The cheque was signed by the President (accused No. 2), not by any of the respondents. How can they be liable for an offence under Section 138?

My Lord, Section 141 creates vicarious liability. The drawer of the cheque is the Society. The President signed on behalf of the Society. The respondents, as office bearers who were in charge of and responsible for the conduct of the Society's affairs, are vicariously liable under Section 141. They need not have signed the cheque themselves. What is required is that they were in charge of the affairs of the Society at the time the offence was committed. The complaint alleges that, and the antecedent documents show their participation in the underlying transaction. That is sufficient at the stage of taking cognisance.

The High Court relied on Ashok Shewakramani, where this Court quashed proceedings because the complaint contained only a reproduction of statutory language. Why is that case not applicable here?

My Lord, Ashok Shewakramani is distinguishable. In that case, the complaint contained only a reproduction of the statutory requirements under Section 141 without disclosing any factual nexus between the accused and the transaction. Here, the complaint is accompanied by promissory notes and an MoU that bear the signatures of respondent Nos. 1, 2 and 4. There is a clear factual nexus. This Court in S.P. Mani and Mohan Dairy specifically held that where the factual foundation for the offence has been laid, the power of quashing should be exercised sparingly. The High Court erred by applying Ashok Shewakramani without appreciating the factual distinction.

For PetitionerCriminal Premium

Specific Averments and Documents Support Vicarious Liability — (2026) INSC 542

M/s Mansi Finance (Chennai) Ltd. v. M. Lalitha — (2026) INSC 542

Core Argument

The complaint, read along with the promissory notes and Memorandum of Understanding, provides sufficient factual foundation that the respondents were in charge of and responsible for the conduct of the Society's affairs. The respondents signed antecedent financial documents, which prima facie establishes their involvement in the transaction.

Key Precedents

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89 — Held that the complaint must contain specific averments that the accused was in charge of and responsible for the conduct of the business, but such averments need not be in any particular form as long as the factual foundation is disclosed.
HDFC Bank Limited v. State of Maharashtra (2025) 9 SCC 653 — Clarified that the complaint need not mechanically reproduce the exact phraseology of Section 141 if the substance of the allegations, read as a whole, discloses the factual basis for vicarious liability.
S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan (2023) 10 SCC 685 — Held that where the factual foundation for the offence has been laid, the power of quashing should be exercised sparingly and a hyper-technical approach ought not to be adopted.

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