High Court quashes proceedings against directors in NI Act case, stresses on resignation evidence

The High Court quashed the proceedings against the petitioners, who were directors of the accused company, in a case under Section 138 of the Negotiable Instruments Act. The Court found that the summoning order was faulty as the petitioners had resigned before the alleged offense, a fact not considered by the Trial Court. The High Court emphasized the importance of clearly stating the roles of the accused in complaints under the NI Act. Certified copies of Form-32 confirming the petitioners' resignation were deemed conclusive evidence, leading to the petitioners being absolved of responsibility. The Court ordered the Trial Court to be informed of the judgment electronically and for the judgment to be uploaded on the website promptly.

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Issues:
Summoning order faulty due to legal notice and resignation of petitioners.

Analysis:
The petitioners, as directors of the accused company, were summoned to face trial under Section 138 of the Negotiable Instruments Act. The summoning order was challenged on two grounds. Firstly, the legal notice was sent only to specific accused persons, excluding the petitioners. Secondly, the petitioners had resigned from the company before the alleged offense, which was not considered by the Trial Court. The Trial Court dismissed the plea for discharge, stating that evidence was required to prove the resignation.

The High Court emphasized that in a complaint under the NI Act, the specific roles of the accused must be clearly stated. The complaint failed to mention that the dishonored cheque was issued by the petitioners, who had resigned before the incident. The Trial Court's reasoning was questioned as the complainant did not dispute the genuineness of the Form-32, which showed the petitioners' resignation. The Court noted that the certified copies of Form-32 were now filed, confirming the resignations.

The High Court found the certified copies of Form-32 to be of high quality and conclusive evidence of the petitioners' resignation. As the petitioners had resigned years before the offense, they could not be held responsible. The absence of a legal notice to the petitioners indicated that the respondent was aware of their resignation. Consequently, the petition was allowed, and the proceedings against the petitioners were quashed.

The High Court directed the Trial Court to be informed electronically about the judgment and ordered the immediate upload of the judgment on the website.

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