2020 (9) TMI 898 - HC - Indian Laws

Dishonor of Cheque - uncontroverted document i.e. Form-32 to prove resignation of Director - case of petitioner is that that despite the petitioner having resigned as a Director (independent and non-executive) from the accused Company on 22nd September, 2010, the petitioner has been arrayed as an accused on the basis of a dishonoured cheque dated 1st June, 2014 - alleged offences punishable under Sections 138 r/w 141 and 142 of the Negotiable Instruments Act - HELD THAT - A perusal of Form 32 shows that the petitioner had resigned from the accused Company on 22nd September, 2010. It is pertinent to note, that the said document, Form 32 has not been controverted by the learned counsel for the respondent No.2. Learned Counsel states that he has no document or any material to show that the petitioner, post his resignation, was in any way concerned with the said accused Company. The cheque dated 1st June, 2014, which was dishonoured, was issued by the accused Nos.1 and 2 Company, post the petitioner's resignation, forms the basis of the complaint. The petitioner has relied on the certified copy of Form 32, which shows the date of resignation as 22nd September, 2010, almost 4 years prior to issuance of the cheque in question - Also as noted above, the said document has not been controverted by the respondent No.2 nor any document is brought on record to show that the petitioner continued to be concerned with the affairs of the Company, post his resignation in 2010. The continuation of the proceedings qua the petitioner will clearly be an abuse of the process of the Court - petition allowed.

Summary

Issues involved:
Quashing of criminal proceedings under Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure based on the petitioner's resignation as a Director from the accused Company before the issuance of a dishonoured cheque.

Detailed Analysis:

Issue 1: Quashing of Criminal Proceedings
The petitioner sought to quash criminal proceedings under Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure. The petitioner, a former Director of the accused Company, resigned on 22nd September, 2010, but was implicated in a case involving a dishonoured cheque dated 1st June, 2014. The petitioner argued that the summons against him were issued solely based on the complaint despite his resignation before the cheque's issuance. The petitioner relied on Form-32 and legal precedents like Gunmala Sales Private Limited v/s Anu Mehta and Anita Malhotra v/s Apparel Export Promotion Council to support his case for quashing the proceedings.

Issue 2: Uncontroverted Evidence of Resignation
The respondent No.2, the complainant, accused the petitioner and other Directors of the accused Company in the complaint. The petitioner presented Form-32, confirming his resignation on 22nd September, 2010, which was not disputed by the respondent. The absence of any evidence indicating the petitioner's involvement with the Company post-resignation, coupled with the uncontroverted Form-32, strengthened the petitioner's argument for quashing the proceedings.

Issue 3: Legal Precedents and Judgment Analysis
The judgment referred to legal precedents such as Gunmala Sales Private Limited and Anita Malhotra cases. These cases emphasized that in situations where a Director had resigned before the issuance of cheques or was not involved in the Company's affairs, continuing proceedings against them would amount to an abuse of the court's process. The court highlighted the importance of unimpeachable evidence or circumstances beyond doubt to support the decision to quash proceedings against a Director.

Conclusion:
Considering the petitioner's resignation before the cheque's issuance, the lack of evidence of his involvement post-resignation, and the uncontroverted Form-32, the court concluded that continuing the proceedings against the petitioner would constitute an abuse of the court's process. Therefore, the court allowed the petition and quashed the criminal proceedings initiated against the petitioner under C.C. No.82/SS/2016. The judgment underscored the necessity of upholding legal principles and protecting individuals from unjust legal actions.