Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd.

The respondent, Godfather Travels & Tours Pvt. Ltd., was an accredited commercial travel enterprise providing ticketing, reservation, and international touring packages. The appellant, Aneeta Hada, was an authorized signatory and Director of International Travels Ltd., a public limited corporate entity engaged in commercial tour operations. In discharge of accumulated commercial debt incurred by the company for bulk flight bookings, a cheque in the sum of ₹5,00,000 was issued in favor of the complainant agency, drawn on the current account of International Travels Ltd. and signed by the appellant in her official capacity as authorized director.

Upon presentation for clearance through banking channels, the cheque was returned dishonoured by the drawee bank with the written endorsement "insufficient funds". The complainant firm served a formal statutory demand notice under Section 138 proviso (b) of the Negotiable Instruments Act, 1881. Despite the expiry of the statutory 15-day cure period, payment was not tendered. Consequently, the complainant instituted a criminal complaint under Section 138 read with Section 141 of the NI Act before the Judicial Magistrate. Crucially, however, the complainant arraigned only the Director, Aneeta Hada, in her individual capacity as the sole accused, completely omitting to name, implead, or prosecute the company, International Travels Ltd.

The Judicial Magistrate took cognizance of the offence and issued criminal summons against the appellant. Aggrieved by the issuance of process, the appellant approached the High Court under Section 482 of the Code of Criminal Procedure, 1973, praying for quashing of the complaint on the foundational threshold ground that under Section 141 NI Act, criminal vicarious liability is strictly dependent upon the arraignment of the principal corporate offender, and in the absence of the company being an accused, no individual director could be prosecuted.

The High Court dismissed the quashing petition, relying upon the two-judge bench decision in Anil Hada v. Indian Acrylic Ltd. (2000) 1 SCC 1, which had held that even if the company was not prosecuted, its directors could still be prosecuted vicariously. When the matter came before a two-judge bench of the Supreme Court, the Bench observed a sharp conflict between Anil Hada and earlier rulings including State of Madras v. C.V. Parekh (1970) 3 SCC 491 and U.P. Pollution Control Board v. Modi Distillery (1987) 3 SCC 684. In order to resolve this critical question of corporate criminal liability definitively, the matter was referred to an authoritative 3-Judge Bench.

1. Arraignment of Corporate Entity as Indispensable Condition: Whether an authorized signatory or Director of a company can be prosecuted under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 without the company itself being arraigned as an accused party.
2. Nature of Corporate Criminal Vicarious Liability: Whether the commission of the offence by the company constitutes an indispensable condition precedent and sine qua non for fastening vicarious liability upon its directors, managers, and officers under Section 141.
3. Doctrine of Juristic Personhood and Attribution: Whether criminal liability can be fastened on an individual agent or officer when the principal corporate juristic person is absent from the array of parties in a criminal complaint.
4. Applicability of Legal Maxim Lex Non Cogit Ad Impossibilia: Whether the doctrine that the law does not compel the impossible can excuse the non-impleadment of a company in liquidation, winding up, or defunct status.

The 3-Judge Bench of the Supreme Court allowed the criminal appeals, set aside the judgment of the High Court, and quashed the criminal complaints instituted under Section 138 read with Section 141 of the Negotiable Instruments Act against the appellant-directors.

The Court held that in the absence of the company being arraigned as an accused, the prosecution against its directors and authorized signatories is fundamentally non-maintainable and an abuse of the process of court.

The statutory matrix governing corporate criminal liability under Section 141 NI Act and its interaction with the Code of Criminal Procedure, 1973 and Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS):

Aneeta Hada is the bedrock precedent on corporate criminal liability in India, consistently applied across multiple legal domains:

• Himanshu v. B. Shivamurthy (2019) 3 SCC 797: The Supreme Court quashed a Section 138 complaint against a Director on the sole ground that the company was not arraigned, reaffirming that the rule in Aneeta Hada admits of no exceptions.
• P. Mohanraj v. Shah Brothers ISPAT Pvt. Ltd. (2021) 6 SCC 258: A 3-Judge Bench held that while moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) stays Section 138 proceedings against the corporate debtor, the directors can still be prosecuted because the company had been duly arraigned as an accused in the complaint.
• Dilip Hariramani v. Bank of Baroda (2022 SCC OnLine SC 579): Extended Aneeta Hada to partnership firms, holding that a partner cannot be prosecuted vicariously under Section 141 unless the partnership firm is arraigned as an accused.
• Pavana Dibbur v. Directorate of Enforcement (2023 SCC OnLine SC 1586): Applied the Aneeta Hada principle to Prevention of Money Laundering Act (PMLA) prosecutions, holding that vicarious liability requires prosecution of the primary entity.