Trustee liability in cheque dishonour proceedings upheld where prima facie responsibility is pleaded and limitation is satisfied.

Trustees alleged to be in charge of a trust's affairs may be proceeded against for cheque dishonour under Section 138 of the Negotiable Instruments Act where the complaint contains prima facie averments of responsibility and no material is produced to displace them; the challenge on that ground failed. A complaint based on dishonoured cheques was also held to be within limitation where statutory notices were issued within time after dishonour and the complaint was filed within the prescribed period; the limitation objection failed. On both grounds, the Section 138 proceedings were treated as sustainable and the request to quash them was rejected.

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Issues: (i) whether the petitioners, as trustees alleged to be in charge of the trust, could be proceeded against for the offence under Section 138 of the Negotiable Instruments Act, 1881; (ii) whether the complaint was barred by limitation.

Issue (i): whether the petitioners, as trustees alleged to be in charge of the trust, could be proceeded against for the offence under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The complaint contained averments that the petitioners were trustees and were in charge of the trust and its day-to-day affairs. The petitioners did not produce the trust deed to show that they were merely eo-nominees. In the absence of material to displace the allegations in the complaint, there were prima facie materials to proceed against them along with the trust for the dishonour of cheques issued on its behalf.

Conclusion: The petitioners were liable to face the proceedings and the challenge on this ground failed.

Issue (ii): whether the complaint was barred by limitation.

Analysis: The cheques were dishonoured on 18.12.2009. Notices demanding payment were issued on 28.12.2009 and again on 09.01.2010, both within the statutory period after dishonour. The complaint filed on 18.02.2010 was therefore within the prescribed time.

Conclusion: The complaint was not barred by limitation.

Final Conclusion: The proceedings under Section 138 of the Negotiable Instruments Act, 1881 were found sustainable and the request to quash them was rejected.

Ratio Decidendi: Trustees alleged to be in charge of the affairs of a trust may be proceeded against for cheque dishonour where the complaint contains prima facie averments of responsibility, and a complaint instituted within the statutory time after valid notice is not barred by limitation.

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