Former additional director cannot be prosecuted for cheque dishonour once he had ceased association with the company.

A former additional director could not be prosecuted under the Negotiable Instruments Act and the Indian Penal Code for dishonour of cheques issued after he had ceased to be associated with the company. His resignation was recorded in Form No. 32 and was not specifically denied; in any event, an additional director under section 260 of the Companies Act, 1956 holds office only until the next annual general meeting, so his tenure had ended before the relevant lease transaction and cheque dishonour. On those facts, he had no connection with the company when the alleged offences arose, and the criminal process issued against him was unsustainable.

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Issues: Whether the petitioner, who had ceased to be an additional director before the relevant transactions and dishonour of cheques, could be proceeded against for offences under the Negotiable Instruments Act and the Indian Penal Code.

Analysis: The petitioner's resignation as additional director was reflected in Form No. 32 and was not specifically denied in the complaint reply. Independently, even if the resignation were ignored, an additional director under section 260 of the Companies Act, 1956 holds office only up to the date of the next annual general meeting. As the first annual general meeting ought to have been held by 16-3-1993, the petitioner's tenure ended by that date. The cheques and the lease transaction were much later, so he had ceased to have any connection with the company when the alleged offences arose.

Conclusion: The petitioner could not be prosecuted for the dishonour of the cheques, and the process issued against him was unsustainable.

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