Company cheque dishonour complaints can proceed against directors on proper allegations, and process may issue without a mandatory Section 202 inquiry.

In cheque dishonour complaints against a company, directors who are not cheque signatories may still be proceeded against if the complaint contains specific allegations showing they were in charge of, and responsible for, the company's business, or acted with consent, connivance, or neglect under Section 141 of the Negotiable Instruments Act. The non-signature objection alone is insufficient where the cheque was issued on behalf of the company. The commentary also states that, in complaints under Section 138, the Magistrate is not invariably required to order an inquiry under Section 202 of the Code of Criminal Procedure merely because some accused reside outside jurisdiction; prima facie satisfaction on the complaint material may justify issuance of process.

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Issues: (i) Whether the process under Section 138 of the Negotiable Instruments Act could be issued against the directors who were not the signatories to the cheque, in the light of Section 141 of the Act. (ii) Whether the Magistrate was bound to conduct an inquiry under Section 202 of the Code of Criminal Procedure, 1973 before issuing process against accused residing outside jurisdiction in a complaint under Section 138 of the Negotiable Instruments Act.

Issue (i): Whether the process under Section 138 of the Negotiable Instruments Act could be issued against the directors who were not the signatories to the cheque, in the light of Section 141 of the Act.

Analysis: The complaint specifically alleged that the cheque was issued on behalf of the company and was signed by some directors, while the remaining directors were also connected with the affairs and business of the company. Section 141 creates liability where the offence is committed by a company and the persons concerned were in charge of and responsible for the conduct of its business, or where the offence was committed with their consent, connivance, or neglect. On the facts pleaded, the allegations were sufficient to bring the accused within the scope of company liability under the Negotiable Instruments Act. The decision concerning joint account holders who were not drawers did not apply on the facts, because the present case concerned issuance of cheque on behalf of a company by its directors.

Conclusion: The process against the petitioners was sustainable and the objection based on non-signature alone was rejected.

Issue (ii): Whether the Magistrate was bound to conduct an inquiry under Section 202 of the Code of Criminal Procedure, 1973 before issuing process against accused residing outside jurisdiction in a complaint under Section 138 of the Negotiable Instruments Act.

Analysis: The judgment examined the scope of Sections 200 and 202 of the Code of Criminal Procedure, 1973 and the conflicting views of coordinate Benches on their applicability to complaints under Section 138 of the Negotiable Instruments Act. It was held that the special scheme of Sections 143 to 147 of the Negotiable Instruments Act departs from and overrides the general procedural law to ensure expeditious disposal of cheque dishonour cases. In that framework, the Magistrate is not invariably obliged to direct a police inquiry merely because the accused reside outside jurisdiction. If the Magistrate, on verification and material on record, reaches prima facie satisfaction, process may be issued directly.

Conclusion: Non-compliance with Section 202 was not found to vitiate the issuance of process in the facts of the case.

Final Conclusion: The writ petition failed, as the order issuing process in the cheque dishonour complaint was upheld and no illegality was found in the Magistrate's approach.

Ratio Decidendi: In a prosecution based on a company cheque, directors can be proceeded against where the complaint contains sufficient allegations of their responsibility for the conduct of business, and in complaints under Section 138 of the Negotiable Instruments Act the Magistrate may issue process on prima facie satisfaction without necessarily directing an inquiry under Section 202 of the Code of Criminal Procedure, 1973.

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