Case Note & Summary
The applicant, Satish Menon, was accused No.5 in Criminal Complaint Case No. 8288/2010 pending before the Judicial Magistrate First Class, Nagpur, for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The complaint was filed by Miss Purvee Parekh (non-applicant No.1) alleging dishonour of cheques issued by the company. The applicant had filed a revision application before the Sessions Court challenging the order of issuance of process against him on the ground that he was not a Director of the company at the time of the alleged offence. The revision application was dismissed. The applicant then approached the High Court under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the proceedings. The applicant contended that he had resigned as Director on 04-03-2010, much before the cheques were issued, and therefore could not be held vicariously liable. The complainant argued that the Master Details of the Company obtained in 2011 still showed the applicant as a Director. The court considered the judgment of the Supreme Court in Harshendra Kumar D. v. Rebatilata Koley, AIR 2011 SC 1090, which held that uncontroverted documents showing resignation must be considered at the initial stage and that criminal prosecution is a serious matter affecting liberty. The court found that the applicant had submitted his resignation on 04-03-2010, and the cheques were issued thereafter. The Master Details relied upon by the complainant were obtained in 2011 and did not reflect the resignation, but the court held that the resignation documents were uncontroverted. The court allowed the application, quashed the proceedings against the applicant, and set aside the order of issuance of process.
Headnote
A) Criminal Law - Negotiable Instruments Act, 1881 - Section 138 - Vicarious Liability of Director - Resignation prior to cheque issuance - The applicant, a former director, challenged the issuance of process against him in a complaint under Section 138 of the Negotiable Instruments Act, 1881, on the ground that he had resigned before the cheques were issued. The court held that since the applicant had resigned on 04-03-2010, before the cheques were issued, he could not be held vicariously liable. The court relied on the Supreme Court judgment in Harshendra Kumar D. v. Rebatilata Koley, AIR 2011 SC 1090, which held that uncontroverted documents showing resignation must be considered at the initial stage. The court quashed the proceedings against the applicant. (Paras 3-6) B) Criminal Procedure Code, 1973 - Section 482 - Inherent Powers - Quashing of Criminal Proceedings - The court exercised its inherent powers under Section 482 of the Code of Criminal Procedure, 1973, to quash the proceedings against the applicant, as the continuation of the trial would be an abuse of process of law given that the applicant was not a director at the time of the alleged offence. (Para 6)
Issue of Consideration
Whether a person who resigned as Director before the issuance of cheques can be held vicariously liable under Section 138 of the Negotiable Instruments Act, 1881
Final Decision
The court allowed the application, quashed the proceedings against the applicant in Criminal Complaint Case No. 8288/2010 pending before the Judicial Magistrate First Class, Nagpur, and set aside the order of issuance of process against him.
Law Points
- Vicarious liability under Section 138 of Negotiable Instruments Act requires directorship at time of offence
- Resignation prior to cheque issuance absolves liability
- Uncontroverted resignation documents must be considered at initial stage
