prosecution against director of company can not be quashed on the ground that he resigned
In my opinion, a Director who signs the cheque issued by the Company on its behalf and thus acts for and on behalf of the company in an important and fundamental act constituting - in combination with other acts - the offence, cannot be absolved from facing the prosecution even if he ceases to a Director, before the period mentioned in the said clause (c) is over. That, a Director who has resigned from the company would have no duty, or means, to pay the amount of the cheque signed by him, though often may be the correct position, it cannot be accepted as a universal truth. Whether he would be vicariously liable by virtue of Section 141 of 12/14 WP 1605.12
the Negotiable Instruments Act, would depend on several factors, such as the understanding between him and the company and/or other Directors, his position vis a vis the company after the resignation etc. Therefore, the mere fact of resignation would be insufficient to quash the proceedings against him. In a given case, indeed, he would not be liable, but this would need to be decided only on the basis of evidence, as may be adduced during the trial. Thus, as a general proposition, it can be safely laid down that the liability of such a Director in the alleged offence can be determined only on the basis of the evidence, as would be adduced during the trial; and therefore, the prosecution against such a Director cannot be permitted to be scuttled at the inception itself.
Bombay High Court
Bindu Kumar Mehta vs Mr.Rishiket Prakash Gujar And ... on 13 August, 2012
Bench: A.M. Thipsay
