Ex-director liability under cheque dishonour law fails where resignation predates issuance and public records prove cessation of office.

Criminal prosecution under Section 138 of the Negotiable Instruments Act could not be sustained against a person who had resigned as director before the cheques were issued, where public records filed with the Registrar of Companies showed the resignation and the cheques were not signed by him. The Court treated those documents as unimpeachable and held that continuation of proceedings against an ex-director in these circumstances was an abuse of process. Inherent powers were therefore exercised to quash the proceedings qua him.

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Issues: Whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be sustained against a former director who had resigned before the cheques were issued.

Analysis: The resignation was shown by public documents filed with the Registrar of Companies and the Court treated those documents as unimpeachable. The petitioner had ceased to be a director before the cheques in question were issued, and the instruments were not signed by him. In such circumstances, continuation of the prosecution against an ex-director was held to be unwarranted and an abuse of process, making exercise of inherent power to quash appropriate.

Conclusion: The proceedings under Section 138 of the Negotiable Instruments Act, 1881 could not continue against the petitioner as he was an ex-director on the date of issuance of the cheques; the petition was allowed and the proceedings were quashed qua him.

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