Vicarious liability in cheque dishonour cases can survive quashing where managerial control and knowledge are specifically pleaded.

Allegations that a company officer was in charge of day-to-day affairs and had knowledge of the cheque issuance were sufficient at the quashing stage to sustain vicarious liability under Section 141 of the Negotiable Instruments Act. A plea that the petitioner was not concerned with the company when the cheques were issued was treated as a defence requiring evidence, not a basis for quashing under Section 482 CrPC. The court also noted that the Section 138 offence is completed only on failure to pay within the statutory period after notice, and the petitioner was the Chief Executive Officer when that stage was reached, so the complaint could proceed.

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Issues: Whether the complaints under Section 138 of the Negotiable Instruments Act, 1881 were liable to be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the ground that the petitioner was not concerned with the company when the cheques were issued and that the complaint lacked sufficient averments to fasten vicarious liability under Section 141(1) of the Negotiable Instruments Act, 1881.

Analysis: The complaint specifically stated that the petitioner was the Chief Operating Officer of the company, was in charge of and responsible for its day-to-day affairs, and that the cheques were issued with his knowledge. The Court held that such allegations were sufficient at the quashing stage, especially because the petitioner held a high managerial position and later became Chief Executive Officer. The plea that he was associated with another concern earlier was treated as a defence requiring evidence. The Court also noted that the offence under Section 138 is completed only when payment is not made within the statutory period after notice, and on the dates when the offence was completed the petitioner was holding the post of Chief Executive Officer.

Conclusion: The petitions were not fit for quashing and the complaint could proceed against the petitioner.

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