The Delhi High Court, in a concise order dated 28 July 2026, dismissed three revision petitions filed by Sarveshwar Shrivastava, holding that the question of his resignation as director at the time of alleged cheque dishonour under Section 138 of the Negotiable Instruments Act is a factual dispute for the trial court, not a matter for interlocutory review.
Background & Facts
The Dispute
The petitioner, Sarveshwar Shrivastava, a former director of Modern Paper Mart Pvt. Ltd., is facing prosecution under Section 138 of the Negotiable Instruments Act, 1881 for alleged dishonour of several cheques. He contends that he had resigned from the company well before the dates on which the cheques were issued, and therefore should not be liable.
Key Facts
- Petitioner: Sarveshwar Shrivastava, former director of Modern Paper Mart Pvt. Ltd.
- Resignation date: 11 October 2023.
- Cheques alleged to be dishonoured: 16 February 2025, 24 February 2025, 04 March 2025, 12 March 2025, 22 March 2025.
- Offence: Prosecution under Section 138 of the Negotiable Instruments Act, 1881.
- Revision petitions filed: CRL.M.C. 5279/2026, CRL.M.C. 5280/2026, CRL.M.C. 5282/2026.
- Respondent: Modern Paper Mart Pvt. Ltd. and others (no appearance recorded).
Procedural History
- 11 Oct 2023: Petitioner resigns as director of the respondent company.
- 16 Feb 2025 - 22 Mar 2025: Dates of the cheques that are the subject of the Section 138 complaint.
- Date unspecified: Criminal complaint filed against the petitioner under Section 138.
- 28 Jul 2026: Delhi High Court delivers judgment dismissing the three revision petitions.
Parties' Positions
- Petitioner: Argues that his resignation predates the issuance of the cheques and therefore he cannot be held liable under Section 138.
- Respondent/Complainant: Maintains that the resignation does not automatically extinguish liability and that the factual issue of the petitioner’s status at the time of cheque issuance must be examined by the trial court.
Relief Sought
The petitioner sought dismissal of the revision petitions and a direction that the trial court determine, based on evidence, whether he had ceased to be a director at the relevant times.
The Legal Issue
Whether the resignation of a director prior to the issuance of cheques alleged to be dishonoured under Section 138 of the Negotiable Instruments Act can be determinative of liability at the revision stage, or whether the question of resignation remains a factual issue to be decided by the trial court.
Arguments Presented
For the Petitioner
- The petitioner relied on the factual chronology that his resignation on 11 Oct 2023 preceded all cheque dates in 2025, contending that this fact should preclude any liability.
- Cited RL Toshniwal v. Indo Rama Synthetics (India) Ltd. (2003) 68 DRJ 474, emphasizing that the resignation of a director is a factual question that must be adjudicated with evidence at trial.
- Submitted that the revision petitions are premature because the contested fact has not been admitted or disproved by the complainant.
For the Respondent
- The respondent argued that resignation does not ipso facto absolve a former director from liability under Section 138; the issue of liability must be examined on the basis of the director’s role at the time of cheque issuance.
- Relied on precedents such as Sunaina R. Mathani v. NCT of Delhi and Anurag Modi v. MSTC Ltd. to assert that the trial court is the appropriate forum for factual determination.
The Court's Analysis
The Court began by noting that the petitioner is charged under Section 138 of the Negotiable Instruments Act, 1881, and that his principal grievance is the alleged premature summoning of the complaint despite his resignation.
The Court observed that the factual question of whether the petitioner had ceased to be a director at the relevant times is disputed and cannot be conclusively resolved at the revision stage. It reiterated the principle articulated in RL Toshniwal v. Indo Rama Synthetics (India) Ltd. that “once the accused persons have been summoned to face trial under Section 138 of the Act, the question as to whether such persons had resigned from the accused company… can be decided only after evidence is led by the parties at the appropriate stage.”
Further, the Court cited Sunaina R. Mathani v. NCT of Delhi and Anurag Modi v. MSTC Ltd. to reinforce that the trial court, not a revisional forum, is the proper arena for adjudicating factual disputes concerning the status of a director.
The judgment also referred to the Supreme Court’s observations in Municipal Corporation of Delhi v. Purshotam Dass Jhunjunwala and Raj Lakshmi Mills v. Shakti Bhakoo, underscoring that the factual matrix surrounding a Section 138 offence must be examined with the benefit of evidence.
The Court further noted that the petitioner may place all relevant documents before the trial court during the admission/denial stage, allowing the trial court to pass appropriate orders after hearing the complainant.
"It is, however, clarified that there is no adjudication on merits and about the abovesaid question of fact and it will be, entirely, up to the learned Trial Court to answer the same at appropriate stage, in accordance with law."
Consequently, the Court dismissed all three revision petitions, emphasizing that no merits have been decided and that the trial court retains jurisdiction to determine the factual issue of resignation.
The Verdict
All three revision petitions - CRL.M.C. 5279/2026, CRL.M.C. 5280/2026, and CRL.M.C. 5282/2026 - are dismissed. The High Court makes no determination on the merits of the Section 138 charge. It directs that the factual question of the petitioner’s resignation and consequent liability be decided by the learned Trial Court at the appropriate stage, and it disposes of the pending applications.
What This Means For Similar Cases
Resignation Is Not an Automatic Shield
- A director’s resignation prior to alleged cheque issuance does not automatically exempt him from liability under Section 138.
- Courts will treat the resignation as a factual issue that must be proved or disproved with evidence during trial.
Revision Petitions Cannot Resolve Factual Disputes
- Parties should avoid using revision petitions to settle factual questions such as the status of a director.
- Evidence and documentary proof should be presented at the trial stage, especially during the admission/denial of documents.
Evidence Must Be Placed Before the Trial Court
- Petitioners should file all relevant resignation letters, board minutes, and correspondence with the trial court promptly.
- Failure to do so may result in the court treating the issue as undisputed and proceeding with the prosecution.
