Vicarious liability in cheque-dishonour cases requires a clear averment that the director was responsible for company business.

A former director cannot be proceeded against for a company's cheque-dishonour offence unless the complaint specifically alleges that, at the time of the offence, he was in charge of and responsible for the company's business. Mere designation as a director is insufficient to attract vicarious liability under the Negotiable Instruments Act. Where the complaint lacks that foundational averment and the material indicates the person had ceased to be a director before the cheque was issued, continuation of prosecution constitutes abuse of process and the High Court may exercise inherent powers to quash the proceedings. The case was held unsustainable against the former director, while the prosecution could continue against the remaining accused.

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Issues: Whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed against a former director in the absence of an averment that he was in charge of and responsible for the conduct of the company's business at the time of the offence.

Analysis: Liability of a director under Section 141(1) of the Negotiable Instruments Act, 1881 arises only if the complaint contains the necessary averment that, when the offence was committed, the person was in charge of and responsible to the company for its business. Mere designation as a director is insufficient. The petitioner produced material showing that he had ceased to be a director before the cheque was issued, and the complaint did not contain the foundational allegation required to attract vicarious liability. In such circumstances, continuation of prosecution would amount to abuse of process and the inherent power under Section 482 of the Code of Criminal Procedure, 1973 could be exercised to secure the ends of justice.

Conclusion: The proceedings against the petitioner were liable to be quashed for want of the necessary averment and supporting material to fasten liability under Section 141(1) of the Negotiable Instruments Act, 1881.

Final Conclusion: Prosecution was held unsustainable against the former director, while the case was left to proceed against the remaining accused in accordance with law.

Ratio Decidendi: A director cannot be proceeded against for an offence by the company under Section 138 unless the complaint specifically alleges, and the material prima facie shows, that he was in charge of and responsible for the company's business at the relevant time.

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