Cheque dishonour complaints: disputed notice service, resignation claims, and external restraint orders are matters for trial, not quashing.

In a prosecution under Sections 138 and 141 of the Negotiable Instruments Act, disputed issues about the mode or service of demand notice, the effect of RBI directions or a winding-up stay, and the directors' resignation were held to be matters for trial, not grounds for quashing. The Court found that notice need not be served only in one prescribed manner, that external restraint orders did not create immunity from prosecution, and that the complaint's averments that the petitioners were in charge of day-to-day business and had signed the cheque were sufficient to proceed. The defence based on Form 32 and resignation could not be accepted at the Section 482 stage.

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Issues: (i) whether alleged non-service of demand notice in the manner urged by the petitioners could justify quashing of the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881; (ii) whether the restraint order of the Reserve Bank of India and the stay order in winding-up proceedings barred prosecution of the company and its directors; (iii) whether the complaint contained sufficient averments to attract vicarious liability of the directors and whether the defence based on resignation and Form 32 could be considered at the quashing stage.

Issue (i): whether alleged non-service of demand notice in the manner urged by the petitioners could justify quashing of the complaint under Sections 138 and 141 of the Negotiable Instruments Act, 1881.

Analysis: The statutory scheme was read to mean that notice of dishonour is not restricted to one mode alone, and that service of notice is a matter of fact to be established in trial. The Court treated the question whether notice was served by registered post, by hand, or by courier as one that could not be conclusively determined at the threshold on the complaint alone. The complaint could not be rejected merely because the petitioners disputed the mode of service.

Conclusion: The alleged defect in service of notice did not warrant quashing of the complaint.

Issue (ii): whether the restraint order of the Reserve Bank of India and the stay order in winding-up proceedings barred prosecution of the company and its directors.

Analysis: The Court held that the Reserve Bank of India directions relied upon by the petitioners did not create a legal bar to a prosecution under Section 138 of the Negotiable Instruments Act, 1881. The stay granted by the Delhi High Court was understood as relating to the company proceedings and not as a complete immunity for the directors. The plea that these external orders defeated the complaint was treated as a defence to be examined on evidence, not as a ground for quashing.

Conclusion: Neither the Reserve Bank of India order nor the winding-up stay barred the criminal proceeding.

Issue (iii): whether the complaint contained sufficient averments to attract vicarious liability of the directors and whether the defence based on resignation and Form 32 could be considered at the quashing stage.

Analysis: The complaint specifically stated that the petitioners were in charge of the day-to-day business and that one of them had signed the cheque. Those averments were held sufficient at the initial stage to proceed under Section 141 of the Negotiable Instruments Act, 1881. The plea of resignation and the supporting documents were treated as matters of defence requiring proof at trial, and the Court declined to examine them in proceedings under Section 482 of the Code of Criminal Procedure, 1973.

Conclusion: The complaint disclosed sufficient material against the petitioners, and the defence raised could not be accepted for quashing.

Final Conclusion: The revisional challenge failed because no ground for interference under the inherent jurisdiction was made out, though limited procedural indulgence was granted regarding appearance before the trial court.

Ratio Decidendi: In a prosecution under Sections 138 and 141 of the Negotiable Instruments Act, 1881, disputed questions regarding service of notice, external restraint orders, and the role or resignation of directors are ordinarily matters for trial, and a complaint containing substantive averments of responsibility and participation cannot be quashed at the threshold.

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