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Directors' role in cheque bounce

The Supreme Court, last week, set aside the judgment of the Calcutta High Court and reiterated that in a cheque bounce case, the directors can be prosecuted only if it is specifically alleged that they were "in charge of and responsible for the conduct of the business" of the firm. In this case, Mannalal vs state of West Bengal, a few directors of Heritage Herbs Ltd which promised land as investment, were prosecuted when three cheques issued by the chairman of the firm bounced. Meanwhile, the chairman died and therefore the rest of the directors were impleaded in the case under section 138 of the Negotiable Instruments Act. The magistrate summoned them. They appealed to the high court, arguing that there were no specific allegations against them in the original complaint. The high court rejected the contention. On appeal, the Supreme Court quashed the prosecution of the directors.

Article referred: http://www.business-standard.com/article/opinion/interest-payable-on-tds-refund-114033000786_1.html

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