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2019 (1) TMI 570 - HC - Indian LawsDishonor of Cheque - vicarious liability - Section 138 and 141 of the Negotiable Instruments Act - resignation of the petitioner as per Form 32 - Counsel for the complainant had contended that the complaint contains sufficient avernments as required under Section 141 of Negotiable Instruments Act and on the basis of that the process has been issued - Held that - The accused had resigned before the cheques were issued and dishonoured. The acceptance of appellant s resignation is reflected in the resolution as well as Form 32 of the company. It is not the case of the complainant that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date of the offence was committed by the company, the appellant was not the director and he had nothing to do with the affairs of the company. In this view of the matter, if the Criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of Court. In the present case, although the resolution is not produced, there is nothing on record to doubt the genuineness of Form 32 produced by the petitioner accused. The Form 32 was filed on 30.08.2013 giving effect to resignation of petitioner from 01.07.2013. Thus, before date of issuance of cheque and its dishonour the petitioner had resigned and Form 32 was filed with ROC Karnataka. The verification clause of Form 32 mentions that accused No.1 Company has verified information and that the person tendering it has been authorised by Board of Directors resolution dated 17.07.2013 to sign and submit the Form. There is no material to doubt the genuineness of Form 32 produced by the petitioner. Merely an account entry in Form 32 as Additional Director/independent director Form 32 with regards to resignation cannot be discarded. It is not necessary to refer to the other issues raised by the petitioner as the proceedings are required to be quashed on this ground alone. It is also pertinent to note that the process was issued in the present case on 01.04.2015. The petitioner thereafter preferred revision application challenging the order of process before the Sessions Court which was rejected by order dated 20.01.2017. The plea was recorded on 07.06.2017. In the light of the observations made above merely because the plea was recorded on the aforesaid date, the petition cannot be dismissed on the ground that it is not maintainable. Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Maintainability of the petition under Article 227 of the Constitution and Section 482 of the Cr.P.C. after recording the plea. 2. Liability of the petitioner under Section 138 read with 141 of the Negotiable Instruments Act, 1881. 3. Validity and effect of the petitioner’s resignation from the directorship of the accused company. Issue-wise Analysis: 1. Maintainability of the petition under Article 227 of the Constitution and Section 482 of the Cr.P.C. after recording the plea: The primary contention was whether the petition could be maintained after the plea had been recorded. The respondent argued that once the plea is recorded, the trial must proceed to its logical conclusion, as per the Supreme Court's decision in *Subramanium Sethuraman Vs. State of Maharashtra and Anr.* The Court observed that while the High Court should not ordinarily interfere after the plea is recorded, the inherent powers under Section 482 of the Cr.P.C. are still available to challenge the proceedings at an interlocutory stage. The Court emphasized that the powers under Section 482 can be invoked to prevent abuse of process or to meet the ends of justice, as supported by the Supreme Court's decision in *Adalat Prasad Vs. Rooplal Jindal*. 2. Liability of the petitioner under Section 138 read with 141 of the Negotiable Instruments Act, 1881: The petitioner argued that he was an independent professional director and had resigned before the issuance and dishonor of the cheque in question. The respondent contended that the complaint contained sufficient averments indicating that the petitioner was in charge and responsible for the day-to-day affairs of the accused company, making him liable under Section 138 read with 141 of the Negotiable Instruments Act. The Court noted that the petitioner’s role and responsibility were disputed and required examination at trial. However, the petitioner provided Form 32, showing his resignation was effective from 01.07.2013, which was before the issuance and dishonor of the cheque dated 11.09.2013. 3. Validity and effect of the petitioner’s resignation from the directorship of the accused company: The petitioner provided evidence, including Form 32 and a resignation letter, indicating his resignation was effective from 01.07.2013. The Court found no reason to doubt the genuineness of these documents. The Court referred to the Supreme Court's decision in *Harshendra Kumar D. Vs. Rebatilata Koley and Ors.*, which held that criminal prosecution should not proceed against a director who had resigned before the issuance of the cheques. The Court concluded that prosecuting the petitioner would result in gross injustice and abuse of process, as he had resigned before the cheque issuance and dishonor. Conclusion: The Court held that the petition was maintainable and quashed the proceedings against the petitioner. The impugned orders dated 20.01.2017 by the Sessions Court and 01.04.2015 by the Metropolitan Magistrate, along with the proceedings in C.C. No.304/SS/2015, were set aside as against the petitioner. Order: (i) The impugned order dated 20.01.2017 passed by the Sessions Court in Criminal Revision Application No.1178 of 2016, the order dated 01.04.2015 passed by the Metropolitan Magistrate, 23rd Court, Esplanade, Mumbai, and the proceedings in C.C. No.304/SS/2015 pending in the Court of Metropolitan Magistrate, 23rd Court, Esplanade, Mumbai are quashed and set aside as against the petitioner.
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