Mansi Finance Appeal Restores Rs 4.5 cr Charges

Case Name: Mansi Finance (Chennai) Ltd. vs. M. Lalitha and Others
Court/Authority: Supreme Court of India, Criminal Appellate Jurisdiction
Appeal No.: Criminal Appeal No. 2849 of 2026 (arising out of S.L.P. (Criminal) No. 13907 of 2024)
Date of Judgment: 26 May 2026
Period of Dispute: Loan advanced between 02‑07‑2018 and 27‑07‑2018; cheque dated 18‑11‑2019 dishonoured on 19‑11‑2019; statutory demand issued on 12‑12‑2019 (served 16‑12‑2019).

Appellant: Mansi Finance (Chennai) Ltd., a finance company operating in Chennai.
Manager and Power of Attorney holder: A. Ramesh (appears in the complaint).
Respondents (Accused): Office‑bearers of Ravindra Bharathi Educational Society (registered under the Societies Registration Act, 1860)

1. M. Lalitha – Vice‑President (Respondent No. 1)

2. M. Rekah – Treasurer (Respondent No. 2)

3. R. Babu Rao – Executive Member (Respondent No. 3)

4. R. Murugan – Manager (Respondent No. 4)

M. Subramaniam – President of the Society and signatory to the disputed cheque (also a respondent in the underlying criminal complaint).
Lower Courts: IV FTC Metropolitan Magistrate, George Town, Chennai (S.T.C. No. 1980 of 2023); High Court of Judicature at Madras (Criminal Original Petition No. 10494 of 2024).

The appellant alleged that the Society borrowed Rs 4,50,00,000 (₹4.5 cr) for development purposes, documented by promissory notes and a Memorandum of Understanding dated 31‑07‑2018, bearing interest at 30 % per annum payable on demand.
To discharge the debt, the Society issued a cheque No. 003109 dated 18‑11‑2019 for Rs 5,12,61,500, signed by President M. Subramaniam.
The cheque was dishonoured and returned unpaid on 19‑11‑2019 with the endorsement “Account Blocked”.
The appellant served a statutory demand on 12‑12‑2019 (served 16‑12‑2019) demanding payment; no response was received.
A private complaint was filed under Sections 138 and 141 of the Negotiable Instruments Act, 1881 before the Metropolitan Magistrate (S.T.C. No. 1980 of 2023).
The complaint alleged that respondents 1‑4, as office‑bearers, were in charge of and responsible for the Society’s affairs, and that they knowingly issued the cheque despite the blocked account, constituting a mala fide act.
Respondents 1‑4 sought quashing of the criminal proceedings under Section 482 of the Code of Criminal Procedure, contending lack of specific averments linking them to the offence.

The Supreme Court examined the scope of Section 141 of the NI Act, which extends criminal liability to persons in charge of and responsible for the conduct of the business of a company or society at the time of the offence.
The Court reiterated precedents (S.P. Mani & Mohan Dairy, Ashok Shewakramani, S.M.S. Pharmaceuticals Ltd., National Small Industries Corp. Ltd.) emphasizing that specific factual averments are essential; mere designation as an office‑bearer is insufficient.
The Court found that respondents 1 (M. Lalitha), 2 (M. Rekah) and 4 (R. Murugan) had prima facie participation:
Their signatures appear on the MoU (respondent 1) and on the cheque (respondent 2).
Promissory notes and related payment documents bear their signatures, linking them to the underlying loan transaction.
For respondent 3 (R. Babu Rao), the complaint contained only a generic assertion of his office‑bearer status with no specific document or allegation tying him to the loan or cheque; therefore, the High Court’s quashing of proceedings against him was upheld.
The Court held that at the quashing stage, the trial court does not need to assess the truth of the allegations, only whether the complaint provides foundational factual material sufficient to proceed.

No monetary penalty was imposed at this appellate stage.
The Supreme Court set aside the High Court’s order as to respondents 1, 2 and 4, thereby restoring the criminal complaint (S.T.C. No. 1980 of 2023) against them.
The quashing of proceedings against respondent 3 was upheld.

The restored complaint will continue before the IV FTC Metropolitan Magistrate, George Town, Chennai.
All parties are free to raise further contentions and evidence at the trial stage.
No specific compliance measures or audits were ordered; the focus remains on the criminal prosecution of the three respondents.

Appeal partially allowed:
The High Court order dated 28‑06‑2024 is set aside for respondents 1, 2 and 4.
The quashing of proceedings against respondent 3 is upheld.
Consequently, the criminal complaint in S.T.C. No. 1980 of 2023 stands restored against respondents 1, 2 and 4.
The judgment is confined to the issue of quashing and does not adjudicate the merits of the underlying allegations.
The matter will proceed to trial, where the substantive liability of the respondents will be determined.

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Judgment delivered by Justice Prashant Kumar Mishra and Justice N.V. Anjaria, New Delhi, 26 May 2026.