Rajesh Viren Shah v. Redington (India) Limited., Criminal Appeal Arising our of Special Leave Petition (Crl.) No. 6905 of 2022

Brief Facts

  • The appellants, Rajesh Viren Shah and Sanjay Babulal Bhutada (Directors of the Company), were implicated as accused individuals in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881, pertaining to the dishonouring of cheques dated 22 March 2014 issued by the Respondent Company.
  • However, these directors had resigned from the directorship of the Company prior to the date of presentment of cheque.
  • The complaint was filed against the accused directors under Sections 200 and 191A, Code of Criminal Procedure, 1973 read with Section 144 of the N.I. Act. The High Court rejected the accused’s petition seeking to quash the complaint. The director therefore appealed to the Supreme Court.

Issues

  • Whether a director who has resigned from such position and which fact stands recorded in the books as per the relevant rules and statutory provisions, can be held liable for certain negotiable instruments, failing realization?

Held

  • The Apex Court allowed the appeal.
  • The record reveals the resignations to have taken place on 9th December 2013 and 12th March 2014. Equally, we find the cheques regarding which the dispute has travelled up the courts to have been issued on 22nd March 2014. The latter is clearly, after the appellant(s) have severed their ties with the Respondent- Company and, therefore, can in no way be responsible for the conduct of business at the relevant time. Therefore, we have no hesitation in holding that they ought to be then entitled to be discharged from prosecution.

Relevant Paras

  • 4, 7, 8, 10

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