IMPORTANT POINT
Dishonour of cheque – Offence by company – A Director who has resigned from such position and which fact stands recorded in books as per relevant rules and statutory provisions, cannot be held liable for certain negotiable instruments.

JUDGMENT :

SANJAY KAROL, J.

1. Leave granted.

2. Whether a Director who has resigned from such position and which fact stands recorded in the books as per the relevant rules and statutory provisions, can be held liable for certain negotiable instruments, failing realization, is the sole short and common question that this Court must consider in these appeals arising out of the judgment and order dated 6th April, 2022 in CRLOP No. 34923 of 2019 and 8th April, 2022 in CRLOP No. 34248 of 2019.

3. A brief conspectus of facts for adjudication of the present lis is:

(a) The appellants in both the appeals were Directors in the Respondent-Company and had resigned from such Directorship on 9th December, 2013¹ [Annexure P-1, Page 45 of Paperbook] and 12th March, 2014² [Annexure P-1, Page 43 of Paperbook] respectively.

(b) Form 32 in accordance with Sections 303(2), 264(2), 266(1)(a), and 266(1)(b)(iii) of the Companies Act, 1956, in respect thereof stood accepted on 9th December, 2013 and 20th March, 2014 respectively. The relevant records stood rectified, incorporating these changes.

(c) The appellants, namely, Rajesh Viren Shah and Sanjay Babulal Bhutada in Criminal Appeal Nos........@ SLP (Crl) No. 6905 and SLP (Crl) No. 7050 of 2022, respectively, were arrayed as accused in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881³ [‘the N.I. Act’] in relation to three cheques bearing nos. 002535 for Rs. 7,10,085/- 002777 for Rs. 1,85,09,054 and 002791 for Rs. 10,00,000/- all dated 22nd March, 2014, by the Company respondent herein against M/s MIEL e-Security Private Limited and its Directors, with one Mr. Narayanan Kutty Nair, Managing Director, being arrayed as A-2 and A-3 to A-7 being its Directors, including the appellants who were arrayed as A-4 and A-6 respectively.

(d) With the dishonouring of the cheque on presentation on account of insufficient funds the complainant-respondent after serving statutory notice dated 11th April, 2014 preferred a complaint under Sections 200 and 191A Code of Criminal Procedure, 1973⁴ [‘Cr.P.C.’] read with Section 144 of the N.I. Act, seeking quashing of such an action initiated by the respondent herein, the appellants preferred a petition under Section 482 of the Cr.P.C. which stands dismissed by the impugned order.

4. The position of law as to the liability that can be fastened upon a Director for non-realisation of a cheque is no longer res integra. Before adverting to the judicial position, we must also take note of the statutory provision - Section 141 of the N.I. Act, which states that every person who at the time of the offence was responsible for the affairs/conduct of the business of the company, shall be held liable and proceeded against under Section 138 of the N.I. Act, with exception thereto being that such an act, if done without his knowledge or after him having taken all necessary precautions, would not be held liable. However, if it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to (i) a director; (ii) a manager; (iii) a secretary; or (iv) any other officer - they shall be deemed to be guilty of that offence and shall be proceeded against accordingly.

5. Coming to the judicial position, we notice a judgment of this Court in Monaben Ketanbhai Shah vs. State of Gujarat, (2004) 7 SCC 15 wherein it was observed that:

“......The primary responsibility is on the complainant to make necessary averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every partner knows about the transaction. The obligation of the appellants to prove that at the time the offence was committed they were not in charge of and were not responsible to the firm for the conduct of the business of the firm, would arise only when the complainant makes necessary averments in the complaint and establishes that fact....”

6. A Bench of three learned Judges in S