The Rajasthan High Court has quashed criminal proceedings initiated against a former school principal in a cheque dishonour case, holding that a person who had already resigned from service before the cheque was issued cannot be held responsible for the affairs of the institution.
Justice Anoop Kumar Dhand ruled that continuing such prosecution would be legally unsustainable where the undisputed record showed that the petitioner had ceased to hold the post before the cheque came into existence.
Background of the Case
The petition was filed by Mohan Lal Sharma, who challenged an order of the Additional Chief Judicial Magistrate, Nainwa, Bundi, taking cognizance against him under Section 138 of the Negotiable Instruments Act in a cheque dishonour complaint.
According to the petitioner, he had served as the Principal of St. Soldier Senior Secondary School but resigned from the post on 24 March 2017. He argued that the cheque dated 28 April 2017 had allegedly been issued after his resignation and was later presented for encashment, where it was returned unpaid due to insufficient funds. He further contended that although the complaint itself acknowledged his resignation, criminal proceedings were initiated only against him despite the school and its management being involved in the matter.
The respondents opposed the petition, maintaining that the cheque carried the petitioner's signature and, after its dishonour, proceedings under Section 138 of the Negotiable Instruments Act had been rightly initiated.
Court's Observations
After examining the complaint and documents placed on record, the High Court found that the complainant had himself admitted that Mohan Lal Sharma had already resigned from the post of Principal before the complaint was filed.
The Court also noted that documentary material clearly established that the resignation took effect on 24 March 2017, whereas the cheque bore the later date of 28 April 2017. Therefore, at the relevant time, the petitioner was no longer responsible for managing the affairs of the school.
Justice Dhand expressed concern that no cognizance had been taken against the school management or its Director, while proceedings had continued only against a person who had already left the institution.
Referring to the Supreme Court's decisions in Adhiraj Singh v. Yograj Singh and Anita Malhotra v. Apparel Export Promotion Council, the Court reiterated that a person who has resigned before the issuance of a cheque and is no longer connected with the affairs of the organisation cannot ordinarily be held vicariously liable for cheque dishonour proceedings under the Negotiable Instruments Act.
The bench observed:
“The petitioner cannot be held responsible for the affairs of the School after his resignation.”
The Court further remarked that criminal prosecution has serious consequences for an individual's liberty and reputation and should not continue against a person who was no longer associated with the institution when the cheque was allegedly issued.
Decision
Holding that the petitioner could not be made responsible for a cheque allegedly issued after his resignation, the Rajasthan High Court quashed the magistrate's order taking cognizance against him.
Justice Anoop Kumar Dhand allowed the criminal miscellaneous petition, set aside the impugned order, and disposed of all pending applications.
The Court also clarified that the complainant would remain free to proceed in accordance with law against those who were actually responsible for the transaction.
Case Details
Case Title: Mohan Lal Sharma v. Ashok Vardhan Singh & Ors.
Case Number: S.B. Criminal Miscellaneous (Petition) No. 7077/2021
Judge: Justice Anoop Kumar Dhand
Decision Date: 14 July 2026
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