Former Principal Can't Be Prosecuted Under NI Act For Dishonour Of School Cheque Issued After His Resignation: Rajasthan High Court
The Rajasthan High Court has quashed criminal proceedings initiated against a former school principal, in a cheque dishonour case after noting that he had resigned from the post before the cheque was issued. Justice Anoop Kumar Dhand observed that once the petitioner had resigned from the post, his employer-employee relationship with the school came to an end and he could not be fastened...
The Rajasthan High Court has quashed criminal proceedings initiated against a former school principal, in a cheque dishonour case after noting that he had resigned from the post before the cheque was issued.
Justice Anoop Kumar Dhand observed that once the petitioner had resigned from the post, his employer-employee relationship with the school came to an end and he could not be fastened with criminal liability under the Negotiable Instruments Act.
"Criminal prosecution of any person is a serious matter as it affects the liberty of that person. No greater damage can be done to the reputation of a person than dragging him in a criminal case... the petitioner is neither liable nor responsible for the cheque in question issued, if any, under his signatures, after his resignation from the post of Principal of the School."
The petitioner was serving as the Principal of St. Soldier Senior Secondary School when a cheque was allegedly issued in favour of the complainant. According to him, the cheque had been given only as security. He resigned from the post on March 24, 2017, whereas the cheque bore the date April 28, 2017. The cheque was later presented for encashment and was dishonoured due to insufficiency of funds, following which a complaint under Section 138 of the Negotiable Instruments Act was filed.
The petitioner contended that despite his resignation, he was impleaded as an accused merely in his capacity as the former Principal. He further argued that although the complaint concerned the affairs of the school, cognizance had not been taken against the Director or other persons responsible for managing the institution.
After considering the record, the High Court noted that the complainant had himself admitted that the petitioner had resigned from the post of Principal before the complaint was filed. The Court also found that the documents on record showed the petitioner had resigned on March 24, 2017, while the cheque was dated April 28, 2017. Therefore, at the relevant time, he was no longer discharging the duties of Principal or responsible for the affairs of the school.
The Court also observed that it was "quite shocking and surprising" that cognizance had not been taken against the management or Director of the school and had instead been taken only against the petitioner, who had already resigned.
Relying on the Supreme Court's decisions in Adhiraj Singh v. Yograj Singh and Anita Malhotra v. Apparel Export Promotion Council, the Court reiterated that a person who has resigned and is no longer responsible for the affairs of an organisation cannot be held vicariously liable in cheque dishonour proceedings relating to acts after such resignation.
Holding that the petitioner could not be held liable for the cheque allegedly issued after his resignation, the Court quashed the order taking cognizance against him, while observing that the complainant would remain at liberty to proceed against the persons actually responsible for the offence.
Title: Mohan Lal Sharma v Ashok Vardhan Sharma & Ors.
Citation: 2026 LiveLaw (Raj) 296