New Delhi: The Supreme Court has ruled that top rung officials like chairpersons, managing directors and directors of a firm can be held liable for criminal prosecution if a cheque issued by their company bounces at the bank.
The burden of proving that they were actually not in charge of the company at the time when the cheque was issued would rest on the officials, a bench of Justices Tarun Chatterjee and P K Balasubramanyam said while upholding an appeal filed by public sector BSNL.
Moreover, such a defence can be adopted by the accused only at the time of the trial but not during the registration of the case, the apex court said.
The bench gave its ruling while dealing with an appeal filed by N Rangachari, chairman and managing director of Data Access (India) Limited, to challenge the registration of a criminal case against him by BSNL after two cheques issued by the company were dishonoured at the bank.
Rangachari argued that no criminal case could be registered against him as he was only honorary CMD without any power to sign cheques and claimed that he had resigned from the firm on 26 August 2004, four days before the cheques was issued.
However, interpreting Sections 138 and 141 of the Negotiable Instruments Act, the apex court said it was enough for the complainant to have a fair belief that a particular officer was in charge of the company when the cheque was issued.