IMPORTANT POINT
Director of company who issues cheque from his individual account will be individually liable for consequences arising from dishonour of such cheque.

Crl. M.C. No. 3781/2009 and Crl. M.A. No. 12859/2009

1. Respondent no. 2 has been served and has put in appearance.

2. There are three petitioners before this Court. Petitioner no. 1 is M/s Gujarat Oleo Chem. Ltd. a company of which petitioner no.2, Sudhir Pathak, and petitioner no.3 Sandeep Chaturvedi are its directors.

3. The complaint filed by Technology Development Board under Section 138 of Negotiable Instrument Act has arrayed aforesaid petitioners as also Mr. Santosh Dhiraj Pathak the chairman and managing director of petitioner no.1 as the accused persons. Cheque is in the sum of Rs. 54,17,019/-; it is dated 30.9.2008; it is signed by Santosh Dhiraj Pathak who had been arrayed as accused no.2 in the complaint. This cheque had been issued by S.D. Pathak from account No.38420 which is the personal account of the signatory of the cheque i.e. of S.D. Pathak. It is not a cheque which had been issued from the account of the company. This factual position is not in dispute.

4. Learned counsel for the petitioner has pointed out that in these circumstances when the signatory of the cheque i.e. the drawer of the cheque has drawn it in his individual capacity from an individual account the company and its directors i.e. the petitioners before this Court cannot be held liable on any count. Counsel for the petitioner has placed reliance upon a judgment of a Coordinate Bench of this Court reported in Manish Kant Aggarwal v. National Agricultural Cooperation Marketing Federation of India Ltd. (NAFED) and Anr.1 It is submitted that in this case also the Court had quashed the complaint against the company and its other directors as the signatory of the cheque in the said case also was an individual who had signed the cheque in his individual capacity; it was held that the company and its other directors cannot be held liable.

5. These arguments have been refuted by the learned counsel for the non-applicant. It is submitted that the cheque although issued by S.D. Pathak, was yet in the discharge of the liability of the company and this is evident from the memorandum of settlement arrived at between the parties. Attention has been drawn to the reply filed by petitioners wherein they have admitted their liability but the non-payment has been attributed to the liquidity crunch faced by them. It is submitted that in this view of the matter, it has been borne out that the petitioners were also liable as the discharge of liability through this disputed cheque was the liability of the company and the petitioners before this Court are the directors of the said company. Learned counsel for the non-applicant has placed reliance upon I.C.D.S. Ltd. v. Beena Shabeer and Anr.2 as also another judgment Jagarlamudi Surya Prasad and Ors v. State of Andhra Pradesh3 to support his submission that in such an eventuality the criminal complaint is not liable to be quashed straightway. First judgment relied upon by learned counsel for the non-applicant was on the issue with regard to the co-extensive liability of a guarantor and the principal debtor which was a question which the Court held cannot be gone into in a quashing proceedings. In the second judgment the Court had held that the complaint under Section 138 of Negotiable Instruments Act could not be quashed in view of the disputed question about limitation as also as to whether the cheque in question was a forged one or not; both being disputed matters of fact, trial was required.

6. In the instant case there is no dispute to the factual matrix of the case. Cheque had admittedly been signed by S.D. Pathak from his individual account; in these circumstances by a co-joint reading of Section 138 and 141 of the Negotiable Instruments Act as also the definition of ‘drawer’ as, contained in Section 7 of the said Act .the petitioners before this Court cannot be made liable.

7. The petitioners before this Court have been arrayed as accused only as directors of petitioner No.1 i.e. of Gujarat Oleo C