Question relating to the status of directorship of a person issuing a post-dated cheque is a triable issue: HC

Case details: Maj. Surendra Kumar Hooda v. Kapil Gupta - [2021] 129 taxmann.com 59 (Delhi)

Judiciary and Counsel Details

• • Suresh Kumar Kait, J. 
  • Madhav Khurana and Kartikeye Dang, Advs. for the Petitioner.
  • Tanveer Ahmed Mir, Yatharth Dohare and Laksh Khanna, Advs. for the Respondent.

Facts of the Case

In the given case, the respondent agreed with the company ‘AN’ to purchase a flat in a residential project which company ‘AN’ was developing and deposited Rs. 45.25 lakh into account of a company ‘AN’.

The Agreement in question provided the respondent with a ‘Buy Back Option’ and it could be exercised by the respondent by depositing post-dated cheques amounting to Rs. 1.14 crore issued by the accused company under directorship and signatures of the petitioner.

In the meanwhile, the Respondent came to know that company ‘AN’ was on verge of liquidation and said the residential project was nowhere near completion. The Respondent thus exercised Buy Back Option and presented cheques issued by accused company in bank for payment.

However, said cheques were returned unpaid due to ‘insufficiency of funds’. Thus, the respondent filed a complaint under section 138 against company ‘AN’ and the petitioner.

During the proceeding, It came to notice that the petitioner at the time of presentation of cheques in the bank, was not in the role of the Board of Directors and was not responsible for conduct of business of company ‘AN’ and thus, he could not be held liable.

High Court Held

The High Court noted that the petitioner who had issued post-dated cheques in capacity of Director of company, had already resigned on the date of presentation of the cheque and there was sufficient balance in account of accused company to honour legally enforceable debt, which was triable issues that could be agitated during the trial. Therefore Metropolitan Magistrate was justified in summoning the petitioner to face trial and dismissing the petitioner’s prayer for discharge in complaint in question.

List of Cases Referred to

• • DCM Financial Services Ltd. v. J.N. Sareen [2008] 8 SCC 1 (para 12)
  • Sudeep Jain v. ECE Industries Ltd. 2013 SCC Online Del. 1804 (para 12)
  • National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal [2010] 98 SCL 407/154 Comp. Cas. 313 (SC) (para 12)
  • Kamal Goyal v. United Phosphorus Ltd. 2010 SCC Online Del. 447 (para 12)
  • M.L. Gupta v. Ceat Financial Services Ltd. [2007] 77 SCL 73/[2008] 145 Comp. Cas. 837 (Delhi) (para 12)
  • Sunil Gandhi v. A.N. Buildwell (P.) Ltd. [2020] 116 taxmann.com 362/159 SCL 11/219 Comp. Cas. 411 (Delhi) (para 19)
  • Indorama Synthetics (I) Ltd. v. State of Maharashtra [2016] 70 taxmann.com 160/136 SCL 70/198 Comp. Cas. 46 (Delhi) (para 24)
  • MBL Infrastructure Ltd. v. Manik Chand Somani [CRR 3455 of 2018, dated 16-4-2019] (para 24)
  • Krishna Texport Industries Ltd. v. DCM Ltd. [2009] 89 SCL 151/144 Comp. Cas. 113 (Delhi) (para 24)
  • Tayal Cotton (P.) Ltd. v.State of Maharashtra  [2018] 97 taxmann.com 12/149 SCL 453/[2019] 212 Comp. Cas. 421 (Bom.) (para 24)
  • N. Rangachari v. BSNL [2007] 5 SCC 108 (para 30)
  • S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2007] 74 SCL 187/136 Comp. Cas. 268 (SC)
  • J.N. Bhatia v.State  [2007] 79 SCL 191 (Delhi) (para 39).