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2023 (8) TMI 1311 - HC - Indian LawsDishonour of Cheque - vicarious liability of Director - resignation on the date of issuance of cheques in dispute - cause of action arisen for filing impugned complaints - Sections 138 and 141 of NI Act - HELD THAT - In the case at hand, considering the proximity of time in alleged resignation of the petitioner and issuance of cheque in question and its dishonour, absence of other details and material such as appointment of any new director in place of present petitioner, any board resolution to strengthen the case of petitioner and in view of other reasons mentioned in preceding paragraphs, this Court, at this stage, cannot come to a conclusion, with utmost certainty, as to when had the petitioner actually resigned from the office of Director of accused company and as to whether or not he was involved in dishonouring of the cheques in question, amounting to Rs. 11.75 crores, especially when there are specific averments to the effect that he was involved in the process of obtaining loans from the complainant and issuing the cheques in question. The material placed on record by the petitioner is not sterling incontrovertible material or unimpeachable material to show that petitioner was not involved either in day-to-day activities of the company or had no role in issuance of cheque in question or its dishonouring. Petition dismissed.
Issues Involved:
1. Quashing of summoning orders in complaint cases under Section 138 and 142 of the Negotiable Instruments Act, 1881. 2. Setting aside of orders dismissing applications seeking discharge by the petitioner. 3. Determination of petitioner's role and liability under Section 141 of the NI Act. Summary: Quashing of Summoning Orders: The petitioner sought the quashing of summoning orders in five complaint cases instituted under Section 138 and 142 of the Negotiable Instruments Act, 1881, alleging dishonor of cheques issued by the accused company. The complainant company had advanced loans to the accused company, which defaulted on repayments, leading to the issuance of dishonored cheques. Setting Aside Orders Dismissing Discharge Applications: The petitioner also sought to set aside orders dismissing his applications for discharge in the complaint cases. The petitioner argued that he was not in charge of or responsible for the conduct of the business of the accused company at the time the offence was committed, as he had resigned before the cheques were dishonored. Petitioner's Role and Liability: The petitioner contended that he joined the accused company as a Director on 01.06.2016 and resigned on 22.08.2016, the same day the cheques were issued. The cheques were dishonored on 23.08.2016 and 01.09.2016. The complainant argued that the petitioner was involved in the business affairs even before his official appointment and continued after his resignation. The court noted that the petitioner's resignation was communicated to the Registrar of Companies on 23.08.2016, after the cheques were dishonored. Legal Provisions and Precedents: The court referred to Sections 138 and 141 of the NI Act and relevant judgments, including National Small Industries Corp. Ltd. v. Harmeet Singh Paintal and S.P. Mani & Mohan Dairy v. Dr. Snehalatha Elangovan, to determine the liability of directors in cheque dishonor cases. The court emphasized that vicarious liability under Section 141 requires specific averments and cannot be presumed. Court's Conclusion: The court found that the petitioner's involvement in the company's affairs and the timing of his resignation raised questions that could not be conclusively determined at this stage. The material presented by the petitioner was not sufficient to quash the proceedings. The petitions were dismissed, allowing the petitioner to raise his contentions before the trial court. Final Observations: The court clarified that the observations made were solely for deciding the present petitions and should not influence the trial court's decisions on merits. The judgment was to be uploaded on the website forthwith.
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