2022 (2) TMI 851 - HC - Indian Laws

Dismissal of Revisional Application Challenging Liability under Negotiable Instruments Act

Mr. Vivek Bhaskaran Versus State of West Bengal & Anr.

The court dismissed the revisional application challenging liability under Sections 138/141 of the Negotiable Instruments Act. It allowed the proceedings ... Dishonor of Cheque - Funds Insufficient - acquittal of the accused - main thrust of contention of the present petitioner is that since he has resigned from the company he cannot be made liable for the dishonoured cheque - HELD THAT:- In view of the law laid down in the case of Lalit Kumar Sharma [2008 (5) TMI 429 - SUPREME COURT] that the second complaint do not create any new debt or liability the provisions of Section 141 of the Negotiable Instruments Act which refers “every person” and consent and connivance attributable on the part of “any director” should be extended to the present petitioner as liability depends on the role played by a person and not on his designation - the case is at the initial stage any further interpretation regarding the conduct of the present petitioner as also the manner of application of precedents would encourage defaulters to enter into compromise and thereafter resign from the Company. On an appreciation of the factual aspect it is reiterated that this opinion is expressed by this Court as the petitioner has challenged the proceedings at the very inception regarding the maintainability of the proceedings against him - However, if in course of proceedings the petitioner is able to rebut the presumptions so far as the proviso clause of Sub-section 1 is concerned i.e. “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” he would be entitled to an order of acquittal. The stage at which petitioner has approached this Court is premature and as such this Court finds no reason to interfere with the proceedings. Revision application dismissed. Issues Involved:1. Liability under Sections 138/141 of the Negotiable Instruments Act, 1881.2. Validity of the petitioner's resignation and its effect on liability.3. Application of legal precedents to the case facts.Detailed Analysis:1. Liability under Sections 138/141 of the Negotiable Instruments Act, 1881:The petitioner challenged the proceedings under Sections 138/141 of the Negotiable Instruments Act, 1881, for dishonour of cheques issued to liquidate liabilities. The complainant alleged that the accused issued cheques totaling Rs. 11,48,500, which were dishonoured due to insufficient funds. Despite repeated attempts to encash the cheques and issuing a demand notice, the accused did not pay the amount, leading to the initiation of the complaint.2. Validity of the Petitioner's Resignation and Its Effect on Liability:The petitioner argued that he resigned as a director on 29th September 2015, and his resignation was accepted on 30th September 2016, which was reflected in the statutory forms filed with the Registrar of Companies. He contended that he could not be held liable for the dishonoured cheque dated 30th November 2016, as he was no longer a director at the relevant time. The petitioner cited several legal precedents to support his argument that a director who has resigned cannot be held liable under Section 141 of the Negotiable Instruments Act for offences committed after their resignation.3. Application of Legal Precedents to the Case Facts:The petitioner relied on multiple judgments, including Rajasekar v. U.M.S. Radio Factory Limited and Harshendra Kumar D. v. Rebatilata Koley, to emphasize that liability under Section 141 arises only if the person was in charge of and responsible for the conduct of the business at the time the offence was committed. The complainant, however, argued that the petitioner was involved in the settlement agreement and issued cheques as part of the settlement, which included the dishonoured cheque in question. The complainant also pointed out that the petitioner used the company seal in October 2016, indicating his continued involvement.The court noted that while the petitioner had resigned, his involvement in the settlement agreement and use of the company seal raised questions about his role. The court acknowledged the legal precedents but emphasized that each case must be evaluated based on its unique facts. The court highlighted that the petitioner’s actions post-resignation, such as signing the settlement agreement, could imply his continued responsibility.The court concluded that the petitioner’s challenge was premature, as the case was at an initial stage. The court dismissed the revisional application, allowing the proceedings to continue. It was noted that the petitioner could rebut the presumption of liability during the trial by proving that the offence was committed without his knowledge or that he had exercised due diligence to prevent it.Conclusion:The revisional application was dismissed, and the proceedings against the petitioner under Sections 138/141 of the Negotiable Instruments Act were allowed to continue. The court emphasized that the petitioner could present his defense during the trial to prove his lack of involvement or due diligence.