Vicarious liability under the Negotiable Instruments Act requires specific pleadings and no prosecution lies after resignation before dishonour.

A director cannot be fastened with vicarious liability under Section 141 of the Negotiable Instruments Act, 1881 unless the complaint specifically pleads that the person was in charge of and responsible for the company's business at the relevant time. Unimpeachable, uncontroverted material showing that the accused had resigned as a non-executive additional director before dishonour of the cheques negatived liability at the threshold. The complaint's general assertions about management were insufficient, and continuation of the prosecution was held to be an abuse of process warranting quashing.

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Issues: (i) whether the petitioner, being a non-executive additional director who had resigned before dishonour of the cheques, could be proceeded against for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881; (ii) whether the complaint contained the requisite averments to fasten vicarious liability on the petitioner.

Issue (i): whether the petitioner, being a non-executive additional director who had resigned before dishonour of the cheques, could be proceeded against for an offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881

Analysis: The record included Form DIR-11, Form DIR-12 and the corresponding receipt from the Ministry of Corporate Affairs, showing that the petitioner was appointed as a non-executive additional director and had resigned before the cheques were dishonoured. The material was undisputed. In proceedings under Section 141 of the Negotiable Instruments Act, 1881, liability depends on the role actually played in the affairs of the company, and a non-executive director is not, by designation alone, responsible for day-to-day business. Unimpeachable and uncontroverted material showing that the petitioner had ceased to be a director before the relevant date justified interference.

Conclusion: The petitioner could not be proceeded against on this basis.

Issue (ii): whether the complaint contained the requisite averments to fasten vicarious liability on the petitioner

Analysis: A complaint against a director who is not the signatory of the dishonoured cheque must contain specific averments that the person was in charge of and responsible for the conduct of the business of the company at the relevant time. General assertions that directors were concerned with management or day-to-day affairs are insufficient. The complaint did not contain appropriate pleadings showing the petitioner's role so as to attract vicarious liability under Section 141 of the Negotiable Instruments Act, 1881.

Conclusion: The complaint was deficient in the necessary foundational averments against the petitioner.

Final Conclusion: Continuation of the criminal complaint against the petitioner would amount to an abuse of the process of law, and quashing was warranted.

Ratio Decidendi: In a prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, a director cannot be made vicariously liable unless the complaint contains specific averments of responsibility for the company's business at the relevant time, and such liability may be negatived at the threshold by unimpeachable material showing that the person had ceased to be connected with the company before the alleged offence.

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