Karnataka HC: Complainant Can’t Seek To Prosecute Company’s Former Directors For Cheque Issued To Repay Amount Invested When They Held Office | NI Act

The Karnataka High Court in the case Sunita w/o Bharat Kumar Aitawade & Anr v Malikjan s/o Bhaskar Sannakki observed and has quashed the proceedings initiated against two former directors of a company under Section 138 of the Negotiable Instruments Act, 1881 wherein it was claimed by the complainant that when he invested the money in the company, they were directors.
The single judge bench comprising of Justice Hemant Chandangoudar observed and has allowed the petition filed by Sunita and Vidya and quashed the proceedings pending against them.
In the present case, a private complaint was filed under Section 200 of the Code of Criminal Procedure, 1973 (for short, ‘the Act’), wherein it is alleged that the cheque, which was issued by the Company in favor of the complainant, when presented for realization was dishonored for the wants of funds. Thus, the Magistrate, after recording of the sworn statement of the complainant, took the cognizance of the offence punishable under Section 138 of the Act and issued summons to the accused.
It was contended by the petitioners that the petitioners ceased to be the Directors of the Company with effect from 22.03.2017, which is evident from Form No.DIR-12. Further, it was submitted by him that the registration of the complaint against the petitioners-accused Nos.5 and 6 is not sustainable in law.
However, it was contended by the complainant that the petitioner or accused were directors on the date when the complainant invested the money with the petitioner or accused company and cheque which was issued by the company was for repaying of amount invested by the respondent or complaint and hence Magistrate has rightly taken cognizance and same does not warrant any interference
Court Findings:
It has been stated by the bench that on 01.08.2019, the cheque was issued. The petitioners who being the Directors of the Company, ceased to be the Directors of the Company with effect from 22.03.2017, which being evident from the Form No.DIR-12, which is being issued by Registrar of the Companies and the same has remained uncontroverted.
Accordingly, the bench held that it implies that the petitioners ceased to be the Directors of the Companies as on the date of issuance of the cheque. Against the petitioners, the registration of the complaint for the offence is punishable under Section 138 of the Act is not sustainable.

The post Karnataka HC: Complainant Can’t Seek To Prosecute Company’s Former Directors For Cheque Issued To Repay Amount Invested When They Held Office | NI Act appeared first on The Daily Guardian.