A director’s alleged personal borrowing can sustain Section 138 prosecution without formulaic Section 141 averments.

The complainant alleged that Accused Nos. 2 and 4, including the petitioner, sought and received a loan of ₹30 lakh for their business, promised repayment, and later issued a cheque that was dishonoured for insufficient funds.

After service of a statutory demand notice and non-payment, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”).

The Judicial Magistrate summoned the accused.

The petitioner sought quashing, contending that the complaint contained only general allegations, the summoning order was cryptic, and he had resigned as a director in December 2022.

The complaint alleged that the petitioner had personally participated in obtaining the loan and was responsible for dealing with the complainant.

1. Whether the complaint and its supporting material disclosed a sufficient factual basis to proceed against the petitioner under Sections 138 and 141 of the NI Act.

2. Whether the petitioner’s asserted resignation as a director justified quashing the complaint at the threshold.

3. Whether the summoning order and continuation of proceedings warranted interference under Section 482 of the Code of Criminal Procedure, 1973.

Section 138 of the NI Act penalises dishonour of a cheque in the circumstances prescribed by that provision; Section 141 permits vicarious liability for a company’s offence only where the statutory requirements are met.

Under *S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla* and related authorities, a director is not liable merely by designation: the complaint must provide the requisite averments or factual foundation linking that person to responsibility for the company’s business or to the transaction.

However, the complaint need not mechanically reproduce Section 141 if its substance discloses a sufficient, person-specific factual basis for liability (*Mansi Finance (Chennai) Ltd. v. M. Lalitha*).

The High Court’s inherent power under Section 482 CrPC is to be exercised sparingly; the court ordinarily accepts the complaint’s allegations as true and does not conduct a mini-trial, though proceedings may be quashed where the allegations do not make out an offence or continuation would amount to abuse of process (*State of Haryana v. Bhajan Lal* and authorities cited).

The Court found that the complaint did more than rely on the petitioner’s designation as a director: it alleged that he personally approached the complainant, obtained the loan, promised repayment, and dealt with the complainant on the company’s behalf.

Applying *Mansi Finance*, the Court held that these allegations supplied a factual basis to continue the prosecution, notwithstanding the absence of a mechanical recital of the statutory wording.

The petitioner’s denial of the allegations could not be determined in a Section 482 proceeding, which was not the forum for a mini-trial.

Nor could his claimed resignation be accepted as conclusive: he relied on photocopies, while the complainant produced material indicating that he remained a director; the authenticity and significance of those documents were matters for trial.

The petition was dismissed, and the summoning order and complaint remained undisturbed.

The Court clarified that its observations would not affect the merits of the trial.