Vicarious liability under cheque dishonour law requires specific averments showing a director's role at the relevant time.

A director who had resigned before the cheque was issued and dishonoured cannot be fastened with vicarious liability under Sections 138 and 141 of the Negotiable Instruments Act in the absence of specific averments showing that he was in charge of and responsible for the company's business at the relevant time. Documentary records such as resignation documents, Form DIR-12 filings and MCA records, if undisputed, support the conclusion that the person had ceased to be a director before the offence date. A bare statement that accused persons handled day-to-day affairs is insufficient, and mere reproduction of statutory language does not sustain prosecution. Proceedings against such former directors are liable to be quashed.

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Issues: Whether directors who had resigned from the company before the cheque was issued and dishonoured could be proceeded against under Sections 138 and 141 of the Negotiable Instruments Act, 1881, and whether the complaint contained sufficient specific averments to fasten vicarious liability on them.

Analysis: The petitions were founded on documentary material showing that one petitioner had ceased to be a director in July 2017 and the other in August 2017, whereas the cheque in question was issued in September 2018. The resignation documents, Form DIR-12 filings and the MCA records were not disputed. The complaint contained only a bald assertion that accused nos. 2 to 4 were responsible for the day-to-day affairs of the company, without setting out how and in what manner the petitioners were in charge of and responsible for the conduct of the business at the relevant time. The cheque was also not signed by either petitioner. Applying the settled principle that liability under Section 141 is penal and must be founded on clear and specific factual averments showing the requisite role of the director at the time of the offence, the Court held that mere reproduction of statutory language is insufficient.

Conclusion: The petitioners could not be roped in as accused for the dishonour of a cheque issued after their cessation from the company, and the proceedings against them were liable to be quashed.

Final Conclusion: The petitions were allowed and the criminal proceedings pending against the petitioners were quashed and set aside.

Ratio Decidendi: A director who has resigned before the issuance of the cheque cannot be made vicariously liable under Section 141 of the Negotiable Instruments Act, 1881 in the absence of specific averments showing that he was in charge of and responsible for the conduct of the company's business at the relevant time.

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