Specific averments and prior resignation bar vicarious liability of a director in cheque dishonour prosecution

A director cannot be made to face prosecution under Section 141(1) of the Negotiable Instruments Act unless the complaint contains specific averments that he was in charge of and responsible for the company's business at the relevant time. Here, official Registrar of Companies records showed that the director had resigned before the cheques were issued, and those records were treated as reliable at the quashing stage. In the absence of clear role-based allegations and in light of the prior resignation, continuation of the complaint against him was not justified, though the prosecution against the other accused was left undisturbed.

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Issues: Whether the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 could be sustained against a director who had resigned long before the cheques were issued and against whom the complaint did not contain specific averments of being in charge of and responsible for the company's day-to-day affairs.

Analysis: For fastening liability on a director under Section 141(1) of the Negotiable Instruments Act, 1881, the complaint must contain clear and specific allegations showing that the person was in charge of and responsible for the conduct of the company's business at the relevant time. The materials produced from the Registrar of Companies showed that the petitioner had ceased to be a director well before the cheques were issued. Those official records were treated as reliable and could be considered at the stage of quashing. In the absence of specific role allegations and in view of the petitioner's prior resignation, continuation of the prosecution was not justified.

Conclusion: The complaint could not proceed against the petitioner and was liable to be quashed as against him.

Final Conclusion: The prosecution was terminated only in relation to the petitioner, while the complaint against the remaining accused was not disturbed.

Ratio Decidendi: A director cannot be prosecuted under Section 141(1) of the Negotiable Instruments Act, 1881 unless the complaint contains specific averments of responsibility for the company's business at the relevant time, and unimpeachable official records showing prior resignation may be relied upon at the quashing stage.

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