Full Text
HIGH COURT OF DELHI
Date of Decision: 7th February, 2013
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
JUDGMENT
1. In these six Petitions, the Petitioner invokes the inherent powers of this Court under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) for quashing of the six complaints filed under Sections 159/162 of the Companies Act, 1956 (the Act) filed against him.
2. The Petitioner’s case as set up in the Petitions is that M/s. AKG Acoustics (India) Ltd. (AKG Acoustics) was incorporated on 07.03.1988 and was registered as a Public Limited Company under Registration No.05- 033134 under the Companies Act. The Petitioner was inducted as a Director in the said Company on 31.01.1997. However, he (the Petitioner) resigned from his post of Directorship on 28.07.1997 vide a letter of resignation of even date (Annexure P-2).
3. The Petitioner alleges that a notice dated 17.02.2000 was issued by Respondent No.2 Registrar of Companies (ROC) to AKG Acoustics and its Directors for non compliance of some of the provisions under the Act. The said notice was also addressed to the Petitioner showing him as one of its Directors. The Petitioner sent a reply dated 25.04.2000 (Annexure P-3) to the ROC through his Chartered Accountant informing the ROC about his resignation w.e.f. 28.07.1997. The said reply was duly received in the office of ROC on 25.04.2000 itself. The Petitioner sent another reply dated 28.08.2000 under his own signatures (Annexure P-4) again intimating the ROC about his resignation from the Directorship w.e.f. 28.07.1997. According to the Petitioner a copy of the resignation letter was also enclosed with the reply submitted by him.
4. According to the Petitioner, Respondent No.2 filed two complaints against AKG Acoustics for not filing its annual return for the year ending 31.03.2003 under Sections 159/162 of the Act and for not placing the balance sheet for profit and loss account of the Company as on 31.03.2002 in its Annual General Meeting (AGM) within the stipulated period. In the said complaints, the Petitioner was not prosecuted as one of its Directors presumably on the premise that Respondent No.2 (ROC) acknowledged that the Petitioner had ceased to be its (AKG Acoustics) Director.
5. It is the case of the Petitioner that on 05.07.2007 Respondent No.2 filed six cases against AKG Acoustics and its Directors including the Petitioner for violation of various provisions of the Act. His grievance is that since the factum of his resignation was in the knowledge of Respondent No.2, he could not have been prosecuted as a Director of the Company, particularly in view of its own circular No.42 (400)-CL-II-59 dated 29.12.1959. The Petitioner, therefore, moved an application dated 23.04.2009 (Annexure P-6) in the Court of learned ACMM who was seized of the Complaints for dropping the proceedings against him. Respondent No.2 in spite of repeated adjournments failed to responsd to the said application for a period of more than three years. The Petitioner, therefore, approaches this Court for quashing of the Complaints.
6. The Counter Affidavit to the Petitions was not filed by Respondent No.2. During the course of arguments on 05.02.2013 while perusing the complaint case Nos.818 and 819, it transpired that there were some contradictions in Para 4 of the Complaints in as much as in Complaint Case No.818 of 2003, the title of the Complaint contained only two accused whereas in Para 4 it was stated that accused Nos. 2 to 5 were being prosecuted as Directors/officers of the Company. This Court, therefore, directed the learned counsel for Respondent No.2 to examine this aspect. Deputy Registrar of ROC was also required to appear along with the record with respect to AKG Acoustics.
7. The record of AKG Acoustics was produced by Mr. Krushna Shanker Pradhan, Deputy Registrar, in the Office of ROC. A perusal of the record reveals that these are loose papers and the record has not been properly maintained. Since no counter affidavit was filed, the Deputy Registrar was examined in respect of some of the averments made in the Petition with regard to the record of Respondent No.2. The Deputy Registrar in the office of ROC admitted that the reply dated 25.04.2000 to the notice dated 17.02.2000 was received in the office of ROC whereby the Petitioner had informed the ROC that he (the Petitioner) had resigned from the company w.e.f. 28.07.1997.
8. The submissions raised on behalf of the Petitioner are twofold. First, the filing of Form 32 to the ROC is not the responsibility of the Director, it being the responsibility of the Company. Thus non-filing of Form 32 is immaterial and as soon as the information regarding resignation is received by ROC, it is expected to make an inquiry in terms of the Circular No. 42 (400)-CL-II-59 dated 29.12.1959 and also make an inquiry whether the resignation from the Directorship is bonafide or not. Once the resignation is communicated and is not disputed by the ROC, such a Director cannot be prosecuted for any violation being a Director of the Company after the date of receipt of resignation. Reliance is placed on a judgment of a coordinate Bench of this Court in B.N. Kaushik v. The offences punishable under Sections 159/162 of the Act are punishable with fine only. Since these offences are not continuing offences, the Complaint could have been filed against an accused only within a period of six months, the Court was debarred from taking cognizance beyond the period of six months. Reliance is placed on B.N. Kaushik, Shalini Marwah and Anr. v. The Registrar of Companies, Delhi and Haryana, MANU/DE/0822/2005; and Saumil Dilip Mehta v. State of Maharashtra & Ors., AIR 2002 Bom. 194.
9. On the other hand, learned counsel for Respondent No.2 argues that unless Form 32 is received, it is difficult to accept that the Petitioner has resigned. The learned counsel points out that as per Form 32 received in the year 2000 Mr. S. Raja Gopalan had resigned from the post of Managing Director of M/s. AKG Acoustics (India) Ltd. If the Petitioner had also resigned, Form 32 in this regard would have been sent by the Company. Learned counsel urges that in exercise of its jurisdiction under Section 482 Cr.P.C., the High Court is not to go into the disputed questions of facts and the allegations made in the complaint will have to be accepted at its face value and its truth or falsity cannot be gone into by the Court at this stage. Reliance is placed on Iridium India Telecom Limited v. Motorola Incorporated & Ors. (2011) 1 SCC 74.
10. On the issue of limitation, the learned counsel for Respondent No.2 relies on earlier judgments of this Court in Anita Chadha v. The Registrar of Companies 74 (1998) DLT 537; and Sugga Engineering Works (P) Ltd. & Ors. v. State & Anr. Crl.M.(M) No.576-577/1987, decided on 17.11.1987 wherein a learned Single Judge of this Court had held that offence punishable under Sections 159/162 & 220/162 of the Act for failure of filing Annual Returns and balance sheet within the time are continuing offences and will be governed by the provision of Section 472 Cr.P.C. in the matter of limitation for lodging prosecution.
11. There is no gainsaying that the powers under Section 482 Cr.P.C. for quashing any criminal proceedings are to be exercised sparingly and with circumspection where the High Court is satisfied that the continuance of the proceedings would be abuse of process of any Court. As held in Iridium India Telecom Limited, the inherent powers ought not to be exercised to stifle legitimate prosecution but at the same time, when there is documentary evidence in possession of the Complainant or from the facts proved it is established that the accused is not liable to be prosecuted at all, the High Court in the exercise of its power under Section 482 Cr.P.C. must come forward to put an end to unnecessary harassment of a person who has been prosecuted without any basis.
12. In M.L. Gupta v. DCM Financial Services Limited 167 (2010) DLT 428 in spite of the allegations made in the Complaint that the Petitioner was the Director and in charge and responsible to the company for the conduct of its business on the date of the dishonour of the cheque, the criminal proceedings were initiated against him in spite of the fact that Form 32 filed by the company indicated that the Petitioner was no longer the Director of the Company on the alleged date of commission of the offence. The High Court quashed the proceedings in exercise of its powers under Section 482 Cr.P.C. Thus, if from the admitted documents, the Petitioner is able to show that he was not the Director of AKG Acoustics, he cannot be held responsible for filing the Annual Returns or for placing the balance sheet in the AGM of the Company, etc. Admittedly, an application dated 23.04.2009 (Annexure P-6) was moved by the Petitioner before the Trial Court for dropping the proceedings on the ground that he resigned from the Directorship w.e.f. 28.17.1997. He also stated that two letters with regard to his resignation were also written to the ROC. It is very intriguing that the ROC preferred not even to respond to this application for a period of almost three years compelling the Petitioner to approach this Court for quashing of the Complaint. The Petitioner had placed before the Trial Court not only the copy of his resignation letter but also the copies of letters through which he informed the ROC about his resignation.
13. According to the averments made in the Petition, a notice dated 17.02.2000 was issued by ROC to the Petitioner requiring him to show cause as to why he should not be prosecuted as a Director. The Petitioner avers that he submitted a reply dated 25.04.2000 through his CA (Annexure P-3) which was duly received in the office of ROC on 25.04.2000. The receipt of this reply is admitted by the Deputy Registrar office of ROC who appeared in the Court today. In the circumstances, it is established that the ROC was very much aware of the resignation tendered by the Petitioner, and, therefore, ROC was under obligation to hold an inquiry as envisaged by the Circular dated 29.12.1959.
14. The learned Single Judge of this Court in B.N. Kaushik relied on an earlier judgment of the coordinate Bench of this Court in Luc Auto Ancillary (India) Ltd. (In Liquidation) v. Laxmi Narain Raina & Ors.1999 (50) DRJ 101; and a judgment of the Division Bench of Bombay High Court in Saumil Dilip Mehta v. State of Maharashtra (2002) 39 SCL 102 and held that Registrar of Public Limited Company or a Private Limited Company can tender his resignation unilaterally and without filing the Form 32 and without sending a notice to the ROC. Paras 5 to 7 of the report are extracted hereunder:-
7. Reliance is also placed by the learned counsel for the petitioner upon a Division Bench Judgment of the Bombay High Court in Saumil Dilip Mehta vs. State of Maharashtra reported in (2002) 39 SCL 102 (Bom.), wherein, in paragraph 6, it has been held as follows:-
15. In this case, not only that the factum of resignation was intimated to the ROC; the ROC in Complaint Nos. 818/2003 and 819/2003 preferred not to prosecute the Petitioner as one of its Directors for non compliance for a period ending 31.03.2002 presumably accepting the Petitioner’s averments about his resignation.
16. Thus, in my opinion, the factum of the Petitioner’s resignation had come to the notice of the ROC at least on 25.04.2000 when the intimation with regard to same was submitted by the Petitioner in his reply to the show cause notice dated 17.02.2000. The Petitioner, therefore, could not have been prosecuted for violation of Sections 159/162 of the Act.
17. Since the Petitions are liable to be allowed on the short ground that ROC was informed about the Petitioner’s resignation on 25.04.2000. Admittedly, the prosecution was launched after the expiry of period of six months from the last date of filing the return etc. I would stay my hands off the question whether the offence under Section 159 read with Section 162 of the Act were continuing offences or not and the divergence of opinion in B.N. Kaushik on the one hand and Anita Chadha and Sugga Engineering Works (P) Ltd on the other.
18. The Petitions are accordingly allowed and the prosecution in the earlier said complaints are quashed.
19. Pending applications stand disposed of.
JUDGE FEBRUARY 07, 2013 vk