Criminal proceedings under the Negotiable Instruments Act cannot be quashed when the accused's resignation is contested via evidence of corporate procedural irregularities, as factual disputes regarding the validity of statutory filings must be adjudicated through evidence during trial rather than via a summary inquiry by the High Court.

Dr. Ajoy Kumar Mukherjee, J.

1. The criminal proceeding being Case no. CS/407394/14 under section 138 read with section 141 of the Negotiable Instrument Act 1881, (in short N.I. Act) has been assailed by the petitioner herein.

2. The allegation levelled in the complaint is that MS Karunamoyee Construction Pvt. Ltd. entered into a loan cum hypothecation agreement with the opposite party no.1 M/S Srei Equipment Infrastructure Finance Pvt. Ltd and to discharge part debts and/or liabilities against the said agreement, the company issued three cheques drawn on Bank of Baroda through its directors in favour of opposite party no.1. It is further alleged that said cheques were deposited for encashment within the validity period but the cheques were dishonoured on the ground ‘fund insufficient and payment stopped by the drawer’.

3. The complainant through his advocate sent demand notice but since the payment was not made in terms of demand notice, the aforesaid complaint case has been filed by opposite party no.1 herein under section 138/141 of the N.I. Act.

4. During pendency of the said proceeding the petitioner herein made a prayer before the court below for discharging her from the said proceeding on the ground that she was not a director at the time of issuance of cheques and that she resigned from the post of the directorship long back on 19.07.2012 as reflected in Form no. 32.

5. Learned Court below upon hearing the parties by an order dated 19th August, 2019 rejected such prayer made by the petitioner interalia on the ground that there is no specific provision under the Code, by which the accused person can be discharged in a summon procedure case.

6. Being aggrieved by the said order Ms. Bahar, learned Counsel appearing on behalf of the petitioners submits that she had resigned as Director from the company much before the alleged cause of action arose and it is settled law that Form 32 under the Companies Act is a document of unimpeachable character and of sterling quality and as such can be looked into to trace whether a Director had indeed resigned from a company on a particular date. He further submits that the cheques referred to in the complaint were issued on 15.12.2013, 15.01.2014 and 15.02.2014 i.e. long after resignation of the petitioner from the company, which took effect on and from 19.07.2012. He also argued that the petitioner herein was neither a signatory of the said cheque nor the petitioner was in any manner whatsoever involved with the daily affairs of the accused company. In this context he relied upon the judgment of Rajesh Viren Shah Vs. Redington (India) Ltd., reported in AIR 2024 SC 1047. He further pointed out that in affidavit in opposition, the opposite party no. 1 has admitted that the petitioner was not the Director of the accused company during the issuance of cheque but the petitioner has been implicated alleging that she was a guarantor of a separate loan agreement and therefore liable to be prosecuted under the provisions of the N.I. Act.

7. Ms. Bahar in this context further argued that liability of a guarantor comes under the ambit of Indian Contract Act and only attracts in case of civil liability and not in the case of criminal liability under section 138 or 141 o