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.

ORAL ORDER

The petitioner-accused No.3 in C.C.No.32008 of 2014 is at the doors of this Court calling in question the proceedings so registered for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (‘Act’ for short).

2. Heard Sri.Prakash B.N., learned counsel appearing for the petitioner, Sri.Nache Gowda B.H, learned counsel appearing for the respondent.

3. Facts in brief, germane, are as follows:

3.1. The respondent institutes proceedings under the Act, by issuing a notice for two cheques dated 27.09.2014 and 29.09.2014. The complaint comes to be registered on 29.11.2014. The concerned Court takes cognizance of the offence and registers C.C.No.32008 of 2014 and issues summons.

3.2. Learned counsel appearing for the petitioner submits that on the said two dates, the petitioner was not the director or an office bearer of the Company M/s Dreamz Infra India Pvt. Ltd., in any capacity. Learned counsel submits that if he was Director, Additional Director and involved in the affairs of the business of the Company, it would have been altogether different circumstance, particularly on two dates of issuance of the cheques i.e., 27.09.2014 and 29.09.2014. He would submit in that light, the very proceedings instituted against the petitioner is an abuse of the process of law.

3.3. Learned counsel appearing for the complainant contends that the petitioner was the Director in the year 2012, continued to be the Director up to the date of issuance of cheques and later transposes as Additional Director but has been involved in the affairs of the Company throughout and has hoodwinked several people and not only the petitioner. The issue does not relate to one or two cases. There are several cases against the petitioner for having done identical offences. He would submit that all these are a matter of trial and the petitioner should come out clean there and not a proceeding under Section 482 of the Cr.P.C.

4. I have given my anxious consideration to the submissions made by the learned counsel for the respective parties and have perused the material on record.

5. The afore-narrated facts lie in a narrow compass. The dates of the instruments i.e., the cheques involved in the case at hand are 27.09.2014 and 29.09.2014. This factor is not in dispute. The petitioner’s entry and exit into the Company is even according to the records of the Ministry of Corporate Affairs, is as follows:

6. The petitioner enters the Company as a Director on 16.01.2012 when the Company was under the CIRP. He ceases to be the Director of the Company on 08.04.2013. Then lies a vacuum up to the date when he enters the Company as an Additional Director on 14.09.2015 and resigns or ceases to be an Additional Director even on 22.03.2016. The cheques are admittedly issued on 27.09.2014 and 29.09.2014. In those dates, the petitioner was not involved in the affairs of the Company even according to the notings in the official website of Ministry of Corporate Affairs, as the petitioner was in the Company between 16.01.2012, ceases to be in the Company on 08.04.2013, again enters the Company on 14.09.2015 and ceases to be in the Company on 22.03.2016. The cheques are issued in the interregnum. The petitioner admittedly is not the signatory to the cheque, ostensibly so as he could not be the signatory as he was not involved in the affairs of the Company. On this short point, the petition deserves to succeed,