NEW DELHI: The Delhi High Court has held that a director who is an admitted signatory to a cheque that got dishonoured cannot evade prosecution claiming resignation, especially when the genuineness and timing of such resignation are disputed.
Justice Sanjeev Narula made the observation while hearing petitions filed by a company, Singh Finlease Pvt. Ltd., a non-banking financial company (NBFC), against two borrower companies—South Centre of Academy Pvt. Ltd. and Sampoorn Academy Pvt. Ltd.—and their directors.
The complaint claimed that the loans were sanctioned with a plan of repayment through equated monthly installments. The cheques issued towards repayment, however, were dishonoured in March 2024 due to “funds insufficient”.
The judge said that while mere designation as a director may be insufficient, a cheque signatory stands on a different footing, adding that a signatory to a cheque is “clearly responsible for the incriminating act” and can be prosecuted even in the absence of detailed averments regarding day-to-day management.
“The petitioner’s admitted role in negotiating the loans, executing the documentation and signing the cheques, coupled with the disputed nature and timing of his resignations, takes the matter outside the narrow class of cases where quashing has been permitted,” the judge said.
The court, however, said that the petitioner was free to raise all his defences, including the validity and effect of his resignation, during the course of the trial.
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