Directors resigned after cheque bounce, are they liable for the case ?

624 votes

In my view,
Once the negotiable instrument is signed and issued then the signatory is liable to pay the signed amount to the drawee of the cheque. Eventhough subsequently director resigned from the position of director.
The libilty is arised on the day, when the cheque got signed so he is responsible for the amount.

Advocate Sangeeta S. Sharma LawRato

782 votes

Section 141 of the Negotiable Instruments act lays down that :

141 Offences by companies.-

(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attribute to, any neglect on the part of, any director, Manager, secretary, or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation: For the purpose of this section. –

So, you have to prove that, all the directors were in charge of and were responsible to the company for the conduct of the business of the company at the time of your transaction and issuance of the cheque. Further, they should be aware of the your transaction for being liable.

Advocate Unmesh Gopal Dindore LawRato

527 votes

Yes director are liable for 138 if they give you cheque. You will have to follow the procedure regarding 138. Like notice and it's period. And period for filing 138 in Court. You have to make all the director as a party to Litigation.

Advocate Sheetal Bhutada LawRato

906 votes

Yes , if they are on duty or in partnership at the time of transaction with d party whom d said cheque was issued and the role was completed by the next party , then the resigned partners were also liable for d said transaction if they resigned after bouncing of said cheque ( issued by the said party) .

Advocate Vikas Galugade LawRato

695 votes

They are liable. It also depends which kind of organisation it is. 138 can be stored in multiple case with permutation and combination. Detailed case papers are required for giving a understanding of the solution.

Advocate Satish Mishra LawRato