Cheque dishonour liability under the NI Act depends on the drawer and proven control over the company at the relevant time.

Section 138 liability attaches to the drawer of the cheque, and vicarious liability under Section 141 arises only when the drawer is a company or other juristic entity and the complaint shows that the accused was in charge of and responsible for its business at the relevant time. Where dishonoured cheques were drawn from a director's personal account in his individual capacity, the statutory basis to prosecute another director was absent. A director who had resigned before the cheques were issued or dishonoured could not be proceeded against without material showing control over the company at the relevant time. Mere status as director or issuance of cheques as security was insufficient.

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Issues: (i) Whether proceedings under Section 138 of the Negotiable Instruments Act could be sustained against a director when the dishonoured cheques were drawn and signed by another director in his individual capacity from his own account; (ii) Whether a resigned director could be proceeded against under Sections 138 and 141 of the Negotiable Instruments Act for cheques issued after his resignation.

Issue (i): Whether proceedings under Section 138 of the Negotiable Instruments Act could be sustained against a director when the dishonoured cheques were drawn and signed by another director in his individual capacity from his own account.

Analysis: Section 138 fastens criminal liability on the person who draws a cheque on an account maintained by him and whose cheque is returned unpaid. Section 141 extends liability to other persons only where the drawer is a company or other juristic entity and the complaint contains the necessary averments showing that the accused was in charge of and responsible for the conduct of the business at the relevant time. Where the company is not the drawer and the cheques are issued by an individual director from his personal account, the statutory basis for vicarious criminal liability is absent. Mere status as a director or the sending of cheques as security does not, by itself, create criminal liability under the penal provision.

Conclusion: The complaint could not be sustained against the petitioner on this basis, and the summoning order was liable to be quashed.

Issue (ii): Whether a resigned director could be proceeded against under Sections 138 and 141 of the Negotiable Instruments Act for cheques issued after his resignation.

Analysis: A director's resignation takes effect from the date it is tendered and acted upon, and liability under Section 141 depends on the accused being in charge of and responsible for the company at the time of the offence. Where the record showed resignation before the cheques were issued and dishonoured, and no material established control over the company's affairs at the relevant time, the necessary foundation for vicarious liability was lacking. In such circumstances, continuation of criminal proceedings against the resigned director was unwarranted.

Conclusion: The resigned directors could not be proceeded against for the alleged offence, and the summoning orders against them were liable to be quashed.

Final Conclusion: The petitions succeeded because the statutory conditions for fastening criminal liability on the petitioners were not met, either for want of the company being the drawer or because the concerned directors had already ceased to hold office before the relevant transactions.

Ratio Decidendi: Liability under Section 138 attaches to the drawer of the cheque, and vicarious liability under Section 141 arises only when the company is the drawer and the complaint specifically shows that the accused was in charge of and responsible for its business at the relevant time.

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