Liaility of Resigned Director & Shareholder in Pvt Ltd co.

1.  IF a director has  "duly"  resigned under acknowledgement from the company and the local ROC, THEN  there is no liability applicable ariaising after the date of resignation.

2.  HOWEVER, since a "bounce cheque" matter under he N.I.Act,  is considered as a "Vicarious Liability",  the signatory of the cheque is, by default,  liable for "bounce cheque" prosecution,  (even if resigned)  unless and untill the Company files a declaration in the Court absolving the Directors liability and deputing a "legal representative" to represent the company in court (subject to various parameters).  A revised & updated Form-32 under the Companies Act, may be filed with ROC and the Court in the matter.

3.  The onus of responsibilty is on the resigned director, who has to clear his lawful obligations before resigning,  that is withdrawal of signed cheques and honouring of other third party liabilities in whatever form and handover of all assets (Car, House, Phone or whatever) of the company in his possession. The Company too should accept resignation of such director, after absolving the directror of all his liabilities (including pending cheques)

4.  A resigned director may not possess or retain any company owned assets (car, house, phone etc....) after the date of resignation, else it would amount to fraud on part of the resigned director, for deliberate concealment of company assets.

Keep Smiling .... Hemant Agarwal

Thanks Hemant for your reply. I am still confused with your reply:

1.  Since my client has resigned and transferred his shares to another director and shareholder of the same company, why he should carry any liability now ?

2. Would my client be still responsible for the bounced cheque, issued for a date after the resignation date. Cheque is issued on the behalf of the company with my client has one of the authorized signatories, should not the liability of bounced cheque be limited to company itself and not amounting to personal obligation of my client

3. Bank account of such cheque has been frozen due to the forgery act done by other director. Will such cheques will be treated as bounced cheques ??

My client now has fear that other director might forge his signature and bounce the cheque.

In the bounced cheque, company and all the signatories will be parties. Then, what will be the liability of the authorized signatoryies for a cheque, say of amount Rs. 1 lacs if the authorized signatory is just 3% shareholder in the company

1.  The criminal courts (Trial court) has no jurisdiction to determine ratio of Diectors responsibility (ratio/percentage of Share holding)  AND neither there is any such provision under the N.I.Act.    AND neither the punishment under N.I.Act can be awarded on ratio/percentage of share holding or responsibility.

2.  All such ratio / perceftage determination on the authorised and paid up capital can be considerered only at the time of winding up / dissolving / closing the company.  Bank account can be frozen / suspended only and only by a Statutory order / court order and once that is done then even if a cheque gets dishonoured THEN N.I.Act is not attracted.

3.  Transferring of own share holding to another director does not absolve the first director of the Criminal liability (Vicarious Liability or whatever).  That may be acceptable under the Companies Act, Contract and other laws, but not under the N.I.Act,  BUT it would depend if the first director has made a specific agreement with the another director which should have included take over of the Criminal & Civil liabilities, in its entirety by the another director.  Till then the criminal liability of the first director stands intact in a criminal court.

4.  The cheque may be issued on behalf of the company, BUT it is the Director who issues it using his brains or whatever, thereby deriving the vicarious liability resulting into Fine / Imprisonment.  IT is fortunate enough that the Co. cannot be imprisoned, ELSE ALL THE DIRECTORS COULD PREFER TO GET THE CHEQUES DISHONOURED AND ENJOY THEIR PATIALA PEGS.

Keep Smiling .... Hemant Agarwal
 

Hi SIr/ All,

My client was Director in Pvt Ltd firm During Aug 2012 to March 2013, raw material was purchased during this period

1. my client was not signature authority for cheques and bank accounts

2. after my clients resignation cheque bounced. about in april

3. all directors are underground and firm is also no more, they ran away

now the party of raw material suppliers claim that my client has to pay it.....

please guide me for this 

Hi SIr/ All,

My client was Director in Pvt Ltd firm During Aug 2012 to March 2013, raw material was purchased during this period

1. my client was not signature authority for cheques and bank accounts

2. after my clients resignation cheque bounced. about in april

3. all directors are underground and firm is also no more, they ran away

now the party of raw material suppliers claim that my client has to pay it.....

please guide me for this

ALOK JI 

FIRST OF ALL CLIENT IS RESIGNED WITH ALL THE FORMALITIES ACCORDING THE ROC RULES AND IF THERE IS ANY LIABILITIES ARISE YOU CAN NOT MEASURE IT ON PRIMERY LEVEL....THERE IS MANY MANY ISSUE ARISES IF OLD DIRECTOR INTENTION IS WRONG.....

SO PLEASE MY REQUEST IS THAT YOU CAN CHECK ALL THE POSSIBILITIES NORMALLY AND CONFINDENT TO YOUR CLIENT TO FACE THE FUTURE RISK.

IT IS LIKE A INSURANCE AND ASSURANCE.......

THANKS 

AVADHESH PALIWAL