Karnataka High Court Quashes Cheque Bounce Case Against Director Who Resigned Before Cheques Were Issued, Cites MCA Records

The Karnataka High Court quashed a cheque dishonour complaint lodged against a man who was the Director of an infrastructure company, after referring to records of Ministry of Corporate Affairs and noting that when the cheques were issued to the complainant the petitioner was not a director.

Justice M Nagaprasanna allowed the petition filed by Sujith Sudhakaran, Director of M/S Dreamz Infra India Pvt. Ltd, and quashed the complaint registered against him by Lalu Jacob Mammen, registered under Section 138 of the Negotiable Instruments Act.

The respondent had instituted proceedings under the Act, by issuing a notice for two cheques dated 27.09.2014 and 29.09.2014. The complaint came to be registered on 29.11.2014. The concerned court took cognizance of the offence and registered case and issued summons.

The petitioner argued that he was not the director or an office bearer of the Company M/s Dreamz Infra India Pvt. Ltd., in any capacity. If he was Director, Additional Director and involved in the affairs of the business of the Company, it would have been altogether different circumstances, particularly on two dates of issuance of the cheques i.e., 27.09.2014 and 29.09.2014.

The complainant opposed the plea submitting that petitioner was the Director in the year 2012, continued to be the Director up to the date of issuance of cheques and later transposes as Additional Director but has been involved in the affairs of the Company throughout and has hoodwinked several people and not only the petitioner. The issue does not relate to one or two cases. There are several cases against the petitioner for having done identical offences.

The bench noted that the dates of the instruments i.e, the cheques involved in the case at hand are 27.09.2014 and 29.09.2014. This factor is not in dispute the court said.

Referring to the records of the Ministry of Corporate Affairs it said, “In those dates, the petitioner was not involved in the affairs of the Company even according to the notings in the official website of Ministry of Corporate Affairs, as the petitioner was in the Company between 16.01.2012, ceases to be in the Company on 08.04.2013, again enters the Company on 14.09.2015 and ceases to be in the Company on 22.03.2016. The cheques are issued in the interregnum.”

Following which it held “The petitioner admittedly is not the signatory to the cheque, ostensibly so as he could not be the signatory as he was not involved in the affairs of the Company. On this short point, the petition deserves to succeed, as the petitioner was neither Director nor Additional Director nor involved in the affairs of the Company, particularly on the dates on which the cheques were issued.”

Accordingly it allowed the petition.

Appearance: Advocate PRAKASH B. N for Petitioner.

Advocate NACHE GOWDA B. H, for Advocate GEORGE JOSEPH for Respondent.

Citation No: 2025 LiveLaw (Kar) 7

Case Title: SUJITH SUDHAKARAN AND LALU JACOB MAMMEN

Case No: CRIMINAL PETITION NO. 10408 OF 2023.

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