Shashank Shivdev
Asked August 29, 2016

Ex-Co-Director suing for stopping cheque

  • 1 Answer

I had incorporated a company on March 4th with my co founder *****. Both of us are directors of the company. After a couple of months, he decided to leave the company in pursuit of MS. He gave me his resignation from the board (I haven't processed it as I have been in Hyderabad since then. I told him I'd pay him his share of (incorporation costs + broker charges = 12,000) (we used a broker to find a office) and he'd resign and let me bring my friend on the board. So, I gave him a post dated cheque. But I decided to not pursue the business anymore and settled on a fellowship programme at IIT. So when the time came, I stopped the cheque. Technically he is still a director. Now he has sent a notice under Section 138 of the Negotiable instruments Act that I am liable for 12,000. Kindly advise.

Answer 1

Default avatar
Ayushi Singhal

While section 138 of the Negotiable Instruments Act makes a person liable for dishonor of cheque, including when the cheque has been dishonored because of stop-payment by the drawer, it is subject to section 139 of the Act. A reading of these two sections leads one to the conclusion that one is liable under Section 138 only when the cheque was issued in pursuance of a legally enforceable debt or liability (Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375). As per the facts you have described, it appears that you had no legally enforceable obligation, and hence you should reply to the notice accordingly. 

Agree Comment 0 Agrees about 5 years ago

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