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Issues: Whether cognizance of an offence under Section 138 of the Negotiable Instruments Act could be taken against a director in the absence of specific averments showing that she was in charge of and responsible for the conduct of the company's business and had a role in the transaction.
Analysis: Section 141 creates vicarious criminal liability and therefore must be strictly construed. A complaint against a director cannot proceed merely on the assertion that she is a director or is in charge of the company; it must specifically state how and in what manner she was responsible for the conduct of the business at the relevant time. Liability is not to be presumed against all directors, and it must be pleaded as a fact that the accused was in charge of and responsible for the business of the company. In the present complaint, the cheque was signed by another director, and there were no specific allegations that the petitioner was responsible for the business of the company or had any role in the transaction.
Conclusion: Cognizance against the petitioner was unsustainable for want of the mandatory specific averments under Section 141 of the Negotiable Instruments Act, and the complaint against her was liable to be set aside.
Ratio Decidendi: A director can be proceeded against for an offence by the company under Section 141 of the Negotiable Instruments Act only when the complaint contains specific factual averments showing that she was in charge of and responsible for the conduct of the business at the relevant time, unless the case falls within a recognized exception such as a managing director or the signatory of the cheque.
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