Top executives can be prosecuted for bounced cheque
According to a ruling by the Supreme Court, top executives of an organisation, such as a Director / CEO / Managing Director, can be prosecuted if a cheque signed by them bounces due to insufficient funds.
This can happen if the person filing the complaint makes a specific charge against such persons in their complaint.
Recently, Tata Finance Ltd. had moved the courts against Paresh Rajda and Vijay Shroff, MD and Director of a company after a cheque of Rs.1 lakh issued by them was returned due to insufficient funds. The Bombay High Court dismissed Rajda’s plea after which he moved the Supreme Court.
The court sought to make a distinction however, between a person not liable for prosecution merely because of designation, and a person who could be deemed to be in charge of and responsible for the conduct of the company’s business.
