Court quashes case against director in cheque bounce matter due to lack of evidence

The court quashed the proceedings against the petitioner, a Director of a company, under Section 138 of the Negotiable Instruments Act. The court emphasized the lack of specific allegations linking the petitioner to the offense and considered his resignation before the issuance of the dishonored cheques. Relying on previous judgments and Form-32 evidence, the court found the allegations vague and insufficient to establish vicarious liability. Stressing the importance of clear averments, the court dismissed the case against the petitioner and ordered an expedited trial for the other accused parties.

---

---

Issues:
Petition to quash proceedings under Section 138 of the Negotiable Instruments Act based on vicarious liability of a Director.

Analysis:
The petitioner, a Director of a company, sought to quash proceedings under Section 138 of the Negotiable Instruments Act. The complainant alleged that the petitioner, along with others, issued dishonored cheques. The petitioner contended that he had resigned from directorship before the cheques were issued and was not involved in day-to-day affairs. The complaint lacked specific allegations against the petitioner regarding his involvement in the offense. The respondent argued that the petitioner's resignation does not absolve him of vicarious liability. The court considered the petitioner's resignation and relevant case laws.

The court noted that the complaint only mentioned the petitioner as a Director without specific allegations of his involvement in the offense. Citing previous judgments, the court emphasized the need for clear and unambiguous allegations against a Director to establish vicarious liability. The court referred to Form-32, showing the petitioner's resignation before the cheque issuance, to determine his lack of involvement in the company's affairs during the relevant period.

Relying on Supreme Court decisions, the court highlighted the necessity of specific averments to hold a Director vicariously liable. The court found the allegations against the petitioner to be vague and insufficient, especially considering his early resignation. Consequently, the court quashed the proceedings against the petitioner, emphasizing the importance of clear allegations to establish vicarious liability. The court directed expedited trial for the remaining accused in the case.

---