After resignation, Director can’t be held responsible for daily affairs of Company including Cheques issued and dishonoured.
Fact of the case:
The petition was filed seeking quashing of five complaint cases initiated against the Petitioner. These complaint cases are primarily grounded on the return of five cheques which were issued on behalf of the Respondent No.2 company for a total amount of Rs. 45 Lakhs. Petitioner submitted that he ceased to be the Director of the Respondent No.2 company w.e.f. 27. 10. 2010, at least eight years prior to the issuance of the cheques in question and the resignation of the Petitioner was also notified to the Registrar of Companies by the Respondent No.2 by filing Form 32 dated 04. 01.2011, which is a public document.
The Petitioner contended that he was not the Director when the underlying contract was executed between the Respondent No.1 and Respondent No.2, nor when the cheques were issued and when they were presented.
According to the Respondent, the Petitioner was involved in the discussion before an agreement was executed between the Respondent No.1 and the Respondent No.2. Further, the Petitioner being a responsible Director of accused Respondent No.2 Company participated in meetings and assisted the officials of the Respondent No.1 who had visited the Respondent No.2 for verification of its financial and physical status.
Issue:
The contention of the Petitioner was: Whether Director of the Company after resignation is still held responsible for daily affairs of Company including Cheques issued and dishonoured?
Judgement
Delhi High Court held that, in cases where the accused has resigned from the Company and Form 32 has also been submitted with the Registrar of Companies then in such cases if the cheques are subsequently issued and dishonoured, it cannot be said that such an accused is in-charge of and responsible for the conduct of the day-to-day affairs of the Company, as contemplated in Section 141 of the NI Act. Thus, Petitioner after his resignation cannot continue to be held responsible for the actions of the Company including the issuance of cheques and dishonour of the same. Hence, complaint cases filed under Section 138 of the NI Act, against the petitioner are quashed.
In this case, Alibaba Nabibasha (Petitioner) vs. Small Farmers Agri- Business Consortium & Ors.(Respondents).
Delhi High Court CRL. M.C. 1602/2020, CRL. M.A. 9935/2020
Elevated as Additional Judge of High Court of Delhi on 17th April, 2013 and as Permanent Judge on 18th March, 2015 (F/N).
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