Bom HC | Director who resigned before issuing of cheques held not liable under S. 138 r/w S. 141 of NI Act for dishonour thereof

Bombay High Court: S.S. Shinde, J. allowed a criminal application filed against the order of the Magistrate whereby he rejected the application filed by the applicant for recalling the issuance of process under Section 138 of the Negotiable Instrument Act, 1881, against him.

The applicant was one of the accused in a criminal complaint filed by the complainant against one Echovox (India) (P) Ltd. and its directors. Echovox defaulted in payment of lease credit extended by the complainant. The cheques issued by Echocvox in favour of the complainant for the charge of the said liability were dishonoured on the presentation for insufficiency of funds. The applicant was one of the directors of Echovox. However, he claimed that he had already resigned from the said position before the subject cheques were issued. After the complaint was filed, the Magistrate had issued process against all the accused including the applicant. Thereafter, the applicant filed an application for recalling of the said order against him. However, the Magistrate rejected the application. Aggrieved thereby, the applicant filed the present application.

The High Court, on perusal of the record, took note of the fact that in his reply to the statutory notice sent by the complainant, the applicant had informed them that he had ceased to be a director of the said company, and necessary Form No. 32 in that regard had already been filed with the Registrar of Companies. On facts of the case, the Court held:

“As already observed hereinabove, the Applicant was not the director of the accused 1 company at the time of issuance of cheques and therefore is not held to be responsible for the business of the said company as averred in the complaint. Respondent 2/Complainant has not brought on record any unimpeachable and incontrovertible evidence to show that the applicant is concerned with the issuance of cheques.”

In such view of the matter, the Court allowed the application filed by the applicant and set aside the order of the Magistrate impugned herein.[Ramesh Pahulraj Makhija v. State of Maharashtra, 2019 SCC OnLine Bom 1656, decided on 23-08-2019]

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