Court upholds vicarious liability of directors under Section 141 in dismissal of petitions challenging process issuance. Inconsistencies noted.

The court dismissed the petitions challenging the process issuance under Section 138 of the Negotiable Instruments Act. It upheld the vicarious liability of directors under Section 141, finding the complaints sufficient to establish a prima facie case. The court noted inconsistencies in the claimed resignations and emphasized that such defenses should be addressed during trial, not at the preliminary stage. The petitions were deemed lacking in merit, and the court upheld the trial court's decision, allowing the proceedings to continue without being quashed.

---

---

Issues Involved:
1. Invocation of Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973.
2. Issuance of process under Section 138 of the Negotiable Instruments Act.
3. Vicarious liability of Directors under Section 141 of the Negotiable Instruments Act.
4. Validity of resignation and involvement in day-to-day affairs of the company.

Issue-wise Detailed Analysis:

1. Invocation of Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973:
The petitioners invoked Article 227 of the Constitution and inherent powers under Section 482 of the CrPC to challenge the order issuing process and the proceedings initiated for the offence under Section 138 of the Negotiable Instruments Act. The court analyzed whether the use of these provisions was justified in the context of the complaints and the issuance of process.

2. Issuance of Process under Section 138 of the Negotiable Instruments Act:
The complaints were filed for dishonor of cheques issued by the accused company. The cheques, when presented for realization, were dishonored due to insufficient funds. Statutory notices were issued to the accused, but the payments were not made. The trial court issued process under Section 138 of the Negotiable Instruments Act. The petitioners contended that the process was issued mechanically without proper application of mind by the Magistrate.

3. Vicarious Liability of Directors under Section 141 of the Negotiable Instruments Act:
The petitioners argued that they were not in charge of or responsible for the day-to-day affairs of the company and thus could not be held vicariously liable under Section 141 of the Negotiable Instruments Act. The court examined the averments in the complaints, which stated that the accused directors were in charge of and responsible for the conduct of day-to-day affairs of the company. The court found that the complaints complied with the legal requirements to invoke Section 141, establishing a prima facie case against the petitioners.

4. Validity of Resignation and Involvement in Day-to-Day Affairs of the Company:
Petitioners claimed they had resigned from the directorship before the cheques were issued and thus should not be held liable. The court scrutinized the evidence, including Form-32 and other documents, and found inconsistencies in the dates of resignation provided by the petitioners. The court noted that the resignation and involvement in the company's affairs were factual issues that needed to be proved during the trial. The court emphasized that the defense of resignation could not be considered at this preliminary stage and must be tested during the trial.

Conclusion:
The court concluded that the petitions lacked merit and dismissed them. The court held that the complaints contained sufficient averments to invoke vicarious liability under Section 141 of the Negotiable Instruments Act and that the issues raised by the petitioners regarding their resignation and involvement in the company's affairs were matters to be addressed during the trial. The trial court's issuance of process was upheld, and the proceedings were not quashed.

---