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of <h1>Directors not vicariously liable for dishonored cheques; resignations upheld.</h1> <h3>Naveen Kumar Aggarwal, Smriti Thingbaijam Versus Dove Creation Pvt. Ltd., Almighty Creations</h3> Naveen Kumar Aggarwal, Smriti Thingbaijam Versus Dove Creation Pvt. Ltd., Almighty Creations - TMI Issues Involved:1. Quashing of Criminal Complaint No. 20686 and 20677 of 2013.2. Validity of the resignation of directors before the issuance of the cheques.3. Vicarious liability of directors under Section 138/141 of the Negotiable Instruments Act.4. Delay in informing the Registrar of Companies about the resignation.Detailed Analysis:1. Quashing of Criminal Complaint No. 20686 and 20677 of 2013:The petitions sought to quash Criminal Complaint No. 20686 and 20677 of 2013, and the summoning orders dated 09.07.2013 issued by the Judicial Magistrate 1st Class, Ludhiana. The complaints were filed under Section 138 of the Negotiable Instruments Act due to the dishonor of cheques issued by M/s Miraaya Apparel and Trading Pvt. Ltd. in favor of M/s Dove Creations Pvt. Ltd. and M/s Almighty Creations Pvt. Ltd. for Rs. 46,31,605/- and Rs. 19,88,688/-, respectively.2. Validity of the Resignation of Directors Before the Issuance of the Cheques:The petitioners, Smriti Thingbaijam and Naveen Kumar Aggarwal, had resigned as directors of M/s Miraaya Apparel and Trading Pvt. Ltd. before the issuance of the cheques. Smriti Thingbaijam resigned on 16.02.2013, and her resignation was accepted on 18.02.2013. Naveen Kumar Aggarwal resigned on 21.02.2013, and this change was communicated to the Registrar of Companies in June 2013. The court noted that the petitioners were not involved in any board meetings or company affairs after their resignation.3. Vicarious Liability of Directors Under Section 138/141 of the Negotiable Instruments Act:The court examined whether the petitioners could be held vicariously liable under Section 138/141 of the Negotiable Instruments Act. It was argued that the petitioners were not in charge of or responsible for the conduct of the company's business at the time the cheques were issued and dishonored. The court referred to several judgments, including Saroj Kumar Poddar v. State (NCT of Delhi) and National Small Industries Corporation Ltd vs. Harmeet Singh Paintal, which established that directors who had resigned before the issuance of cheques could not be held liable under Section 141 of the Act.4. Delay in Informing the Registrar of Companies About the Resignation:The respondents contended that the delay in informing the Registrar of Companies about the resignation of Smriti Thingbaijam (communicated on 16.09.2013) created doubts about the authenticity of the resignation documents. However, the court held that the delay in communication did not affect the validity of the resignation. It was noted that the resignation of the directors had been accepted and acted upon by the Board of Directors, and the petitioners were not involved in the company's day-to-day affairs after their resignation.Conclusion:The court concluded that the petitioners had resigned from their positions as directors before the issuance of the cheques, and their resignations had been duly accepted and communicated to the Registrar of Companies. Therefore, they could not be held liable for the dishonor of the cheques under Section 138/141 of the Negotiable Instruments Act. Consequently, the criminal complaints and the summoning orders dated 09.07.2013 were quashed, and the petitions were allowed.
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