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Director Can’t Be Prosecuted U/S 138 Of Negotiable Instruments Act If Company Is Not Arraigned As Accused: Chhattisgarh HC

[29 March 2022] The Chhattisgarh High Court held that a director could not be prosecuted under Section 138 of the Negotiable Instruments Act without the company being arraigned as an accused.
Justice Gautam Bhaduri allowed the petition to quash the impugned orders and noted that only directors of the company are made the accused without making specific averments about the role played by them, and leaving the company out of the proceedings.
The Court noted that where only directors of the company are made the accused, leaving the company, the complaint under section 138 of Negotiable Instruments Act would not lie. It referred to the case of Hindustan Unilever Ltd. v. State of Madhya Pradesh (2020) 10 SCC 751, where the Court held the person in charge of and responsible to the company for the conduct of business would be guilty of the offence.

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