Cheque dishonour prosecutions require specific averments for director liability; single complaint upheld after statutory notice default.

For prosecution of company officers in cheque dishonour cases, vicarious liability under Section 141 of the Negotiable Instruments Act arises only where the complaint specifically alleges that each accused was in charge of and responsible for the company's business at the time of the offence; in the absence of such averments, cognizance against directors other than the chairman and managing director is quashed. A single complaint for multiple dishonoured cheques is not barred by Section 219 CrPC where the operative cause of action under Section 138 matures on failure to pay within the statutory notice period under Section 138(b). An objection based on the complainant's advocate allegedly participating in the sworn statement was rejected for lack of supporting material.

---

---

Issues: (i) Whether the complaint and cognizance against the directors, other than the managing director, were sustainable in the absence of specific averments showing that they were in charge of and responsible for the conduct of the company's business; (ii) Whether Section 219 of the Code of Criminal Procedure, 1973 barred a single complaint in respect of multiple dishonoured cheques where the cause of action arose on failure to comply with the statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881; (iii) Whether the alleged participation of the complainant's advocate in the recording of the sworn statement vitiated the proceedings.

Issue (i): Whether the complaint and cognizance against the directors, other than the managing director, were sustainable in the absence of specific averments showing that they were in charge of and responsible for the conduct of the company's business.

Analysis: For prosecution of a company and its officers under Section 141 of the Negotiable Instruments Act, 1881, the complaint must contain clear averments that each person sought to be proceeded against was, at the time of the offence, in charge of and responsible to the company for the conduct of its business. In the absence of such allegations in the complaint and sworn statement, vicarious liability cannot be fastened on the directors merely by virtue of their office. The cheque transactions were shown to have been signed by the chairman and managing director.

Conclusion: The cognizance taken against the directors other than the chairman and managing director was quashed.

Issue (ii): Whether Section 219 of the Code of Criminal Procedure, 1973 barred a single complaint in respect of multiple dishonoured cheques where the cause of action arose on failure to comply with the statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881.

Analysis: The operative cause of action for prosecution under Section 138 of the Negotiable Instruments Act, 1881 arises on failure to make payment within the period stipulated in the statutory notice under Section 138(b), and not merely upon dishonour of the cheques. On that basis, a single complaint covering the cheques was not hit by Section 219 of the Code of Criminal Procedure, 1973.

Conclusion: The objection based on Section 219 of the Code of Criminal Procedure, 1973 was rejected.

Issue (iii): Whether the alleged participation of the complainant's advocate in the recording of the sworn statement vitiated the proceedings.

Analysis: No material was placed on record to show that the advocate had actually participated in the recording of the sworn statement in a manner that would invalidate the proceedings.

Conclusion: The objection was rejected.

Final Conclusion: The proceedings were sustained against the chairman and managing director, but quashed against the other directors for want of necessary averments under the company liability provision.

Ratio Decidendi: In a prosecution against company officers for dishonour of cheque, vicarious liability under Section 141 arises only when the complaint specifically alleges that the accused was in charge of and responsible for the company's business, and the cause of action under Section 138 matures upon non-payment after statutory notice.

---