Section 202 inquiry and director liability under the NI Act were upheld, allowing cheque dishonour proceedings to continue.

In a Section 138 cheque dishonour complaint, inquiry under Section 202 CrPC was held satisfied where the Magistrate considered the complaint, affidavit and documents before issuing process; the absence of express Section 202 language did not show non-application of mind, so interference was unwarranted. As to a director's liability under Section 141 NI Act, the complaint's averment that the directors handled the company's day-to-day affairs was sufficient at the quashing stage, and without unimpeachable material showing false implication, inherent jurisdiction could not be used to terminate the prosecution. The challenge to continuance of the proceedings therefore failed.

---

---

Issues: (i) whether the process issued in a complaint under Section 138 of the Negotiable Instruments Act could be interfered with for alleged non-compliance with Section 202 of the Code of Criminal Procedure in respect of accused residing outside the court's territorial jurisdiction; (ii) whether the proceedings against a director could be quashed for want of adequate averments attracting vicarious liability under Section 141 of the Negotiable Instruments Act.

Issue (i): whether the process issued in a complaint under Section 138 of the Negotiable Instruments Act could be interfered with for alleged non-compliance with Section 202 of the Code of Criminal Procedure in respect of accused residing outside the court's territorial jurisdiction.

Analysis: The order issuing process recorded consideration of the materials on record, the complainant's affidavit and documents. The applicable legal position is that, where the accused resides beyond jurisdiction, inquiry under Section 202 is required, but the Magistrate is not bound to examine witnesses on oath in every case and may confine the inquiry to documents or affidavits. The record disclosed that the Magistrate had undertaken the requisite inquiry before issuing process, and the omission of the precise phraseology of Section 202 did not establish failure of justice or non-application of mind.

Conclusion: The challenge based on alleged non-compliance with Section 202 failed and no interference was called for.

Issue (ii): whether the proceedings against a director could be quashed for want of adequate averments attracting vicarious liability under Section 141 of the Negotiable Instruments Act.

Analysis: The complaint contained an assertion that the accused directors were responsible for the day-to-day affairs of the company. The plea for quashing rested on the contention that the cheque was signed by another accused and that the director's implication was insufficient. In the absence of unimpeachable material showing false implication, the question of vicarious liability was treated as one of fact unsuitable for exercise of inherent jurisdiction at that stage.

Conclusion: The proceedings against the director were not liable to be quashed on the ground of insufficient averments.

Final Conclusion: The revisional challenge to the continuance of the cheque dishonour prosecution did not succeed, and the impugned proceedings were allowed to continue.

Ratio Decidendi: In a complaint under Section 138 of the Negotiable Instruments Act, an inquiry under Section 202 of the Code of Criminal Procedure is satisfied if the Magistrate considers the complaint, affidavit and documents before issuing process, and quashing on the basis of director liability will not be granted absent unimpeachable material showing that continuation of the prosecution is unjustified.

---