Director liability under the Negotiable Instruments Act survives quashing challenge where specific averments and company notice are present.

Specific averments that a director was in charge of the company's day-to-day affairs, involved in financial decision-making, and had agreed to guarantee repayment were treated as sufficient to make out a prima facie case under Section 141 of the Negotiable Instruments Act, 1881, so the criminal complaints could not be quashed at the threshold. The defence that the cheques were issued only as security was held to be a matter for trial. The objection that a separate demand notice had not been served on the director was rejected because individual notice is not required where the company has already received notice. The complaints were therefore allowed to proceed.

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Issues: Whether the criminal complaints under Sections 138 and 141 of the Negotiable Instruments Act, 1881 deserved to be quashed against the petitioner, including on the grounds of absence of specific averments under Section 141, non-service of individual demand notice, and the plea that the cheques were issued only as security.

Analysis: The complaints contained specific assertions that the petitioner, as a director, was in charge of and responsible for the day-to-day affairs of the company, was involved in financial decision-making, and had agreed to guarantee repayment under the factoring arrangement. Such averments were held sufficient to make out a prima facie case under Section 141 of the Negotiable Instruments Act, 1881, and the petitioner's reliance on decisions dealing with non-executive or unconnected directors was found inapplicable on the facts. The plea that the cheques were security cheques was treated as a defence to be examined at trial, not a ground for quashing at the threshold. The contention regarding individual demand notice to the director was rejected in view of the legal position that such separate notice is not required where the company has received notice.

Conclusion: The petitions for quashing were not maintainable on the facts and the complaints were allowed to proceed against the petitioner.

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