Retired but still responsible for dishonoured cheque

NT Correspondent

Bengaluru: The High Court has said that every person responsible for the conduct of a Company’s business will be responsible when the said company is accused of an offence. Dismissing the petition of a person who claimed to be a former director of a company accused in an offence, the HC said that since he had continued to communicate on the official email of the company, he too had to face the trial.

Citing Section 141 of the Negotiable Instruments Act, Justice R Nataraj said, “Perusal of the above leaves no doubt that in order to avoid any doubt as to who should be prosecuted, when a Company is accused of an offence, Section 141 of the NI Act delineates that every person who at the time of commission of offence was incharge of and was responsible to the Company for the conduct of the business of the Company and the company shall be shall be deemed to be guilty and shall be liable to be proceeded and punished.”

Kamal Sagar, who claimed to have been a former director of a company, had approached the HC with the petition challenging the prosecution initiated against him in a Magistrate court in Bengaluru. Ms Starworth Infrastructure had filed the private complaint alleging dishonouring of a cheque issued by the company in which Sagar was a director. The cheque for Rs.2,00,00,000 had been dishonoured in August 2016.

When the Magistrate court took cognizance and issued the process, Sagar approached the HC stating that he had resigned as the director of the company which issued the cheque in 2015 itself. Starworth Infrastructure claimed that even after Sagar’s alleged retirement he had e-mail correspondence officially and the claim of him not being a director “was a smoke screen created by the petitioner to escape being prosecuted.” The HC accepted the contention of the complainant company.

“The e-mail correspondence which is placed on record, demonstrates that notwithstanding his alleged retirement from the Company, the petitioner continued to correspond over official matters of the Company. The contention of the petitioner that these correspondences were based on personal level and not even in official capacity, is a matter of trial and the petitioner has to establish the same before the trial Court and he is also bound to establish before the trial Court that he has retired from the company and was in charge or responsible to the company for the conduct of the business,” the HC said.

Dismissing the petition, the HC said, “As rightly contended by the learned Senior counsel for the respondent, there are shades of evidence, which indicates that the petitioner was corresponding with the respondent over the matters concerning the drawer-Company and therefore, the contention of the petitioner that he retired from the directorship of the Company and therefore was insulated from prosecution cannot be accepted at this stage and in that view of the matter, the petitioner fails and the same is dismissed.”