#quashing of complaint

The Allahabad High Court has ruled that dismissal of Section 138 NI Act cases for non-prosecution can be reversed under Section 482 CrPC when the complainant demonstrates genuine intent to cooperate, the underlying debt is substantial (Rs. 29 lakhs), and no prejudice is caused to the accused. This sets a precedent for restoring commercial dispute proceedings where procedural lapses stem from unavoidable circumstances, not mala fide intent.

The Punjab & Haryana High Court ruled that directors cannot be held vicariously liable under Section 141 of the NI Act unless the complaint specifically alleges their active involvement in the company’s affairs at the time of cheque issuance. This judgment reinforces the need for precise averments to sustain prosecution against directors in cheque dishonour cases.

Directors cannot be held criminally liable under Section 34 of the Drugs and Cosmetics Act merely for their position; the prosecution must specifically aver their active role in operational control. The Himachal Pradesh High Court quashed proceedings against directors, reinforcing that vicarious liability demands concrete evidence of involvement beyond directorship.

The Bombay High Court held that a part payment made on a cheque without endorsement on the instrument itself negates the existence of a legally enforceable debt at the time of presentation, rendering the Section 138 complaint unsustainable. This clarifies that mere settlement or partial discharge, without formal endorsement, cannot preserve the statutory presumption of liability under the Negotiable Instruments Act, affecting creditors and corporate directors alike.

Punjab & Haryana High Court rules that mere repayment of a dishonoured cheque amount, even after delay, does not extinguish criminal liability under Section 138 of the Negotiable Instruments Act. The complainant's consent is mandatory for compounding the offence, reinforcing that statutory compounding requirements cannot be bypassed by unilateral payment.