Signatories to cheques can be held liable under Section 138 despite not being current directors.

ORDER

1. Petitioner, who is facing trial for the offence punishable under Section 138 of the Negotiable Instruments Act , 1881 (for short, 'the Act') in C.C.No.51444/2022 pending before the Court of XVII Addl. Judge, Small Causes Court, Mayo Hall, Bengaluru, is before this Court under Section 482 Cr.PC with a prayer to quash the entire proceedings in the said case as against him.

2. Heard the learned Counsel for the parties.

3. The respondent-company had filed a private complaint in PCR.No.51569/2022 before the Court of XXXIV Addl. Metropolitan Magistrate, Mayo Hall, Bengaluru, against Utkal Steel and Power Pvt. Ltd., and two others with a prayer to convict and sentence the accused in the said case for the offence punishable under Section 138 of the Act. Petitioner is arrayed as accused no.2 in the said case. The Trial Court, after recording the sworn statement of the complainant, has registered a case against the accused for the offence punishable under Section 138 of the Act and has issued summons to them. Being aggrieved by the same, the petitioner is before this Court.

4. Learned Counsel for the petitioner submits that the petitioner had resigned from the company as a Director as on the date of presentation of the cheque for realization. Section 141 of the Act provides that only the Directors who are incharge of daily affairs and management of the company can be prosecuted. Former Directors of the company cannot be arrayed as accused and they cannot be vicariously held liable for the company. He submits that the petitioner had already informed the complainant that he had resigned as the Director of the company. Therefore, the respondent-company ought not to have arrayed the petitioner as an accused to the proceedings. In support of his arguments, he has placed reliance on the judgment of the Apex Court in the case of ANITHA MALHOTRA - (2012)1 SCC 520, and DCM FINANCIALS VS J.N.SAREEN - (2008)8 SCC 1.

5. Per contra, learned Counsel appearing for the respondent submits that in the complaint there is a clear averment that the petitioner is a signatory of the cheque in question. The signature found in the cheque is not in dispute. It is also not in dispute that the cheque was drawn on the account of accused no.1-company. The authorized signatory of the company can always be prosecuted for the offence punishable under Section 138 of the Act. Signatory of the cheque which is dishonoured is responsible for the incriminating act and he is covered under sub-section (2) of Section 141 of the Act. In support of his arguments, he has placed reliance on the judgment of the Apex Court in the case ofHARSHENDRA KUMAR.D. VS REBATILATA KOLEY & OTHERS (2011)3 SCC 351 and SUNITA PALITA &

OTHERS VS PANCHAMI STONE QUARRY - (2022)10 SCC 152.

6. The Hon'ble Supreme Court in ANITHA MALHOTRA 's case supra, in paragraph 21, has observed as under:

"21. Inasmuch as the certified copy of the annual return dated 30-9-1999 is a public document, more particularly, in view of the provisions of the Companies Act, 1956 read with Section 74(2) of the Evidence Act, 1872, we hold that the appellant had validly resigned from the Directorship of the Company even in the year 1998 and she cannot be held responsible for dishonour of the cheques issued in the year 2004."

7. In DCM Financials' case supra, the Hon'ble Supreme Court has held that in case of post-dated cheques becoming due for payment after the Director had resigned from Directorship and had given notice of resignation to the complainant, the past Director who had resigned cann