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Issues: (i) Whether a director can be summoned for an offence under Section 138 of the Negotiable Instruments Act on the basis of a bald averment that he was in charge of and responsible to the company for its business; (ii) Whether a complaint under Section 138 of the Negotiable Instruments Act filed by the complainant's husband on the basis of a mere authority letter, and not as payee or holder in due course, is maintainable.
Issue (i): Whether a director can be summoned for an offence under Section 138 of the Negotiable Instruments Act on the basis of a bald averment that he was in charge of and responsible to the company for its business.
Analysis: Vicarious liability under Section 141 of the Negotiable Instruments Act is an exception to the general rule of criminal liability and can arise only when the complaint contains clear, specific and unambiguous allegations showing that the accused was in charge of and responsible for the conduct of the company's business at the time of the offence. Mere reproduction of the statutory phrase is not enough. The pleadings must disclose the role of the accused and, in substance, show overall control of the day-to-day affairs. The petitioner was described only by a general allegation, was stated to be a part-time director, was not the signatory of the cheque, and no material was shown to indicate control of daily business.
Conclusion: The summoning of the petitioner on the basis of vicarious liability was unsustainable and liable to be quashed.
Issue (ii): Whether a complaint under Section 138 of the Negotiable Instruments Act filed by the complainant's husband on the basis of a mere authority letter, and not as payee or holder in due course, is maintainable.
Analysis: Section 142(1) requires a written complaint by the payee or holder in due course. The complaint here was filed by the complainant's husband, who was neither the payee nor the holder in due course and was not shown to be a general or special power of attorney holder. The authority letter did not amount to a valid authority conferring the status contemplated by law for instituting the prosecution under Section 138. The complaint was therefore not properly instituted.
Conclusion: The complaint was not maintainable on this ground as well.
Final Conclusion: The complaint, summoning order and consequential proceedings could not be sustained and were quashed insofar as they related to the petitioner.
Ratio Decidendi: For prosecution under Section 138 of the Negotiable Instruments Act, a complaint against a company must specifically plead the accused director's responsibility and control over the business, and institution of the complaint must be by the payee or holder in due course or by a legally valid attorney.
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