Prima facie vicarious liability under cheque dishonour law sustained on specific averments of responsibility for company conduct.

Specific averments that company officers were in charge of and responsible for the day-to-day conduct of the business were sufficient to disclose a prima facie case of vicarious liability under Section 138 of the Negotiable Instruments Act, 1881. The complaint also pleaded issuance and timely presentation of the cheque, its dishonour with the remark "refer to drawer", service of notice, and failure to pay within the statutory period. On those allegations, it was premature to hold that no offence was made out, and the defence could be examined only at trial. The complaint was therefore maintainable and the proceedings were permitted to continue.

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Issues: Whether the complaint disclosed a prima facie case under Section 138 of the Negotiable Instruments Act, 1881 against the company officers and whether the proceedings were liable to be dropped on the ground of maintainability.

Analysis: For deciding a challenge to the continuation of criminal proceedings, the allegations in the complaint are the material to be seen at the threshold. The complaint specifically averred that all the accused were in charge of and responsible for the day-to-day conduct of the business of the company, which was sufficient to disclose prima facie vicarious liability at the stage of taking cognizance. The complaint further stated that the cheque was issued, presented within time, returned unpaid with the remark "refer to drawer", notice was served, and payment was not made within the statutory period. On these averments, the court held that it would be premature to conclude that no offence under Section 138 had been made out, and that such questions could be gone into only at trial.

Conclusion: The complaint was held maintainable, and the proceedings were allowed to continue against the accused.

Final Conclusion: The challenge to the order refusing to drop the proceeding failed, and the Magistrate's decision to proceed with the case was affirmed.

Ratio Decidendi: At the stage of quashing or dropping proceedings under Section 138 of the Negotiable Instruments Act, 1881, a specific averment in the complaint that the accused were in charge of and responsible for the day-to-day conduct of the business of the company is sufficient to make out a prima facie case, and the truth of the defence must ordinarily await trial.

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