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Issues involved:
The issues involved in this judgment are whether directors can be prosecuted under Sections 138/141 of the Negotiable Instruments Act based on the complaint filed against them, and whether a director who has resigned can be prosecuted after resignation has been accepted by the Board of Directors. Issue 1: Prosecution of Directors based on complaint: The petitioners, three directors of a company, filed a petition seeking to quash a complaint against them under Sections 138/141 of the N.I. Act. The complaint alleged that the directors were in charge of and responsible for the conduct of the company's business when the offense was committed. The petitioners raised two questions for consideration: i) Whether directors can be prosecuted based solely on the assertion in the complaint that they were in charge of the company's business. ii) Whether a director who has resigned can be prosecuted after acceptance of resignation by the Board of Directors. The court referred to previous judgments to determine the liability of directors. It was held that specific averments in the complaint regarding the director's role in the company's management are essential to establish liability under Section 141. Mere directorship is not sufficient to make a person liable. The court emphasized the need for clear allegations on how the directors were responsible for the company's business. Issue 2: Prosecution of Resigned Director: Regarding the second question, whether a resigned director can be prosecuted, the court did not delve into this issue. Due to the settled legal position in favor of the petitioners on the first question, the court decided to quash the proceedings against the present directors. The complaint was allowed to proceed against the company and another director who issued the bounced cheque. The court directed the trial court to conclude the trial expeditiously. Conclusion: The court quashed the complaint against the directors as the complaint lacked specific allegations regarding their role in the company's management. The proceedings were allowed to continue against the company and another director. The trial court was directed to expedite the trial process.
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