The main legal point established in the judgment is the requirement for specific averments against a director to establish their responsibility for the conduct of the company's business, and the need for strict compliance with statutory provisions and settled legal principles before imposing vicarious liability on a director under Section 141 of the Negotiable Instruments Act.

ORDER :

1. Leave granted.

2. The appellant preferred this appeal aggrieved by the judgment and order passed by the High Court of Punjab and Haryana in Criminal Miscellaneous No. M-35870 of 2010 (O&M) by which the High Court dismissed the appellant's petition for quashing the Complaint under Section 138 of the Negotiable Instruments Act, 1881 (for short "the Act") read with Section 420 of the Indian Penal Code.

3. The brief history of the case as per the complaint is that the accused/appellant issued nine cheques on 6-7-2006 in favour of the complainant Company for Rs. 8,00,000/- each, and one other cheque for Rs. 9,40,780.05 in discharge of legal liability of M/s. Coventry Spring and Engineering Company Ltd. (for short "the defaulter Company") of which the appellant was a Director. When the cheques were presented for clearance, they were dishonoured by the bank with remarks "insufficient funds" on 24-08-2006. The complainant-respondent thereafter, served legal notice dated 6-9-2006 demanding payment but the appellant-accused did not make payment. Ld. Judicial Magistrate took cognizance of the complaint and summoned the appellant-accused. On his failure to turn up before the Court, learned Magistrate proceeded under Section 299 of Criminal Procedure Code (for short "the Code"). The appellant-accused thereafter filed a petition before the High Court under Section 482 of the Code for quashing the complaint, summoning order and subsequent criminal proceedings, which came to be dismissed by the order impugned in the present appeal.

4. The case of the appellant is that the respondent Company has unnecessarily made him a party to the complaint though he was not associated with the defaulter Company on the date of cause of action. The complaint in question is not pertaining to the cheques issued by him on 28-12-2004 in the capacity of Director of the defaulter Company. He had resigned from the post of Director w.e.f. 2-1-2006, long before the date on which cause of action arose in the present case. The cheques issued during his tenure as Director with the validity of six months, were neither deposited by the drawee nor dishonoured by the bank and after the lapse of six months period they ceased to be negotiable instruments under the Act. The cheques against which the present Complaint was lodged were issued by the defaulter Company on 6-7-2006 much later after his resignation and were dishonoured on 24-08-2006 against which the legal notice dated 6-9-2006 was served and subsequently the complaint in question has been filed. Learned counsel further argued that since the bounced cheques were not actually issued by the appellant, nor he was holding the post of Director at that point of time and he has nothing to do with that transaction therefore he is not liable. Simply for the reason that at one point of time, the appellant had played some role in the activities of the defaulter Company as a Director would not bind him to the constructive liability under Section 141 of the Act. In support of his argument, learned counsel relied on a decision of this Court in DCM Financial Services Ltd. vs. J.N. Sareen and Another, (2008) 8 SCC 1.

5. Learned counsel for the respondent, on the other hand, supported the impugned judgment and submitted that as a matter of fact the cheques were issued by the appellant towards the amount due since the year 2004 when the appellant was Director. On 16-12-2014, a letter was written to the defaulter Company demanding payment of outstanding dues. Thereafter, on 9-7-2005, the earlier cheques were replaced by new cheques to the tune of Rs. 67.49 lakhs and on 1.1.2006 again new cheques were issued. Thus the cheques initially issued by the appellant were getting replaced with new cheques till their presentation and finally on 24-08-2016 they were dishonoured at the bank. Since the dues were originated at the time when the accused-appellant was Director of the defaulter Company, he is liable under the Act and the High Cour