Dragging company directors into action when check bounces is a mockery of the judicial process

Supreme Court: The Supreme Court on Monday held that the directors of a company in respect of issuance or bounce of a check shall be liable to criminal proceedings under the Negotiable Instruments (NI) Act only because of their designation. Dragging in would amount to mockery of the judicial system.

The apex court said this while quashing the criminal proceedings in the alleged check bounce case against three persons who were independent, non-executive directors of the accused company. . The apex court, while allowing all the three appeals, said that the September 2019 order of the Calcutta High Court has been quashed. which rejected his application for quashing of proceedings pending before a court at Birbhum in respect of complaint under the provisions of NI Act.

Company not covered by judicial provisions Every person associated with were not in charge of it or responsible for its business, they would not be liable under those provisions. Liability under section 138/141 arises on account of being responsible for the conduct of the business of the company at the relevant time when the offense was committed and not merely by virtue of holding office or position in any company. Section 138 of the NI Act deals with bounced checks. Or to drag directors like Director (Personnel), Director (HRD) into criminal proceedings under NI law in respect of his being bounced, just because of their designation would amount to mockery of justice and its process.

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