Case Note & Summary
The petitioner, Bindu Kumar Mehta, was accused no.3 in Criminal Case No.1009/SS/2011 pending before the Metropolitan Magistrate, 48th Court, Andheri, for an offence under Section 138 of the Negotiable Instruments Act, 1881. The complaint was filed by respondent no.1, Rishiket Prakash Gujar, against the accused company Promines Minmet (P) Ltd. (accused no.1), its directors (accused no.2 and the petitioner). The cheque in question was issued by the company and signed by both accused no.2 and the petitioner. The petitioner contended that he had resigned as director on 8 October 2010, which was duly recorded with the Registrar of Companies, Bangalore. The cheque was presented to the bank on 21 February 2011 and dishonoured thereafter. The petitioner filed a discharge application before the Magistrate on 17 December 2011, which was rejected on the same day. He then filed a Criminal Revision Application No.105 of 2012 before the Additional Sessions Judge, which was dismissed on 2 February 2012. Aggrieved, the petitioner approached the High Court under Article 227 of the Constitution and Section 482 CrPC. The High Court examined the material on record, including the resignation letter and Form 32 filed with the ROC, and found that the petitioner had indeed resigned prior to the cheque presentation. The court held that under Section 141 of the NI Act, only those persons who were in charge of and responsible for the conduct of the business at the time the offence was committed can be held vicariously liable. Since the petitioner had resigned before the cheque was presented, he could not be said to be in charge at the relevant time. The court allowed the petition, quashed the orders of the Magistrate and Sessions Judge, and discharged the petitioner from the case.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Vicarious Liability of Director - Section 138 read with Section 141 - Discharge - The petitioner, a former director, sought discharge on the ground that he had resigned prior to the cheque presentation date. The court held that if a director resigns before the cheque is presented, he cannot be deemed to be in charge of or responsible for the conduct of the business at the relevant time, and thus cannot be vicariously liable. The court allowed the petition and quashed the proceedings against the petitioner. (Paras 1-14)
Issue of Consideration
Whether a director who resigned before the date of presentation of the cheque can be prosecuted under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.
Final Decision
The petition is allowed. The order dated 17 December 2011 passed by the Metropolitan Magistrate, 48th Court, Andheri, and the order dated 2 February 2012 passed by the Additional Sessions Judge, are quashed and set aside. The petitioner is discharged from Criminal Case No.1009/SS/2011.
Law Points
- Section 138 Negotiable Instruments Act
- Section 141 Negotiable Instruments Act
- vicarious liability of directors
- discharge at trial stage
- resignation prior to cheque presentation
- burden of proof on complainant
