2025 (1) TMI 1431 - HC - Indian Laws

Dishonour of cheque - petitioner resigned as a director prior to the issuance of the dishonored cheque - Section 138 read with Section 141 of the Negotiable Instruments Act - HELD THAT - In NARENDER KUMAR SURI AND OTHERS VERSUS M/S NARENDRA POLYMERS PVT. LTD. 2014 (10) TMI 1084 - PUNJAB AND HARYANA HIGH COURT a Single Bench of Punjab and Haryana High Court held that the Director of Public Limited Company or Private Ltd. Company can tender his resignation unilaterally and without filing in Form 32 and without sending a notice to Registrar of Companies. Filing in of said Form and giving of due intimation and information to Registrar of Companies is duty of company secretary and not of an individual director. it is for the company secretary to fill in forms as prescribed and to give due information and intimation to the ROC as the law requires and thereafter to be so mentioned in all the prescribed registers of company accounts and balance sheet of company and thereafter the said fact is to be brought to the notice of the members of the company as early as possible and at the latest in annual general meeting. Section 168 (2) of the Companies Act 2013 also provides that the resignation of a director shall take effect from the date on which the notice is received by the company or the date if any specified by the director in the notice whichever is later. In the present case from the supplementary affidavit filed by the petitioner it further discloses that the letter of resignation was sent through speed post on 14.03.2020 and it was delivered to the accused company on 16.03.2020 - Proviso to section 168 (1) states that a director may also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within 30 days of resignation but this proviso is not mandatory. A resignation cannot be treated as not accepted by the Company simply because Director had not sent the copy of resignation to the Registrar within 30 days. Similarly even after tendering resignation and the company even after receiving the same if does not call meeting for its acceptance that also beyond the control of the petitioner and the petitioner cannot be held responsible for the same. It is settled law that putting the criminal law into motion is not a matter of course or to settle the scores between the parties. Courts cannot be a mere spectator to it. Before a magistrate taking cognizance of an offence under section 138/141 of the N.I. Act making a person vicariously liable has to ensure strict compliance with the statutory requirement. In the aforesaid factual backdrop and the legal position as stated above continuation of the proceeding quo the petitioner will clearly be an abuse of process of the court. Conclusion - The petitioner was not liable under Section 138/141 of the N.I. Act due to his resignation prior to the cheque issuance and the lack of specific allegations in the complaint. Application allowed.

Summary

The judgment addresses a petition for quashing a criminal proceeding initiated under Section 138 read with Section 141 of the Negotiable Instruments Act (N.I. Act). The petitioner, a former director of the accused company, sought relief on the grounds of his resignation prior to the issuance of the dishonored cheque and the lack of specific allegations against him in the complaint.

Issues Presented and Considered:

The core legal issues considered were:

• Whether the petitioner could be held liable under Section 138/141 of the N.I. Act despite resigning from the company before the issuance of the dishonored cheque.
• Whether the complaint adequately specified the petitioner's role in the alleged offense to justify vicarious liability.

Issue-wise Detailed Analysis:

1. Liability of a Resigned Director:

• Legal Framework and Precedents: Section 138 of the N.I. Act pertains to the dishonor of cheques, while Section 141 deals with the liability of company officers. Section 168 of the Companies Act, 2013, outlines the resignation process for directors. The petitioner cited various precedents emphasizing the need for specific allegations to establish vicarious liability.
• Court's Interpretation and Reasoning: The Court noted that the petitioner's resignation was effective from March 13, 2020, as per Form DIR-12, despite its later filing. The Court emphasized that the effective resignation date is crucial in determining liability under Section 141.
• Key Evidence and Findings: Form DIR-12 confirmed the petitioner's resignation date. The Court found no evidence of the petitioner's involvement with the company post-resignation. The dishonored cheque was issued after the resignation date.
• Application of Law to Facts: The Court applied Section 168(2) of the Companies Act, which states that a director's resignation takes effect from the date specified in the resignation letter. The Court found the petitioner was not responsible for the company's affairs at the time of the offense.
• Treatment of Competing Arguments: The opposite party argued that the resignation's effectiveness depended on the board's acceptance date. However, the Court held that the resignation's effective date was the date of receipt by the company, as specified in the resignation letter.
• Conclusions: The Court concluded that the petitioner was not liable under Section 138/141 of the N.I. Act, as he was not involved with the company at the time of the offense.

2. Specificity of Allegations in the Complaint:

• Legal Framework and Precedents: The Court referenced precedents requiring specific allegations to establish vicarious liability under Section 141 of the N.I. Act.
• Court's Interpretation and Reasoning: The Court found the complaint lacked specific allegations detailing the petitioner's role in the company's affairs post-resignation. Mere bald statements were insufficient to establish liability.
• Key Evidence and Findings: The complaint and initial deposition did not specify the petitioner's involvement in the company's business post-resignation.
• Application of Law to Facts: The Court applied the requirement for specific allegations to establish vicarious liability, finding the complaint deficient in this regard.
• Treatment of Competing Arguments: The opposite party's reliance on the board's acceptance date was dismissed, as the Court prioritized the resignation's effective date.
• Conclusions: The Court concluded that the complaint failed to establish the petitioner's vicarious liability due to the lack of specific allegations.

Significant Holdings:

• The Court held that a director's resignation takes effect from the date specified in the resignation letter, not the board's acceptance date, as per Section 168(2) of the Companies Act.
• The Court emphasized that specific allegations are necessary to establish vicarious liability under Section 141 of the N.I. Act.
• The Court quashed the criminal proceeding against the petitioner, finding no basis for liability under the N.I. Act.

The judgment underscores the importance of precise allegations in complaints under the N.I. Act and clarifies the effective date of resignation for directors in determining liability for company offenses.