Supreme Court Rules in Favor of Directors in Section 138 Case

The Supreme Court quashed the complaint and summoning order against accused No.2 to 7, who were directors of accused No.1, in a case involving allegations under Section 138 of the Negotiable Instruments Act 1881. The Court emphasized the necessity of specific averments against directors under Section 141 of the Act, noting the lack of such allegations in the complaint. However, the complaint and summoning order against accused No.1 were upheld due to prima facie evidence supporting the existence of the complainant company during the transaction. No costs were awarded to accused No.2 to 7.

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Issues involved: Complaint under Section 138 of Negotiable Instruments Act 1881 against company and its directors. Quashing of complaint and summoning order.

Details of the judgment:

Issue 1: Allegations against the directors of the company
- Respondent No.2 filed a complaint u/s 138 alleging non-payment of dues by accused No.1.
- Accused No.2 to 7 described as managing director and directors of accused No.1.
- Pre-summoning evidence led to summons against all accused.
- Accused No.4, 3, and 6 sought quashing of the complaint and summoning order.
- Directors' liability under Section 141 of the Negotiable Instruments Act 1881 discussed.
- Supreme Court decisions emphasized the need for specific averments against directors.
- Complaint lacked specific allegations against directors, leading to quashing of petitions by accused No.2 to 7.

Issue 2: Existence of complainant company during the transaction
- Accused No.1 issued a cheque to the complainant company.
- Dispute regarding the existence of the complainant company during the transaction.
- Prima facie evidence suggested the complainant existed during the transaction.
- Complaint and summoning order upheld against accused No.1.
- Petitions by accused No.2 to 7 quashed, no costs awarded.

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