Cheque dishonour based on signature defects was held insufficient to sustain Section 138 prosecution against directors.

Cheque-return endorsements such as "no image found" and "drawer's signature incomplete/illegible" were treated as insufficient to satisfy the statutory ingredients of Section 138 of the Negotiable Instruments Act, because the dishonour was not for insufficiency of funds. On that basis, the complaints were not maintainable on the stated dishonour grounds, and the same reasoning was applied to quash the proceedings against the petitioners, including non-signatory directors.

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Issues: Whether complaints under Section 138 of the Negotiable Instruments Act were maintainable when the cheques were returned with endorsements such as "no image found" and "drawer's signature incomplete / illegible", and whether the complaints could be quashed qua the non-signatory directors.

Analysis: The dishonour endorsements were treated as falling within the same principle already applied in the earlier quashing of complaints against the cheque signatory, namely that such endorsements do not satisfy the statutory ingredients required to sustain a prosecution under Section 138. Since the cheques were not dishonoured for insufficiency of funds but for signature-related defects, the criminal complaints could not be maintained on that footing. The Court also accepted that the same reasoning extended to the present petitioners, and therefore the proceedings deserved to be quashed as against them.

Conclusion: The complaints were held not maintainable on the stated dishonour endorsements, and the proceedings were quashed qua the petitioners.

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