Petitioners Who Had Retired from Post of Directors Before the Issuance of Dishonoured Cheque Couldn’t be Held Liable u/s 138 of NI Act | HC

Case Details: Pankaj Saraf v. State of West Bengal - [2023] 153 taxmann.com 647 (HC - Calcutta)

Judiciary and Counsel Details

• • Bibek Chaudhuri, J.
  • Dipanjan Chatterjee, Ashok Bhowmik, Ms Richa Pramanik & Sourodeep Singha, Advs. for the Petitioner.
  • Debajyoti Deb, Shyamal Mondal, Ms Somdyuti Parekh & Ms Sanjana Maitra, Advs. for the Respondent.

Facts of the Case

In the instant case, ‘D’ company issued three cheques in favour of the complainant company but the same were dishonoured on presentation. Thereafter, the complainant issued a notice upon ‘D’ demanding the due amount of cheques within the statutory period of time.

However, ‘D’ failed to pay the due amount and, thus, a complaint under section 138 of the Negotiable Instruments Act, 1881 was filed against ‘D’ and the petitioners (i.e. directors of ‘D’).

The petitioners filed an instant writ petition for quashing the complaint registered under the NI Act on the ground that they retired from the post of directors of ‘D’ by submitting their resignations before the Ministry of Corporate Affairs on 10-6-2014 and the cheque was issued on 21-6-2014. Therefore, the petitioners were not directors of the company on the date when the cheques were issued.

High Court Held

The High Court held that since the petitioners were not directors of ‘D’ on the date when the cheques were issued, they could not be held liable under section 138 of the Act and, thus, the criminal proceedings initiated against the petitioners could not survive.

List of Cases Reviewed

• • Fateh Chand Bhansali v. Hindusthan Development Corporation Ltd. [2005] 2 CHN 454
  • Saroj Kumar Jhunjhunwala v. State of West Bengal [2007] 1 C Cr. LR (Cal.) 793 (para 12) followed.

List of Cases Referred to

• • Harshendra Kumar D. v. Rebatilata Koley [2011] 9 taxmann.com 229/106 SCL 159 (SC) (para 5)
  • Vijay Chaudhary v. Gyan Chand Jain 151 [2008] Delhi Law Times 237 (para 6)
  • Saroj Kumar Jhunjhunwala v. State of West Bengal [2007] 1 C Cr. LR (Cal.) 793 (para 7)
  • Counter Point Advt. (P.) Ltd. v. Harita Finance Ltd. 2006 (2) Crimes 368 (para 9)
  • Fateh Chand Bhansali v. Hindusthan Development Corporation Ltd. [2005] 2 CHN 454 (para 10).