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Issues: Whether directors of a company, against whom a complaint under section 138 of the Negotiable Instruments Act, 1881 alleges that they were in charge of and responsible for the conduct of the company's business, can be summoned without a detailed recital of their individual role, and whether their plea of resignation or lack of responsibility can be examined at the summoning stage.
Analysis: The complaint under section 138 proceeded on the basis that the company's cheque had been dishonoured and that the named directors were in charge of the company's management. The Court held that, in the context of corporate functioning, the Board of Directors is the body through which the company acts, and the internal distribution of work, delegation, or identification of a sleeping or non-working director is a matter specially within the knowledge of the directors themselves. On that premise, the burden of showing that a particular director was not responsible for the conduct of business cannot be shifted to the complainant at the threshold. The Court further held that a director's claim of resignation or non-involvement is a matter of defence to be proved before the trial court, and not a ground to quash or interfere with the summoning order. Reliance was placed on the statutory scheme of sections 138 and 141 of the Negotiable Instruments Act, 1881, the summary-trial procedure under section 251 of the Code of Criminal Procedure, 1973, the principle of facts within special knowledge under section 106 of the Indian Evidence Act, 1872, and the management powers of the Board under section 291 of the Companies Act, 1956.
Conclusion: The allegations in the complaint were sufficient to sustain summons against the directors, and their challenge to the summoning order failed.
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