Specific allegations and dishonest intent are required before criminal process can proceed against directors and a company.

Directors and office-bearers cannot be summoned for criminal breach of trust, cheating, or conspiracy on vague and omnibus allegations; the complaint must plead specific facts showing their personal participation and a definite factual basis for criminal liability. The court also noted that, absent statutory vicarious liability, office alone does not justify trial. On the cheating allegation against the company, a disputed demand, accounting adjustment, or set-off of share sale proceeds did not by itself show deceptive or dishonest inducement at inception. The article therefore highlights the need for particularised allegations and a clear showing of fraudulent intent before criminal process can be sustained.

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Issues: (i) Whether the summoning order could be sustained against the directors and other office-bearers in the absence of specific factual allegations showing their personal participation in the alleged offences of criminal breach of trust, cheating and conspiracy. (ii) Whether the complaint disclosed a prima facie case of cheating against the company on the allegations of an inflated demand and adjustment of share sale proceeds towards third-party liabilities.

Issue (i): Whether the summoning order could be sustained against the directors and other office-bearers in the absence of specific factual allegations showing their personal participation in the alleged offences of criminal breach of trust, cheating and conspiracy.

Analysis: The allegations against the individual petitioners were general and omnibus. The complaint did not state who forged or procured the disputed letter, who took the decision to sell the shares, or who authorised appropriation of the sale proceeds towards the dues of group companies. The property and dominion over it were with the company, not with the individual petitioners. In the absence of statutory vicarious liability, criminal liability of directors or officers cannot be inferred merely because they hold office, and the materials did not disclose the definite factual foundation required to subject them to trial.

Conclusion: The summoning order against the individual petitioners was not sustainable and was set aside.

Issue (ii): Whether the complaint disclosed a prima facie case of cheating against the company on the allegations of an inflated demand and adjustment of share sale proceeds towards third-party liabilities.

Analysis: Cheating requires deception coupled with fraudulent or dishonest inducement. The material showed a dispute regarding the amount payable and delayed payment charges, and the company subsequently gave credit for the balance amount in the complainant's account. On these facts, an excessive claim or disputed accounting adjustment did not by itself establish fraudulent intention. The adjustment of the balance amount towards other liabilities was, at most, connected with the separate allegation of criminal breach of trust, but not a distinct case of cheating on the facts pleaded.

Conclusion: No separate prima facie offence of cheating was made out against the company on the pleaded facts.

Final Conclusion: The order summoning the individual petitioners was quashed, while the prosecution against the company was allowed to continue only on the remaining allegations and provisions for which a prima facie case survived.

Ratio Decidendi: In criminal prosecutions against a company, directors and officers cannot be summoned on the basis of vague or general allegations alone; specific facts showing their personal role are required, and cheating is not made out unless deceptive and dishonest intention is shown at the inception.

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