Bom HC | Interference with issuance of process under S. 138 read with S. 141 NI Act declined where Directors had resigned, but the resignation was not approved

Bombay High Court: S.S. Shinde, J. refused to interfere with the order of the Magistrate whereby process was issued against the applicants (directors of the accused company) for the commission of offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.

The complainant’s case was that the accused company had issued a post-dated cheque on their favour on account of payment for supply of certain bio-medical equipment’s. However, on presentation, the said cheque was dishonoured and, therefore, the complainant instituted the current proceedings against the accused company as well as the applicants (directors of the accused company).

The applicants submitted that the Magistrate erred in issuing process against them as he failed to consider that the applicants had, at the time of commission of the offence, already resigned from their offences. Per contra, the complainant rebutted their submission with the help of Section 168 of the Companies Act, 2013 (resignation of directors).

Perusing Section 168, the High Court opined that the said provision make it abundantly clear that, the Director who wishes to resign from his office, has to give notice in writing to the company and the Board shall on receipt of such notice, take note of the same and company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place fact of such resignation in the report of the directors laid in the immediately following general meeting of the company provision.

Considering the record of the case, it was noted that although the applicants had forwarded their resignation from the office of Director, however, the same was not yet approved by the Board as contemplated by the section discussed above.

Holding that the documents produced by the applicants cannot be considered as uncontroverted or of unimpeachable character, the Court was of the view that the order of issuance of process against the applicants passed by the Magistrate needs no interference.

In such view of the matter, the Court held the instant criminal application to be devoid of merits and rejected the same. [Kulwant Chauhan v. State of  Maharashtra, 2019 SCC OnLine Bom 2280, decided on 23-09-2019]

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