Delhi High Court
Ganesh Krishnamurthy vs The State (Nct Of Delhi) & Anr on 7 February, 2013
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 7th February, 2013
+ CRL. M.C. 878/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
+ CRL. M.C. 879/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
+ CRL. M.C. 880/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
Crl.MC 878/2012 Etc. Page 1 of 13
+ CRL. M.C. 881/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
+ CRL. M.C. 882/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
+ CRL. M.C. 886/2012
GANESH KRISHNAMURTHY ..... Petitioner
Through: Ms. Jyoti Singh Sr. Adv. with
Ms. Shahila Lamba, Adv.
Mr. Sudershan Rajan, Adv.
versus
THE STATE (NCT OF DELHI) & ANR. ..... Respondents
Through: Ms. Rajdipa Behura, APP for the State.
Mr. Saqib, Adv. for R-2.
Crl.MC 878/2012 Etc. Page 2 of 13
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J. (ORAL)
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
Registrar of Companies (2009) 150 CompCas 97 (Delhi). Second, 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:-
"5. In the instant case, the learned counsel for the petitioner
submitted that the complaint initiated on behalf of the respondent
is ex-facie contrary to the facts deposed by the respondent before
the High Court in CA No.606/1984 in CP No.109/1984, that is, in
the proceedings for winding up of the company titled Ram Kishore
Sharma vs. Toyo Lamps Pvt. Ltd. In the said proceedings, an
affidavit had been filed by the respondent categorically admitting
the receipt of the resignation letter dated 27.07.1971 from the
petitioner No.1. Paragraph 12 of the said reply by way of affidavit
clearly admits that the petitioner addressed the said resignation
letter to the Board of Directors and a copy was forwarded to the
office of the respondent, which reads as follows:-
"The averments made in para 16 are admitted to the extent
that Shri B.N. Kaushik, Secretary of the company addressed
a letter dated 27th July, 1971 to the Board of Directors and
copy forwarded to the O ice of the respondent stating his
inability to remain as honorary Secretary of the Company
w.e.f. 27-7-1971. However, Form No.32 has not been filed
by the company in respect of the resignation of Sh. B.N.
Kaushik as Secretary of the company w.e.f. 27-7-1971 and
the other averments made in the aforesaid para are denied
for want of knowledge."
6. Reliance is placed by the learned counsel for the petitioner upon
the judgment of a learned Single Judge of this Court (Hon'ble Mr.
Justice D.K. Jain as His Lordship then was) in Luk Auto Ancillary
(India) Ltd. (In Liquidation) vs. Laxmi Narain Raina & Ors., 1999
(50) DRJ 101, the relevant portion of which reads as follows:-
"I have heard Mr. Sharma, learned counsel for the
applicant, respondent No.4 herein and Mr. Luthra, learned
counsel for OL. In addition to what has been pleaded in the
application, it is also pointed out by Mr. Sharma that at the
time of recording of evidence of the parties, when Mr. M.C.
Saxena, Junior Technical Assistant, O ice of the Registrar of
Companies, North Zone, was examined on 18 July, 1986, he
categorically admitted that an intimation about the
resignation of the applicant was received in the Office of
Registrar of Companies. Further, the attention of the Court
has also been invited to a circular issued by the Department
of Company Affairs, stating that where Registrar receives a
communication from any Director about his resignation,
Registrar should enquire whether the resignation of such
Director is or is not bonafide and if he finds that Director
has resigned bonafide from the Directorship of the company,
he should not start prosecution against such Director,
irrespective of the fact whether such resignation was or was
not accepted by the company. It is pleaded by Mr. Sharma
that no communication was received from the Office of
Registrar of Companies, rejecting his letter of resignation. It
is also contended that, thereafter, no prosecution was
launched against the applicant by the Registrar of
Companies for a default on the part of the company, which
shows that his resignation was deemed have been accepted.
Mr. Luthra, on the other hand, has pointed out that in the
statement of Mr. M.C. Saxena, it was stated that on receipt of
intimation regarding the resignation by the applicant, he was
asked to file Form No.32 and the balance sheet etc. of the company
in liquidation but it was done and, therefore, it could not be said
that the applicant's resignation had been accepted.
In view of the fact that letter of resignation, as sent to the Registrar
of Companies was not rejected and the fact that after the receipt of
the said letter no prosecution is stated to have been launched
against him, presumably in terms of the aforesaid circular issued
by the Department of Company A airs, the non-furnishing of Form
No.32 by applicant No.2 is of no consequence.
Accordingly, for the foregoing reasons, the application is allowed
and the applicant is discharged in Crl.O.2/82."
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:-
"6. The submissions advanced by the litigating parties are
touching an important point involved in this matter which
make us to express our views on the point whether a director
of a public or private limited company can resign
unilaterally and that too by writing a letter to the chairman
of the said company or its secretary. It is necessary for such
a director to fill up Form No.32 and is obliged to give a
notice or intimation to that effect to the Registrar of
Companies ('ROC')? The question arises for our
Adjudication is whether that particular director is obliged to
give such information to the ROC and whether he cannot
retire without complying with the said requirement. Keeping
in view the provisions of the Companies Act, 1956, the
relevant articles of the Constitution of India, we come to the
conclusion that a director of the public limited company or
private limited company can tender his resignation
unilaterally and without filling in Form 32 and without
sending a notice to the Registrar of Companies. It is clear
that the filling in of the said Form and the giving of due
intimation and information to the Registrar of Companies is
the duty of the company secretary and not of an individual
director. Suffice it to say that what he has to do is to send in
writing a letter informing either the chairman or the
secretary of the company, as the case may be, his intention
to resign from the post of the director of the said company.
Thereafter the said letter has to be moved in the meeting of
the directors of the company, it may be ordinary meeting or
may be extraordinary or special meeting, as the case may
be, and the board of directors have to take a decision
whether the Board is accepting his resignation or not. An
intimation should be sent to such director and after such
resolution is passed, the company secretary is under the
obligation to comply with the legal formalities for giving a
finishing touch to the resolution which has been passed in
the said meeting of the board of director. It is for the
company secretary to fill in the forms as prescribed and to
give due information and intimation to the ROC, as the law
requires. Thereafter, it has to be so mentioned in all
prescribed registers of the company, accounts and balance
sheet of the company and thereafter the said fact is to be
brought to the notice of the members of the company as
early as possible and at the latest in annual general
meeting."
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.
(G.P. MITTAL)
JUDGE
FEBRUARY 07, 2013
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