Burden Is On Accused To Disprove Averment In Cheque Bounce Complaint That He/She Is Director Responsible For Conduct Of Company's Business : Madras HC

The Madras High Court observed that it is the burden of the accused to disprove the averment in a cheque bounce complaint that he/she is the director responsible for the conduct of the business of the company.

The court observed thus while dismissing a petition that sought quashing of a complaint filed under Section 138 of Negotiable Instruments Act.

A Single Judge Bench of Justice G. Jayachandran observed that “As far as the instant case, the cheque is for the discharge of the loan advanced to the company for its business purpose. The petitioner had stood guarantee for the loan advanced. She cannot deny knowledge of the borrowing or issuance of cheque just because she is not the signatory of the subject cheque. The complaint at paragraph (6) avers that the petitioner and the second accused as Directors of the first accused company are responsible for the conduct of the business. The burden is on the petitioner to disprove this averment”.

Advocate AR.M. Arunachalam appeared for the Petitioner, whereas none appeared for the Respondent/ complainant.

As per the brief facts of the case, the petitioner is one of the Director of Gevika Agro Food (P) Ltd. Her company borrowed business loan of Rs.25 lakhs from the complainant Bank and agreed to repay the loan in equated monthly instalment. The Managing Director of the Company Kalyankumar and this petitioner as a director had given personal guarantee for the repayment. To discharge the loan the company issued cheque for Rs.25,68,310/- signed by the Managing Director, which when presented for collection, was returned with endorsement “Payment Stopped by drawer”. Having failed and neglected to pay the cheque amount, the complaint was lodged. The petitioner in her quash petition had contended that she is not actively involved in the affairs of the company and hence, the case as lodged against her is not maintainable, since the cheque was not issued with her knowledge.

After considering the submission, the Bench found that the complaint clearly states that the money was borrowed for the business of the first accused company and this petitioner as one of the directors had stood guarantee for repayment of loan.

As directors of the company, she is responsible for the conduct of the business of the company, added the Bench. The Bench further noted that it is not the case of the petitioner that she was not a whole-time director or ex officio Director of the company.

Accordingly, the High Court dismissed the criminal petition.

Cause Title: K. Revathy v. Equitas Small Finance Bank Ltd

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