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IN THE HIGH COURT OF CALCUTTA
Tirthankar Ghosh , J.
Mr. Vivek Bhaskaran - Appellant
Versus
State Of West Bengal And Another - Respondent
CRR 3527 of 2019
Decided On : 18-02-2022
Negotiable Instruments Act - Proceedings challenged under Sections 138/141 - Summary of Acts and Sections: Sections 138/141 of the Negotiable Instruments Act, 1881 - The court discussed the liability of a director for the conduct of the company's business at the time of the offence, the resignation of a director, and the role played by a person in the affairs of the company. Key legal provisions and interpretations were highlighted to determine the liability of the accused.
Fact of the Case:
The petitioner challenged the proceedings under Sections 138/141 of the Negotiable Instruments Act, alleging that he resigned as director before the offence was committed and therefore cannot be held liable. The complainant alleged that the petitioner was a signatory to the cheques and was involved in the terms of settlement.
Finding of the Court:
The court found that the petitioner's resignation and subsequent involvement in the terms of settlement raised questions about his role and liability. The court emphasized that liability depends on the role played by a person and not just on designation. The court also noted that the case was at an initial stage and further interpretation could encourage defaulters to enter into compromise and then resign from the company.
Issues: The issues revolved around the petitioner's resignation, his involvement in the terms of settlement, and the interpretation of Section 141 of the Negotiable Instruments Act regarding the liability of a director.
Ratio Decidendi: The court emphasized that liability depends on the role played by a person and not just on designation. The court also noted that the case was at an initial stage and further interpretation could encourage defaulters to enter into compromise and then resign from the company.
Final Decision: The revisional application was dismissed, and the court found no reason to interfere with the proceedings. The court stated that if the petitioner is able to rebut the presumptions in the course of proceedings, he would be entitled to an order of acquittal.
JUDGMENT
Tirthankar Ghosh, J. - The present revisional application has been preferred by the petitioner challenging the proceedings being Case No. CS-27140 of 2017 under Sections 138/141 of the Negotiable Instruments Act, 1881, pending before the learned Metropolitan Magistrate, 15th Court, Calcutta.
The allegations made in the petition of complaint as made by the complainant are as follows:-
a) M/s. Bengal Nestor's Industries Ltd. (hereinafter referred to as the complainant company) has its registered office at 53-B, Mirza Ghalib Street, 4th Floor, Kolkata-700016 and is represented by its authorized representative Mr. Pradip Bhattacharjee.
b) The accused No. 1, M/s. Otto Projects Pvt. Ltd. is a company having its registered office at 4, Bishop Lefroy Road, Flat No. 4, Calcutta Mansion, Kolkata-700020 and the accused No. 2 to 5 are the Directors, accused No. 6 is the Managing Director and accused No. 7 is whole-time Director of accused No. 1 company, they are responsible for the day to day affairs of the company that is the accused No. 1.
c) The accused persons in order to liquidate their liabilities towards the complainant issued two cheques in favour of the complainant company aggregating to a sum of Rs. 45,94,000/- (Rupees Forty Five Lakh Ninety Four Thousand only). The said cheques were presented for encashment with the complainant's bankers but the same were dishonoured and after complying with all the formalities the complainant company filed a complaint case under Section 200 of the Code of Criminal Procedure for offences under Section 138/ 141 of the Negotiable Instruments Act being Case No. CS/54931/2016 before the Learned Chief Metropolitan Magistrate, Calcutta. The Learned Metropolitan Magistrate was pleased to take cognizance of the offences and transferred the case to the Learned Metropolitan Magistrate, 15th Court, Calcutta, for enquiry, trial and disposal of the same. In course of the proceeding, the accused persons appeared before the learned Court and were represented under Sections 205 and 305 of the Code of Criminal Procedure respectively. On 28.10.2016 a terms of settlement was filed in the complaint case along with a petition under Section 257 of the Code of Criminal Procedure by the complainant for withdrawal of the complaint. That in terms of said settlement the accused persons issued several cheques and pay order for repayment of their legal debts and existing liabilities. To that effect the complainant has enclosed the Photostat copies of the terms of settlement along with the Court's order dated 28.10.2016. The accused persons issued cheque No. 667029 dated 30.11.2016 amounting to Rs. 5,14,000/-(Rupees Five Lakh Fourteen Thousand only) drawn on Syndicate Bank, Kolkata as part of the said settlement.
d) The complainant presented the said cheque with its bankers namely, Vijaya Bank, New Market Branch, P.S.- New Market on 30.11.2016 for encashment within its validity period but the same was dishonoured by the bankers of the accused persons with an endorsement "Funds Insufficient". The said information of dishonour was received by the complainant on 01.12.2016 and pursuant to the request made by the accused persons the complainant again presented the cheque on 31.01.2017 for encashment and the cheque was again dishonoured with the same endorsement. The complainant company lastly on 21.02.2017 presented the cheque with its banker on the verbal assurance of the accused persons but the same was again dishonoured with the same endorsement of 'Funds Insufficient'. The complainant company through its advocate issued a demand notice dated 20th March, 2017, thereby demanding the amount covered by the dishonoured cheque i.e. Rs.5,14,000/- (Rupees Five Lakh Fourteen Thousand only) within 15 days from the date of receipt of the notice. The said notice was received by the accused no.2 on 23rd March, 2017 and by all the accused persons on 21st March, 2017. It has been alleged that in spite of receipt of demand notice the ac
Liability under Section 141 of the Negotiable Instruments Act depends on the role played by a person in the affairs of the company at the time of the offence, not just on designation.
Directors who had resigned prior to the issuance of a dishonored cheque cannot be held liable under Sections 138 and 141 of the Negotiable Instruments Act, and specific averments are required to esta....
A director cannot be held vicariously liable for a company's actions after resignation unless specific allegations of involvement are made in the complaint.
Directors who have resigned cannot be held liable for cheques issued after their resignation unless specific allegations of responsibility are made.
Directors can be held liable for offenses under the Negotiable Instruments Act if they are in charge of the company's affairs at the time of the offense, regardless of their resignation, unless they ....
A director can only be held liable under Section 138 of the Negotiable Instruments Act if actively involved in the company's affairs at the time the alleged offence occurred.
Vicarious liability of directors under Section 141(1) of the Negotiable Instruments Act, 1881 is contingent on their position at the time of the offense, and procedural irregularities in taking cogni....
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