Cheque dishonour complaints survive threshold challenges where director liability, Section 202 compliance, and return memo discrepancies do not negate prosecution.

A complaint under Section 138 of the Negotiable Instruments Act is not defeated at the threshold merely because one director resigned before cheque presentation, where the cheques were issued during his tenure and the complaint contains prima facie averments of participation and day-to-day control under Section 141. Non-compliance with Section 202 of the Code of Criminal Procedure is not, by itself, a ground to quash where the dispute arises from known commercial dealings and the complaint is otherwise within jurisdiction. A return memo describing the cheque as "account closed" instead of "account frozen" also does not warrant quashing when the cheques were timely presented, no notice reply was sent, and the underlying dishonour remains established.

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Issues: (i) Whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed on the ground that one of the accused had resigned before presentation of the cheques and on the ground of absence of role-specific averments against the directors; (ii) Whether non-compliance with Section 202 of the Code of Criminal Procedure, 1973 before issuance of process vitiated the complaint; (iii) Whether the complaint could be quashed because the cheque return memo stated "account closed" although the account had been frozen by the department.

Issue (i): Whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed on the ground that one of the accused had resigned before presentation of the cheques and on the ground of absence of role-specific averments against the directors.

Analysis: The cheques were issued by the accused when the concerned director was in office, and the defence that resignation preceded presentation did not by itself defeat liability at the threshold. The complaint also contained averments that the directors had signed the cheques and were involved in the day-to-day affairs of the company, which was sufficient to disclose a prima facie case for prosecution under Section 141 of the Negotiable Instruments Act, 1881.

Conclusion: The challenge on this ground was rejected and the prosecution was held maintainable against the directors and the company.

Issue (ii): Whether non-compliance with Section 202 of the Code of Criminal Procedure, 1973 before issuance of process vitiated the complaint.

Analysis: Though the accused were residing outside the territorial jurisdiction of the Magistrate, the dispute arose from commercial dealings between known parties and the complaint was presented before the court having jurisdiction as contemplated in cheque-dishonour matters. In these circumstances, the absence of a separate inquiry under Section 202 of the Code of Criminal Procedure, 1973 was not treated as a ground to quash the proceedings.

Conclusion: The complaint was not liable to be quashed for want of inquiry under Section 202 of the Code of Criminal Procedure, 1973.

Issue (iii): Whether the complaint could be quashed because the cheque return memo stated "account closed" although the account had been frozen by the department.

Analysis: The cheques were presented within the permissible period, the accused had not informed the complainant about the freezing of the account, and no reply was sent to the statutory notice. The discrepancy in the return reason did not justify quashing when the factual circumstances still disclosed dishonour of the cheques and liability under Section 138 of the Negotiable Instruments Act, 1881.

Conclusion: The discrepancy in the return memo did not warrant interference and the proceedings were allowed to continue.

Final Conclusion: The petition for quashing failed on all substantial grounds, and the criminal prosecution under the cheque-dishonour provisions was permitted to proceed.

Ratio Decidendi: A complaint under Section 138 of the Negotiable Instruments Act, 1881 will not be quashed at the threshold where the complaint contains prima facie averments of responsibility of the directors, and procedural objections under Section 202 of the Code of Criminal Procedure, 1973 or discrepancies in the return memo do not, by themselves, negate the prosecution when the underlying transaction and dishonour are otherwise established.

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