Director liability under the Penal Code requires specific allegations of personal involvement; resignation before dishonour defeated prosecution.

Criminal proceedings under the Indian Penal Code against former company directors were unsustainable because they had resigned before the cheques were issued and dishonoured, and the record did not attribute any specific act to them in the acceptance of deposits, issuance of cheques, or repayment default. In the absence of a statutory basis for vicarious liability under the Penal Code, mere designation as a director was insufficient to establish criminal liability without concrete allegations of personal involvement. The proceedings against the petitioners were therefore quashed.

---

---

Issues: Whether criminal proceedings under the Indian Penal Code could be quashed against company directors who had resigned before the dishonour of the cheques and against whom no specific role in the commission of the alleged offences was disclosed.

Analysis: The petitioners were proceeded against for offences under the Indian Penal Code in connection with the company's failure to repay deposits and dishonour of cheques. The material on record showed that the petitioners had resigned as directors before the cheques were issued and dishonoured. The affidavits filed for the prosecution did not attribute any precise act to them in the acceptance of deposits, the issuance of cheques, or the default in repayment. In the absence of any statutory provision creating vicarious liability under the Indian Penal Code, mere designation as a director was held insufficient to fasten criminal liability without specific allegations showing personal involvement in the alleged offences.

Conclusion: The criminal proceedings against the petitioners were unsustainable in law and were quashed.

Ratio Decidendi: Where offences are alleged under the Indian Penal Code, a company director cannot be subjected to criminal liability merely by virtue of office held unless the statute creates vicarious liability or the complaint contains specific allegations showing personal involvement in the commission of the offence.

---