Alleged Cheques Issued After Their Resignation: Kerala High Court Stays S 138 NI Act Proceedings Against Resigned Directors Of A Company

Justice P.V. Kunhikrishnan directed that there will be an interim stay of the proceedings against the petitioners as they have made out a prima facie case.

“ After going through the pleadings and after hearing the counsel for the petitioners I think a prima facie case is made out by the petitioners. There will be an interim stay of the proceedings against the petitioners alone for a period of six months. I make it clear that the proceedings against the other accused can continue.”

The petition was filed by the third and fourth accused in the case (C.C No:1089/2020 at JFCM II, Thrissur). They contended that the alleged transactions and the issuance of the cheques occurred after they had resigned from their directorship roles within the company, which was the first accused in the case.

The petitioners, who served as additional directors of the company, asserted that they should not be held liable for the transactions and the cheque issuance, as they had already left the company's board of directors in 2016.

They argued that no cause of action could be maintained against them based on various relevant judgments from the High Court and the Supreme Court.

“Petitioners cannot be held liable for the alleged transaction and date of issuance of cheque which took place much later. No cause of action whatsoever is maintainable against the petitioners jointly or separately based on various binding judgments of this Honourable Court as well as Apex court in this regard.” the petition stated.

In response to a private complaint that led to the issuance of non-bailable warrants against them, the petitioners approached the High Court to seek the quashing of proceedings initiated against them in C.C No:1089/2020 at JFCM II, Thrissur.

The petitioners were represented by Advocate S Nikhil Sankar

Case title: Peter Joseph v State of Kerala

Case number: CRL.MC NO. 8889 OF 2023