Security cheque defence and director liability under the Negotiable Instruments Act were held fit for trial, not quashing.

A criminal complaint under Section 138 of the Negotiable Instruments Act was not quashed under Section 482 CrPC because the defence that the cheques were issued only as security raised factual disputes unsuitable for summary determination at the quash stage. The complaint also contained specific averments that the directors participated in negotiations, monitored the work and were involved in issuing the cheques towards the liability, satisfying the threshold for proceeding under Section 141. The Court reiterated that vicarious liability requires specific pleadings, but a Managing Director or cheque signatory can be proceeded against where the complaint discloses a prima facie case. The accused were therefore required to face trial.

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Issues: Whether the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the plea that the cheques were issued only as security, and whether the complaint contained sufficient averments to proceed against the company directors under Section 141 of the Negotiable Instruments Act, 1881.

Analysis: The complaint contained specific allegations that the directors participated in the negotiations, monitored the work and were involved in the issuance of the cheques towards the outstanding liability. The defence that the cheques were security cheques, payable only after certification, was disputed and depended on facts that could not be adjudicated in a quash petition. The Court applied the settled principle that vicarious liability under Section 141 must rest on specific averments, but also noted that a Managing Director or a signatory to the cheque can be proceeded against and that the High Court cannot conduct a mini-trial at the stage of Section 482 proceedings when the complaint discloses a prima facie case.

Conclusion: The complaint was not liable to be quashed, and the accused were required to face trial.

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