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of <h1>High Court Quashes Criminal Case Against Ex-Director Over Dishonored Cheques</h1> <h3>Dipesh J. Thacker Versus M/s Smartsync Innovation Pvt. Ltd.</h3> The Karnataka High Court quashed criminal proceedings under Section 138 of the Negotiable Instruments Act against an ex-director accused of involvement in ... Dishonor of Cheque - vicarious liability of Director - section 138 of NI Act - HELD THAT:- Similar issue decided in the case of DIPESH J. THACKER S/O JITENDRA V. THACKER VERSUS M/S SMARTSYNC INNOVATIONS PVT. LTD. REP. BY ITS DIRECTOR, MR. ANKIT JAIN. AND M/S QUESS CORP. LIMITED [2022 (6) TMI 1303 - KARNATAKA HIGH COURT] has held that In the teeth of the admitted facts, the submission of the learned counsel appearing for the respondent that the petitioner will have to come out clean in a trial, after him producing the documents with regard to resignation is unacceptable, as those documents without doubt are public documents, which would clearly demonstrate that the petitioner has resigned on 4.7.2019. Since the issue remains the same, albeit the crime being different, it is deemed appropriate to obliterate the present proceedings following the order passed by this Court - petition allowed. Issues:1. Quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act against an ex-director accused of involvement in dishonored cheques post-resignation.Analysis:The judgment by the Karnataka High Court involved the quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act against an ex-director accused of involvement in dishonored cheques post-resignation. The petitioner, accused No. 3, had resigned as a Director of the Company before the issuance of the cheques in question. The Court considered the public documents, Form Nos. DIR-11 and 12, which confirmed the resignation date of the petitioner as 4.7.2019, establishing that he had ceased to be a Director. The cheques were issued by another Director after the petitioner's resignation, making it clear that he was not involved in the transaction at that time. The Court cited the Apex Court's judgment emphasizing that an ex-director cannot be held liable in criminal proceedings post-resignation, especially under Section 138 of the N.I. Act. The Court highlighted the importance of public documents in establishing the resignation date and the lack of involvement of the ex-director in the subsequent transactions.The respondent's argument that the petitioner should produce documents in a trial to prove his resignation was dismissed by the Court, emphasizing the unimpeachable nature of public documents as held by the Apex Court. The judgment reiterated that the power under Section 482 of the Cr.P.C. should be exercised in cases where public documents clearly demonstrate the resignation of a director and that proceedings against the ex-director should be quashed based on such evidence. The Court allowed the Criminal Petition, quashing the pending proceedings against the petitioner-accused No. 3 in the criminal complaint. The judgment made it clear that this decision would not influence or bind the proceedings against accused Nos. 1 and 2 in the same case.In another related case, the Court followed the same reasoning as in the previous judgment and allowed the Criminal Petition, quashing the proceedings against the petitioner in that case as well. The Court emphasized the importance of considering public documents and the resignation date of the ex-director in determining liability in criminal proceedings under Section 138 of the N.I. Act. The judgment reiterated the principle that an ex-director cannot be held accountable for actions taken post-resignation and that the power under Section 482 of the Cr.P.C. should be used to prevent injustice or abuse of process in such cases.This detailed analysis of the judgment by the Karnataka High Court showcases the legal principles applied in quashing criminal proceedings against an ex-director accused of involvement in dishonored cheques after resignation, emphasizing the significance of public documents and the Apex Court's rulings on the liability of ex-directors in such cases.
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