The main legal point established in the judgment is the requirement for clear and specific allegations against directors to establish criminal liability under Section 138 of the Negotiable Instruments Act, 1881.

( 1 ) THIS Criminal Appeal is filed as against the order of an acquittal recorded in c. C. No. 820 of 1997 on the file of the xv Metropolitan Magistrate, Hyderabad as against A-4. The complaint as against A-5 was dismissed as not pressed on 20-2-1998. It is also brought to the notice of this Court that as against the conviction, A-1 to A-3 preferred Criminal Appeal No. 347 of 1998 on the file of the Metropolitan Sessions Judge, hyderabad and the same is pending disposal.

( 2 ) SRI Viswanadha Reddy, learned counsel representing the appellant-complainant would submit that there is a specific averment in the complaint as against A-4. Apart from this aspect of the matter, P. W. 1 specifically deposed that A-2 to A-5 approached the complainant on behalf of A-1 company, who have been looki ng after the day-to-day affairs of A-1 company and they entered into an agreement for the purpose of bill discounting facility for an amount of Rs. 5 lakhs and in view of the specific stand taken by the appellant-complainant, recording of acquittal as against A-4 cannot be sustained.

( 3 ) PER contra, Sri A. Rajendra Babu, learned counsel representing A-4/r-4 would contend that even as per the evidence available on record in general, and also exs. P-2, P-10 and P-22 in particular, A-4 cannot be fastened with criminal liability. The learned counsel also would submit that the evidence of P. W. 1 that A-2 to A-5 approached the complainant on behalf of A-1 company and they have been looking after the day-today affairs of A-1 company by itself may not be sufficient. The learned counsel also would submit that A-4 had not signed the cheques and to fasten the criminal liability as against such Director, clear and specific allegations in the complaint relating to the role played by him and also evidence thereto may be necessary. In the absence of the same, the acquittal recorded by the learned Magistrate cannot be disturbed.

( 4 ) THE learned counsel placed strong reliance on Neeta Bhalla v. S. M. S. Pharmaceuticals Limited, Hyderabad and another and Mukesh Gupta v. Kabsons Gas equipment Limited, Hyderabad and another in this regard.

( 5 ) HEARD both counsel.

( 6 ) THE averments made in the complaint filed by M/s. Merbanc Financial Services ltd. , appellant-complainant herein are as hereunder: the complainant is a limited company incorporated under the Companies Act and has been doing business in Hire Purchase, lease, Bill Discounting and ICD etc. The accused approached the complainant company for providing Bill Discounting facility upto a limit of Rs. 5 lakhs. The complainant accepted for the said request. Accordingly, on 18-11-1996 the accused entered into an agreement with the complainant company. Thereafter, the accused submitted the bills and the complainant discounted the bill and paid the amount after deducting its commission. The due date for the bill discount was on 26-4-1997. It is further contended that the accused issued a cheque dated 26-4-1997 for Rs. 5 lakhs drawn on Union bank of India, Somajiguda, Hyderabad to discharge the bill discount facility. The said cheque was signed and issued by the accused nos. 2 and 3 being the Managing Director and Joint Director of accused No. 1, being they are looking after the day-to-day affairs of the accused No. 1 company for and on behalf of accused No. 1, with the knowledge, consent and connivance of the accused nos. 4 and 5. The complainant presented the cheque for clearance with its banker. The said cheque was returned by the accused-bank on 9-9-1997 as dishonoured with an endorsement "funds insufficient" and the same was informed to the complainant by its bankers. After receiving the said information the complainant got issued a legal notice on 19-9-1997 demanding the accused to pay the cheque equivalent amount within 15 days from the date of receipt of the notice. The said legal notice was duly served on all the accused Nos. 1 to 3 and 5. Accused No. 4 refused to receive the same. B