The High Court of Jharkhand in a petition filed for quashing criminal proceedings in a cheque bounce case held that the cheque had been issued by these petitioners much before their resignation and thus this is a disputed question of facts and not clear-cut admission of resignation and directors' resignations from a company do not automatically absolve them of legal responsibilities particularly when the cheque was signed by them
Brief Facts:
The present petition was filed for quashing criminal proceedings against the petitioner, directors of Rudra Steel Private Limited after a complaint was filed against them alleging that the accused had issued a cheque for Rs. 11,90,000, which bounced due to insufficient funds and the accused failed to respond despite the issuance of a legal notice.
Contentions of the Petitioner:
The learned counsel for the petitioner contended that there is no allegation that the petitioner was in charge of the company at the time of the offence and in view of section 141 of the N.I. Act the specific statement was required to be there about the responsibility of the petitioners. Further, it was contended that the petitioner had already resigned from his position as the director of the company in 2003 and the petitioner was wrongly implicated, as he had ceased to be a Director.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent contended that the petitioners had not come to this Court with clean hands and suppressed the materials facts and submitted that there was legal debt and liability of Rs. 11,90,000/- and thus the petitioners issued a cheque for a sum of Rs. 11,90,000/- under their joint signature and when the said cheque was presented before the bank for its encashment which was returned unpaid with endorsement of “insufficient fund” and in view of complaint as well as solemn affirmation the plea taken by the petitioners can be only appreciated in the trial.
Observations of the Court:
The court referred to the complaint petition and observed that the company had been made an accused and thus one of the requirements under the Negotiable Instrument Act in the light of Section 141 is complied with.
It was stated that the companies are being governed by their Board of Directors and The directors of the company would retire by rotation and may or may not be re-appointed by the Board under the relevant provisions of the Companies Act and the directors can also resign from the company and there may be a change in the management of the company and that change is not private affairs of the company and in view of this, the directors who have resigned years before the cheque came to be dishonoured, are not liable to be prosecuted and he cannot be said to be in charge of and responsible to the company for the conduct of the business of the company only on the ground that at one point of time, he played the role of a director.
The court stated that in the present case, the resignation of the petitioners has been disputed by the complainant and the cheque was issued by these petitioners much before their resignation thus this is a disputed question of facts and not clear-cut admission of resignation and based upon the above this is a requirement to prove by way of leading evidence in the trial and further when the legal notice was issued, the petitioners have not replied to the said notice by way of saying that they are no longer directors of the said company.
The decision of the Court:
The court dismissed the petitions and concluded that the criminal proceedings against the petitioners could not be quashed.
Case Title: Pramod Shankar Dayal and anr. vs. State of Jharkhand and ors.
Coram: Hon’ble Mr. Justice Sanjay Kumar Dwivedi
Case No.: Cr.M.P. No. 926 of 2014
Advocate for the Applicant: Mr. A.K. Kashyap and Mr. Praveen Shankar Dayal
Advocate for the Respondent: Mrs. Priya Shrestha and Mr. Rajeev Kr. Sinha
Read Judgment @LatestLaws.com
Picture Source :
