Court upholds decision on liability of resigned director in cheque bounce cases

The court dismissed the petitions seeking to quash 103 complaints under Section 138 of the Negotiable Instruments Act. Despite the petitioner's resignation as Director before the cheque issuances, discrepancies in resignation documentation and lack of evidence refuting active involvement led the court to uphold the trial court's decision. The court emphasized that resignation alone does not absolve liability if the individual was involved in the transactions. Precedents regarding non-executive directors or resigned directors were deemed inapplicable due to the petitioner's active role and timing of resignation.

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Issues Involved:
1. Quashing of complaints under Section 138 of the Negotiable Instruments Act, 1881.
2. Petitioner's resignation as Director and its effect on liability.
3. Specific averments regarding the petitioner's involvement in the company's day-to-day affairs.
4. Applicability of precedents regarding non-executive directors and resigned directors.

Issue-wise Detailed Analysis:

1. Quashing of complaints under Section 138 of the Negotiable Instruments Act, 1881:
The court addressed the petitions to quash 103 complaints filed under Section 138 of the N.I. Act, alleging that the petitioner, as Director of M/s Amira Pure Foods Pvt. Ltd., issued cheques that were dishonored. The complaints included detailed descriptions of the cheques, amounts, and dates of issuance. The trial court had previously found a prima facie case against the petitioner and issued summoning orders. The petitioner’s revision petition was withdrawn to approach the trial court for discharge, which was subsequently dismissed.

2. Petitioner's resignation as Director and its effect on liability:
The petitioner argued that he had resigned as Director effective from 21.01.2016, prior to the issuance of the cheques, and thus should not be held liable. He submitted Form No.DIR-11 and Form No.DIR-12 to the Registrar of Companies to support his resignation. The trial court, however, found discrepancies in these forms and questioned the timing of the resignation, suggesting it could be ante-dated to escape liability. The court emphasized that resignation alone does not absolve the petitioner of liability if he was involved in the transaction leading to the issuance of the cheques.

3. Specific averments regarding the petitioner's involvement in the company's day-to-day affairs:
The complaints specifically averred that the petitioner was an active director involved in the company's operations, including purchasing raw materials, selling products, and traveling abroad for business. The petitioner did not adequately refute these claims with evidence such as passport records or affidavits. The court noted that the petitioner’s role during the transaction period and his responsibilities were sufficiently detailed in the complaints, establishing his involvement.

4. Applicability of precedents regarding non-executive directors and resigned directors:
The petitioner cited several Supreme Court judgments, arguing that non-executive directors or directors who resigned before the issuance of cheques cannot be prosecuted. However, the court found these precedents inapplicable due to the specific facts of the case. The petitioner’s involvement in the company’s transactions during the relevant period was not sufficiently disproven. The court distinguished this case from others by noting the petitioner’s active role and the timing of his resignation relative to the transactions.

Conclusion:
The court dismissed the petitions, finding no merit in the arguments presented by the petitioner. The discrepancies in resignation documentation, lack of evidence refuting active involvement, and specific averments in the complaints led the court to uphold the trial court’s decision to proceed with the complaints under Section 138 of the N.I. Act.

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