Director liability under the Negotiable Instruments Act requires specific averments of control and responsibility, not mere designation.

For prosecution of company directors under sections 138 and 141 of the Negotiable Instruments Act, the complaint must contain specific and unambiguous averments that each accused was in charge of and responsible for the conduct of the company's business at the relevant time; a bare reference to directorship or general responsibility is insufficient. The Supreme Court also noted that a complainant bank could not sustain the prosecution merely by describing itself as a holder in due course where the pleaded facts did not establish an independent basis for liability. The complaint was therefore held not maintainable against the directors, and the quashing of proceedings was affirmed.

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Issues: (i) Whether a complaint under sections 138 and 141 of the Negotiable Instruments Act, 1881 could be sustained against directors in the absence of specific averments that they were in charge of and responsible for the conduct of the company's business; (ii) whether the complainant bank could proceed on the footing that it was a holder in due course of the dishonoured cheques.

Issue (i): Whether a complaint under sections 138 and 141 of the Negotiable Instruments Act, 1881 could be sustained against directors in the absence of specific averments that they were in charge of and responsible for the conduct of the company's business.

Analysis: Liability of a director for an offence committed by a company is not automatic. For prosecution under section 141, the complaint must contain a clear and specific averment that, at the relevant time, the accused was in charge of and responsible for the conduct of the company's business. Mere description of a person as a director, or a general assertion of responsibility, is insufficient. The principles stated in the earlier decisions on director liability were applied to hold that the complaint did not disclose the necessary foundational facts against the respondents.

Conclusion: The complaint was not maintainable against the directors for want of specific averments and the quashing of the proceedings was justified.

Issue (ii): Whether the complainant bank could proceed on the footing that it was a holder in due course of the dishonoured cheques.

Analysis: The cheques had been issued by the third company and were merely presented by the respondent company for collection. On the facts pleaded, the bank's attempt to fasten liability by characterising itself as a holder in due course did not establish a separate basis to sustain the prosecution. The contention did not cure the absence of a valid complaint against the directors.

Conclusion: The holder-in-due-course contention was rejected.

Final Conclusion: The proceedings against the respondents were liable to fail, and the order quashing the complaint and discharging the accused stood affirmed.

Ratio Decidendi: For prosecution of directors under section 141 of the Negotiable Instruments Act, 1881, the complaint must contain specific and unambiguous averments showing that they were in charge of and responsible for the company's business at the time of the offence; a bare statement of directorship or responsibility is insufficient.

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