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of <h1>Court quashes cognizance order against company Director in cheque dishonour case.</h1> The court quashed the order of cognizance against the petitioner, a Director of the accused-company, in a case involving dishonour of cheques. The court ... Dishonor of Cheque - vicarious criminal liability of a Director or other Officer of a Company - Section 141 of the N.I. Act - HELD THAT:- In the present complaint filed before the learned S.D.J.M. and in the affidavit evidence-in-chief as per Section 145 of the N.I. Act by the complainant, it is clearly averred that accused No. 2 (Managing Director) of the accused company has the absolute controller the business of the Company and he is responsible for the day-today activities. In respect of the petitioner, it is simply averred that she is the Director of the accused-company and, therefore, all the accused persons are jointly liable for the offence. There is no averment whether the petitioner was a Director of the accused-company on the date of issuance of the cheques in question, which were admittedly signed by accused No. 2, the Managing Director. There is no other specific allegation against the petitioner. The question whether the accused-company committed the offence is quite distinct from the question whether the complaint against the company is maintainable or not. The questions need not be gone into in the present proceeding which has been initiated by the petitioner, a Director of the accused-company - Application disposed off. Issues Involved:Challenge to order taking cognizance of offence under Section 138 of N.I. Act against petitioner, vicarious liability of director under Section 141, maintainability of complaint against company, and quashing of order of cognizance.Detailed Analysis:Issue 1: Challenge to Order Taking Cognizance:The petitioner challenged the order taking cognizance of the offence under Section 138 of the N.I. Act against her. The complaint was filed against the petitioner and others for dishonour of cheques issued by the accused-company. The complaint was initially filed in a different court but was later transferred due to a legislative amendment. The petitioner argued that she cannot be vicariously liable as a Director without specific averments in the complaint petition regarding her role at the time of cheque issuance.Issue 2: Vicarious Liability of Director under Section 141:The complainant contended that the accused-company had committed the offence, making the petitioner vicariously liable as a Director under Section 141 of the N.I. Act. The complainant asserted that the person filing the complaint on behalf of the company was authorized by the Chief Officer with power of attorney to institute criminal proceedings. The judgment referenced the Supreme Court's interpretation of Section 141, emphasizing the conditions for extending liability to officers of a company, including strict compliance and necessary averments in the complaint.Issue 3: Maintainability of Complaint Against Company:The judgment highlighted the distinction between establishing the offence by the accused-company and the maintainability of the complaint against the company. It was noted that the present proceeding focused on the petitioner, a Director of the accused-company, and did not delve into the question of whether the company had committed the offence. The analysis emphasized the importance of specific averments and strict observance of provisions in cases involving penal liability.Issue 4: Quashing of Order of Cognizance:Based on the analysis of the complaint petition and relevant legal precedents, the judgment quashed the order of cognizance in relation to the petitioner, holding that the petitioner, as a Director, would not be vicariously liable for the offence allegedly committed by the accused-company. The Criminal Miscellaneous Case was disposed of, and the Lower Court Record was directed to be sent back to the concerned court promptly.This detailed analysis of the judgment addresses the legal issues raised, the arguments presented by both parties, and the application of relevant legal principles in determining the vicarious liability of a Director under Section 141 of the N.I. Act.
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