Quashing of NI Act complaint refused where director's responsibility and alleged resignation raised disputed factual issues
In a complaint under the Negotiable Instruments Act, a specific averment that a director was in charge of and responsible for the company's business was sufficient to resist quashing at the threshold. Disputed questions concerning alleged resignation, non-signatory status, and responsibility for the transaction could not be decided in quashing jurisdiction, particularly where the alleged resignation was not shown to have been notified to the Registrar of Companies and the challenge was raised after evidence had been recorded. The petition for quashing was dismissed, and the complaint and summoning order were left to be tried on merits before the trial court, with directions to expedite the proceedings.
Issues: Whether the complaint under the Negotiable Instruments Act and the summoning order deserved to be quashed on the ground that the petitioner was not a signatory to the cheques, had allegedly resigned as director before the memorandum of understanding, and had ceased to be responsible for the company's business.
Analysis: The complaint contained a specific averment that the petitioner was a director and was in charge of and responsible for the conduct of the business and day-to-day affairs of the company. The plea of resignation was disputed and the alleged resignation was not shown to have been brought to the notice of the Registrar of Companies. The challenge was raised at a belated stage after the complainant had concluded evidence and the case was fixed for statements of the accused. In such circumstances, the Court held that the disputed questions as to the petitioner's role, resignation, and responsibility for the transaction could not be decided in quashing jurisdiction and had to be examined by the trial Court on the basis of evidence.
Conclusion: The petition for quashing was not maintainable on the facts and was dismissed.
Final Conclusion: The complaint and the summoning order were left to be tried on their merits before the trial Court, and the proceedings were directed to be expedited.
Ratio Decidendi: In a complaint under Section 138 of the Negotiable Instruments Act, 1881, where the complaint specifically alleges that a director was in charge of and responsible for the company's business, disputed questions about resignation and participation in the transaction cannot ordinarily be resolved in quashing proceedings, especially when the challenge is raised at a belated stage after evidence has been recorded.
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