Vicarious liability under the Negotiable Instruments Act fails against a former director who resigned before cheque issuance.

Criminal liability under the Negotiable Instruments Act depends on specific averments that a director was in charge of and responsible for the company's business when the cheque was issued. Where the record showed that the accused had resigned before issuance of the cheques, the resignation had been accepted, and he was not a signatory to the cheques, the basis for vicarious liability was absent. The Punjab and Haryana High Court held that continuation of the complaint and the summoning order against such a former director would amount to misuse of process, and the complaint, summoning order, and subsequent proceedings were liable to be quashed qua him.

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Issues: Whether criminal proceedings under the Negotiable Instruments Act could be quashed against a former director who had resigned before the cheques were issued and was not a signatory to the cheques.

Analysis: Liability of a director in a prosecution under Sections 138 and 141 of the Negotiable Instruments Act depends on the existence of specific averments showing that the person was in charge of and responsible for the conduct of the business of the company at the relevant time. Where the record shows that the accused had resigned before issuance of the cheques, the resignation had been accepted, and the accused was not a signatory to the cheques, the foundation for fastening vicarious liability is absent. In such circumstances, continuation of the complaint and the summoning order would amount to misuse of the criminal process.

Conclusion: The complaint, summoning order, and subsequent proceedings were liable to be quashed qua the petitioner.

Final Conclusion: The prosecution could not proceed against the petitioner in his capacity as a former director, since the requisites for vicarious liability were not made out on the admitted facts.

Ratio Decidendi: A former director who had resigned before the issuance of the cheque and whose resignation stood accepted cannot be prosecuted under Sections 138 and 141 of the Negotiable Instruments Act in the absence of specific averments establishing responsibility for the company's business at the relevant time.

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