New Delhi, Feb 8 (PTI) A former director of a companycannot be prosecuted in cheque bounce cases unless there issufficient evidence to prove his/her vicarious liability asotherwise it would cause grave harm to a person''s reputation,the Supreme Court has held.
"Criminal prosecution is a serious matter, it affectsthe liberty of a person. No greater damage can be done to thereputation of a person than dragging him in a criminal case."In our opinion, the High Court fell into a grave errorin not taking into consideration the uncontroverted documentsrelating to the appellant�s resignation from the post ofdirector of the company. Had these documents been consideredby the High Court, it would have been apparent that theappellant has resigned much before the cheques were issued bythe company," the apex court said.
A bench of justices Aftab Alam and R M Lodha passedthe judgement while upholding the appeal filed by HarshendraKumar, a former director Rifa Health care(India)challengingthe summons issued by a magistrate in West Bengal in a caserelating to 18 cheques issued by the company being dishonouredby the bank due to insufficient funds.
Kumar''s plea that he had resigned as a director of thecompany prior to the issuance of the bounced cheques wasrejected by both the magistrate and the Calcutta High Court,following which he appealed in the apex court.