Negotiable Instruments Act

Shivasurya (Querist) 10 September 2009 This query is : Resolved
on 12-06-2002, the complainant trust entered a Memorandum of Understanding with one Ltd company, for becoming a franchisee of the said company. And as per the Memorandum of Understanding, the said company provided computers, 10 KVA UPS, Laser printers, Dot Matrix printers and net working products totally worth about Rs.12,00,000/- as fee for establishing College Network Lab to the complainant trust on receipt of Rs.12,00,000/- from the complainant trust for conducting Networking course to the college students of engineering college at the college campus. And according to the Memorandum of Understanding the complainant trust acted as franchisee of the said company for one year. At the time of entering the Memorandum of Understanding with complainant trust; the accused is not director of the company and only in the year 2003, he became one of the director of the said company and he is unaware about the Memorandum of Understanding entered between the complainant trust and the company.
He came to know about the Memorandum of Understanding entered between the complainant trust only in the year 2004 while seeing a copy of legal notice dated 27-01-2003, sent to the company and its erstwhile 4 directors when cleaning the office of company and he simply ignored it as it was not addressed to him. And in the month of March 2004, the secretary of the complainant trust, came to the office and informed that the company has liable to refund the balance franchisee fee of Rs.3,00,000/- out of Rs.12,00,000/- which was received by the company for giving franchisee to the complainant trust. And as the present director of the company he has to give the said amount of Rs.3,00,000/-. As he unaware about the Memorandum of Understanding entered between the complainant trust and the company, he requested the complainant to give time for verify the records for his claim regarding the MOU and assured him if the company has to repay any amount towards any liability to the complainant trust. But the complainant trust insisted him to give a cheque for Rs.3,00,000/- and promised him that he will return the said cheque, if the accused established that the company has no liability to the complainant trust in respect of the MOU. After perusal of records, the accused knew that the company is not liable to pay anything to the complainant trust and immediately sent a letter to the trust demanding return of the cheque, but the complainant trust presented the cheque and after dishonor filed case u/s.138 NI Act, only against the accused and in the complaint the complainant trust has not added the company and other directors as accused in that case. The accused is facing the trial. I need suitable citations to protect the innocent accused in that case
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Raj Kumar Makkad (Expert) 10 September 2009
No problem except to face to face harassment of litigation. Neither you nor your company has any liability as told by you and the cheque had been issued in good faith by you (though it was not required to be issued prior to the confirmation of the record as director is expected to be more and more vigilant at least on money matters, if he cannot, why is he a director in such company), so you in your personal capacity as well as in your official capacity are not liable to pay anything and if presented cheque has been dishonoured, even then no offence is made out because the complainant is bound to show that the cheque was issued in discharge of liability and this onus is rebuttable. Persue your case effectively, it is a good case.riven