Petition allowed; impugned order set aside: s.141 NI Act averments satisfied prima facie, director liability for trial

HC allowed the petition and set aside the impugned order. The court held that while the N.I. Act requires strict pleading of s.141 averments, the balance sheets signed by the director and the complaint's allegations prima facie satisfy s.141. The question of the director's actual role and liability is a matter for trial and must be determined after evidence is led; there was no basis at this nascent stage to conclusively quash proceedings.

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Issues:
1. Challenge to order setting aside summoning by Revisional Court.
2. Liability of a Director under Section 138 N.I. Act.
3. Averments in the complaint against a Director for summoning.

Analysis:
1. The petitioner challenged the order setting aside summoning by the Revisional Court, arguing that respondent No. 2, a Director of the accused company, was rightly summoned by the Trial Court. The complaint alleged that respondent No. 2 was responsible for the day-to-day affairs of the company, supported by balance sheets signed by her. The Revisional Court contended that specific averments were lacking regarding respondent No. 2's role in the company's financial affairs and the transaction in question.

2. The Court referred to legal precedents emphasizing the requirement for a Director to be in charge and responsible for the company's business to be held liable under Section 138 N.I. Act. It highlighted that the complaint must contain material enabling the Magistrate to issue process. The judgment cited cases like S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Gunmala Sales Private Limited v. Anu Mehta to establish the necessity of averments linking the Director to the company's affairs at the time of the alleged offence.

3. The Court analyzed the averments in the complaint against respondent No. 2, noting that basic averments indicating her responsibility for the company's day-to-day affairs were present. It observed that no material had been provided to refute her involvement, and her status as a Director was undisputed. The Court concluded that the case was at a nascent stage, and the requirements of Section 141 N.I. Act were prima facie satisfied, warranting trial to determine the extent of respondent No. 2's role in the company.

4. Ultimately, the Court found no grounds to quash the summoning order against respondent No. 2, upholding the Trial Court's decision. The impugned order by the Revisional Court was deemed flawed, and the Trial Court was directed to proceed against respondent No. 2 in accordance with the law. The judgment emphasized the importance of strict construction of the N.I. Act and the need for averments satisfying the statutory requirements for holding a Director liable under the Act.

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