Section 141 NI Act: former director cannot face cheque dishonour liability without specific averments and supporting records.

Vicarious liability under Section 141 of the Negotiable Instruments Act applies only where the complaint and supporting materials show that the accused was, at the time of the offence, in charge of and responsible for the company's business. A former director who had resigned before the cheque dates could not be proceeded against where corporate records showed cessation of office and he was neither drawer nor signatory of the cheques. A bare assertion that directors handled day-to-day affairs was insufficient without specific averments explaining the petitioner's role. The criminal proceeding was held unsustainable and quashed as an abuse of process.

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Issues: (i) Whether a former director who had resigned before the cheque dates could be proceeded against under Section 141 of the Negotiable Instruments Act, 1881 for dishonour of cheques issued after resignation. (ii) Whether the complaint contained the necessary averments to fasten vicarious liability on the petitioner as a person in charge of and responsible for the conduct of the company's business.

Issue (i): Whether a former director who had resigned before the cheque dates could be proceeded against under Section 141 of the Negotiable Instruments Act, 1881 for dishonour of cheques issued after resignation.

Analysis: Section 141 creates vicarious liability only for persons who, at the time of the offence, were in charge of and responsible for the conduct of the company's business. The resignation documents, board resolution, Form DIR-12 and corporate records showed that the petitioner ceased to be a director with effect from 13 March 2020, while the cheques were issued in March, April and May 2021. The petitioner was not the drawer or signatory of the cheques, and on the relevant dates he was no longer associated with the company's management.

Conclusion: The petitioner could not be held vicariously liable under Section 141 of the Negotiable Instruments Act, 1881.

Issue (ii): Whether the complaint contained the necessary averments to fasten vicarious liability on the petitioner as a person in charge of and responsible for the conduct of the company's business.

Analysis: A complaint under Section 141 must specifically state how and in what manner the accused was responsible for the conduct of the business of the company. The complaint contained only a bald assertion that the accused directors were in charge of the day-to-day activities, without any particularised role attributed to the petitioner. Such a cursory allegation was insufficient to satisfy the statutory requirement for fastening criminal liability on a director.

Conclusion: The complaint did not disclose the foundational averments necessary to proceed against the petitioner.

Final Conclusion: The criminal proceeding against the petitioner was held unsustainable and was quashed to prevent abuse of process and secure the ends of justice.

Ratio Decidendi: Vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 can be imposed on a director only if the complaint specifically pleads and the materials show that the person was in charge of and responsible for the company's business at the time of the offence; a director who had ceased to hold office before the cheque transaction and against whom only a bald assertion is made cannot be prosecuted.

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