Directors cannot be held liable under Section 138 without evidence of their responsibility at the time of the offence.

1.The petitioner, who is the 4th accused in C.C. No. 2929/98 on the file of the XIII Metropolitan Magistrate, Egmore, Madras, has filed this petition u/S. 482, Cr. P.C. to quash the said proceedings.

2. The respondent M/s. Sundaram Finance Service Ltd. Chennai 14, represented by its Executive S. Suresh, has filed a complaint u/S. 138, Negotiable Instruments Act alleging that in the usual course of the complainant's business, the 1st accused availed bill discounting facility from the complainant for a sum of Rs. 22,50,000 as per bill discounting agreement dt. 19-3-1993 against invoices dated 3-2-97 and 4-2-97. The accused towards the said loan, issued a cheque bearing No. 243249 dt. 27-12-97 for Rs. 22,50,000 drawn on Indian Bank, Alwarpet Branch, Chennai 18. The cheque was presented for payment by the complainant on 27-12-97 in State Bank of Travancore, Mount Road, Chennai 2, and the same was returned on 30-12-1997 with an endorsement "funds insufficient". The petitioner has issued notice to all the accused persons. Even after the receipt of the notice, the amount was not paid. Therefore, the respondent herein has filed the complaint against the accused 1 to 7.

3. The petitioner who as the 4th accused in the said complaint, on receipt of the notice from the complainant, had sent a reply dated 23-1-98 contending that he ceased to be a Director of the 1st accused / company for the last 10 years, however, the respondent has contended that the name of the 4th accused was found in the 37th Annual Report of the 1st accused / company, which shows that he was a director up to 31-3-1996. The petitioner has contended that he had informed that he had ceased to be a Director of the 1st accused / company and never participated in the business of the company for the last 10 years and not attended the board meeting held by the company. The petitioner has also sent form No. 32, showing that he has ceased to be a Director of the company, to the Registrar of Companies, Coimbatore.

4. It was argued on the side of the petitioner that the cheque dt. 27-12-97 was issued to the respondent herein for the sum of Rs. 22,50,000 and at that time the petitioner was not a Director of the company and the cheque was returned unpaid on 30-12-1997 and thereafter the respondent has issued a notice to the petitioner herein for which he has issued a reply dt. 31-1-98.
S.141(1) of the Negotiable Instruments Act , which deals with offences by company says -
"Offences by companies. -
(1) If the person committing an offence under S. 138 is a company, every person who, at the time the offence was committed, was in - charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence."

5. The petitioner herein was a Director of the company and from 20-3-97 he ceased to be a Director of the company. The cheque was issued later i.e. on 27-12-97 and there is no averment in the complaint filed by the respondent herein that at the time when the offence was committed, the petitioner was in - charge of or was responsible to the company for the conduct of the business of the company.
The Apex Court in ( Sham Sundar v. State of Haryana ) AIR 1989 SC 1982 at page 1984 : (1989 CriLJ 2201 at p. 2203 held -
"It would be a travesty of justice to prosecute all partners and