Sri. Vijayendra Babu vs The Registrar Of Companies
2023 Latest Caselaw 7811 Kant

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       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 18TH DAY OF NOVEMBER, 2023

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

         WRIT PETITION No.16395 OF 2023 (GM - RES)


BETWEEN:

SRI. VIJAYENDRA BABU
S/O RAMAKRISHNA GOWDA
AGED ABOUT 58 YEARS
RESIDING AT E-08
UNIWORTH TRANQUIL ROW HOUSES
DODDABALE MAIN ROAD
BENGALURU - 560 060
THE EARLIER ADDRESS SHOWN IS NO.138
2ND STAGE, 1ST BLOCK, H-CROSS
NAGARBHAVI
BENGALURU - 560 072
                                              ... PETITIONER
(BY SRI GAUTAM S.BHARADWAJ, ADVOCATE)

AND:

1.   THE REGISTRAR OF COMPANIES
     'E' WING, 2ND FLOOR
     KENDRIYA SADANA
     KORAMANGALA
     BENGALURU - 560 034.

2.   M/S SPECTRA LAMPS PVT. LTD.,
     A COMPANY REGISTERED UNDER
     THE COMPANY'S ACT, 1956
     REPRESENTED BY ITS
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     MANAGING DIRECTOR
     C.HEMANTHKUMAR
     HAVING ITS
     REGISTERED OFFICE AT
     NO.16A,
     SOMANAHALLI INDUSTRIAL AREA
     MADDUR TALUK
     MANDYA DISTRICT - 571 429.
     ALSO AT NO.5
     14TH A CROSS, WEST OFF CHORD ROAD
     2ND STAGE, 2ND PHASE
     BENGALURU - 560 086.

3.   C. HEMANTH KUMAR
     AGED ABOUT 60 YEARS
     M/S SPECTRA LAMPS PVT. LTD.,
     NO.45, NAL LAYOUT
     JAYANAGAR 4TH 'T' BLOCK
     BENGALURU - 560 041.

4.   SMT. SHEELA KUMAR
     AGED ABOUT 52 YEARS
     MANAGING DIRECTOR
     M/S SPECTRA LAMPS PVT. LTD.,
     NO.45, NAL LAYOUT
     JAYANAGAR 4TH 'T' BLOCK
     BENGALURU - 560 041.
                                          ... RESPONDENTS

(BY SRI H.SHANTHI BHUSHAN, DSGI FOR R1;
    SRI PUTTIGE R.RAMESH, SR.ADVOCATE A/W
    SMT.LAKSHMI HOLLA, ADVOCATE FOR R3 AND R4)


     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT R-1 TO
PRODUCE ALL RECORDS OF R-2 COMPANY (I.E M/S SPECTRA
LEGAL PRIVATE LIMITED)FROM THE DATE OF INCORPORATION OF
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THE COMPANY; TO DECLARE THAT THE PETITIONER CEASED TO BE
DIRECTOR OF R-2 COMPANY(I/E M/S SPECTRA LEGAL PRIVATE
LIMITED) FROM 23.02.2008 AND ETC.,


     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED

FOR ORDERS ON 09.11.2023, COMING ON FOR PRONOUNCEMENT

THIS DAY, THE COURT MADE THE FOLLOWING:-



                              ORDER

The petitioner is before this Court seeking a direction to the

1st respondent/Registrar of Companies to produce all records of the

2nd respondent/Company - M/s Spectra Lamps Private Limited ('the

Company' for short) from the date of incorporation of the Company.

Sequential prayer is to declare that the petitioner has ceased to be

the Director of the 2nd respondent/Company from 23-02-2008 and

has also sought certain consequential directions.

2. Heard Sri Gautam S.Bharadwaj, learned counsel appearing

for the petitioner, Sri H.Shanthi Bhushan, learned Deputy Solicitor

General of India for respondent No.1 and Sri Puttige R. Ramesh,

learned senior counsel appearing for respondents 3 and 4.

3. Facts, in brief, adumbrated are as follows:-

The 2nd respondent-M/s Spectra Lamps Private Limited comes

to be incorporated on 02-01-1995 with the petitioner and his wife

as its Directors. The business of the Company was manufacturing of

tube lights and other lighting equipments. At the relevant point in

time, it is the claim of the petitioner that when the Company was

represented by one C. Hemanth Kumar, the 3rd respondent herein,

he had entered into a loan agreement whereby he had agreed to

lend a sum of `1,21,00,000/- to the Company and to clear the

outstanding loan of the Company payable to the Karnataka State

Financial Corporation. It is the claim of the petitioner that the 3rd

respondent, as a measure of security, was to retain the title

documents of certain properties along with blank signed forms.

Disputes emerge between the petitioner and the 3rd respondent, all

of which lead to the 3rd respondent registering a private complaint

under Section 200 of the Cr.P.C., which then becomes a criminal

case in C.C.No.31986 of 2009. The learned Magistrate in terms of

the judgment dated 04-02-2015 acquits accused Nos.1 and 2, the

Company and its Managing Director - the present petitioner and his

wife of the offences punishable under Section 138 of the Negotiable

Instruments Act, 1988 ('the Act' for short).

4. The acquittal was called in question by the 3rd respondent

before this Court in Criminal Appeal No.422 of 2015. This Court in

terms of its order dated 14-10-2022 upturns the acquittal and

convicts accused 1 and 2, the Company and the petitioner. The

petitioner challenges the said order before the Apex Court in

S.L.P.(Criminal) No. 11205 of 2022. The S.L.P. comes to be

rejected on 02-12-2022. After the said rejection by the Apex Court,

an application is filed before the co-ordinate Bench of this Court

which had passed the order in the criminal appeal seeking

correction of certain errors under Section 362 r/w 482 of the CrPC.

This application is rejected in terms of the order dated 23-06-2023.

Thus, fails all efforts of the petitioner to get himself acquitted of the

order of conviction. Now the petitioner again knocks at the doors of

this Court in the subject petition seeking the aforesaid prayers.

5. The learned counsel appearing for the petitioner would

vehemently contend that the petitioner had submitted his

resignation to the Company in the year 2008 itself. The status of

the petitioner is still in limbo. He has filed this petition only to get

to know what his status is in the Company.

6. Per-contra, the learned senior counsel Sri Puttige R.

Ramesh representing respondents 3 and 4, taking the Court

through the application filed seeking rejection of the petition would

submit that the petitioner is playing mischief with the Court as it is

a mischievous petition after having lost even before the Apex Court

to get the conviction set aside. The petitioner is now wanting to

reopen from the stage of submission of his resignation in the year

2008, a document which is not even available in the file in any

quarter. He would take serious objection to the description of the

3rd respondent in the petition where he is described as Managing

Director of the Company. It is the submission of the learned senior

counsel that the 3rd respondent is neither the Director nor the

Managing Director in terms of the findings rendered by the co-

ordinate Bench of this Court. He has, therefore, preferred an

application seeking correction of the cause title. The learned

counsel for the petitioner would admit the inadvertence in

describing the 3rd respondent as the Managing Director of the

Company but would feigningly try to add that the 3rd respondent is

a Director.

7. The learned Deputy Solicitor General of India,

Shri H.Shanthi Bhushan, qua the first prayer that is sought has filed

his counter affidavit appending a Notification which deals with

destruction of records beyond a period of 5 years and would submit

that records are destroyed. There is nothing that the petitioner can

now seek 15 years after the emergence of the letter.

8. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

9. The afore-narrated facts are not in dispute. The dispute

that arose in terms of a memorandum of understanding lead the 3rd

respondent to the criminal Court by invoking Section 200 of the

Cr.P.C., for offence punishable under Section 138 of the Act. The

Company, the petitioner and his wife were arrayed as accused. The

allegation related to the 3rd respondent handing over certain funds

to clear dues of the Company with the Karnataka State Financial

Corporation. Going back into the merit of the matter is not

required as the learned Magistrate in C.C.No.31986 of 2009 acquits

the Company and the petitioner for offence punishable under

Section 138 of the Act. The acquittal is called in question by the 3rd

respondent before this Court in Criminal Appeal No.422 of 2015.

This Court in terms of its order dated 14-10-2022 on points 2 and

3, upturns the acquittal and convicts the petitioner. The co-

ordinate Bench holds as follows:

                             "..... .....    .....

      POINT NO.(ii)

13. Unhesitatingly it can be held that the findings of the Magistrate are incorrect. There is no dispute about issuance of cheques by the second accused on behalf of Company as its Managing Director and in his individual capacity. The defence version is that the complainant having taken over the Management of the first accused-company loses right to enforce the liability. Ex.D.4 is the document that the accused no.2 has relied upon. It is a copy of Memorandum of Understanding (MoU) dated 14.2.2008. It appears that PW.1 - the complainant admitted the copy of MoU when it was confronted to him during his cross-examination, and therefore it was taken on record as an exhibit. Any way coming into being of MoU is not disputed and it indicates that second accused and his wife Smt. Menaka resigned their Directorship of the Company and the complainant agreed to take over the company. The complainant also agreed to submit Form 32 to the Registrar of Companies. Sri. Puttige Ramesh argued that Form 32 should

have been submitted by outgoing directors, and it was not submitted. It is not in dispute that Form No.32 was not submitted to the Registrar of Companies, and thereby notwithstanding the stipulations found in Ex.D.4, there did not come into effect any change in the management of the company. It is true that Ex.D.1, which is a resolution dated 23.2.2008 shows that the complainant and Smt. Sheela Kumar were appointed as the directors. In Ex.D.2 the complainant is shown as the occupier of the company. Ex.D.3 is a letter dated 26.2.2008 written by the complainant as the Managing Director accepting the resignation of one Ramesh H.K. Ex.D.7 is a Photostat copy of a letter dated 10.2.2009 written by the second accused to the Registrar of Companies stating that the Company was taken over by the complainant and he came to know that Form 32 had not been filed. This letter does not contain seal of the Office of Registrar of Companies for having received original of it, and therefore it cannot be relied upon. Ex.D.8 and Ex.D.9 are copies of two letters dated 21.1.2009 and 5.2.2009 respectively addressed by the second accused to the Branch Manager of Bank of India, Bangalore Main Branch, K.G.Road, Bengaluru stating that the company had been taken over by the complainant. Ex.D.8 does not contain acknowledgment seal of the bank, but Ex.D.9 contains such a seal. It is clear that the endeavour of the accused by producing these documents was to rebut the evidence of the complainant that the cheques became unenforceable and thereby legally enforceable liability did not exist. But the complainant relies on Ex.P.22 which is said to be a settlement that came into existence on 5.2.2009 between the complainant and the company. Actually Ex.P.22 is a letter written by the company and signed by the second accused stating that all the earlier agreements and understandings were cancelled and the second accused confirmed that he was the Managing Director of the Company and that he took back all the original documents executed by him and the company in favour of the complainant. In Ex.P.22 there is a clear reference to the cheques, Ex.P1 to P.3 being issued acknowledging the outstanding liability of the company as Rs.1,90,50,000/-. PW.2 establishes execution of Ex.P.22. He may not be aware of contents but he signed as a witness to the execution of Ex.P.22. There is no effective cross- examination of PW.1 on Ex.P.22. One suggestion found is that the complainant has misused Ex.P.22. That means accused no.2 does not dispute execution of Ex.P.22 and according to him

it was misused. Therefore if on 5.2.2009, Ex.P.22 came into existence nullifying the MoU and other agreements, Ex.D7,D.8 and D.9 can hardly have any effect. If this is the picture obtainable from documentary evidence, the findings of the Magistrate cannot be sustained. A clear conclusion can be drawn that the cheques were issued for discharging part of the liability of the company. As can be made out from Ex.P.22, Ex.P.1 to P.3 were post dated cheques; they do not appear to have been issued on any anterior date by way of security. It is admitted that the cheques were dishonoured for insufficiency of funds in the bank accounts. Demand notice was issued within the prescribed time. Demand was not fulfilled and thereby penal consequences under Section 138 of N.I. Act ensued. For these reasons, the findings of the Magistrate cannot be sustained. Point No.2 is therefore answered in negative.

POINT NO.(iii)

14. In view of discussion on points (i) and (ii), the acquittal judgment requires to be set aside. In regard to dishonour of cheque as per Ex.P.1, the first accused is to be convicted and in terms of section 141 of N.I.Act, accused no.2 who is its Managing Director is to be sentenced. And in regard to cheques as per Ex.P.2 and Ex.P.3, accused is to be held guilty and sentenced for the offence under section 138 of N.I.Act. It may also be noted here that since the case is pending for the past thirteen years, the complainant needs to be compensated adequately from the fine amount. Hence the following:

ORDER

Appeal is allowed. The judgment of acquittal in C.C.No.31986/2009 on the file of XXII Addl. Chief Metropolitan Magistrate, Bengaluru is set aside. Conviction for the offence under section 138 of N.I.Act is recorded against first accused.

For the conviction recorded against accused no.1, second accused is directed to pay fine of Rs.2 Crore and in default to pay fine, he shall serve simple imprisonment for a period of six months. Out of the fine amount of Rs.2 Crore, complainant shall be paid compensation of Rs.1,99,75,000/-. Rs.25,000/- shall be defrayed towards prosecution expenses.

For the conviction recorded against second accused in his personal capacity, he is sentenced to fine of Rs.75,000/- and in default he shall serve simple imprisonment of one month. Out of fine amount of Rs.75,000/-, the complainant is entitled to compensation of Rs.70,000/-. Rs.5,000/- shall be defrayed towards prosecution expenses."

The petitioner immediately challenges the same before the Apex

Court. The Apex Court rejects Special Leave to Appeal (Criminal)

No.11205 of 2022 by its order dated 02-12-2022 observing as

follows:

"Upon hearing the counsel, the Court made the following

ORDER

We do not find any good ground and reason to interfere with the impugned judgment and hence, the Special Leave Petition is dismissed.

Pending application(s), if any, shall stand disposed of."

After dismissal of the S.L.P., the petitioner files an application

before the Court which had convicted the petitioner, in I.A.No.1 of

2023 seeking correction of the order. The co-ordinate Bench

rejects the same by the following order:

"..... ..... .....

In regard to Ex.D.7 the power under Section 362 of Cr.P.C., cannot be exercised, because it is a finding on a document; it is not a clerical error. Moreover in page 18 of the

judgment, it is clearly observed that Ex.P.22 has nullified the effect of the documents marked as Exs.D.7, 8 and 9. The argument of Sri Sathyanarayana S Chalke on this point cannot be accepted.

Lastly, Sri Sathyanarayana S Chalke took up another ground which is not stated in the application. His argument was that accused No.1 is a Company and having recorded conviction against the company, accused No.2 should not have been sentenced to fine on behalf of the company. This is not an error which can be corrected under Section 362 of Cr.P.C. In fact it is not an error at all, the conviction is recorded in accordance with Section 141 of the Negotiable Instruments Act. Moreover the accused preferred Special Leave Petition ('SLP' for short) to the Hon'ble Supreme Court challenging the judgment dated 14.10.2022 and the said SLP was dismissed. After dismissal of SLP accused have come up with this application which does not merit consideration, hence I.A.No.1/2023 is dismissed."

10. The petitioner now comes up with a novel idea. In the

garb of getting to know what his status is, he is wanting to dilute

the order of conviction passed by the co-ordinate Bench against

which the S.L.P. is dismissed by putting the clock back or walking

back to the date of submission of resignation in the year 2008. A

cleverly worded prayer and ingenious submission of the learned

counsel for the petitioner will not sway this Court to redeem the

mischief that is wanting to be played by the petitioner after getting

convicted for the offence under Section 138 of the Act in the

judgment rendered by the co-ordinate Bench in which observations

are clearly made qua the status of the petitioner that he is wanting

to flog a dead horse or exhume what is inhumed. The petition is,

therefore, to be rejected with exemplary costs. But, this Court

would hold its hands, as the sword of conviction is already hanging

on his head.

11. Insofar as the first prayer is concerned, the learned

Deputy Solicitor General of India Sri H.Shanthi Bhushan has placed

on record certain documents which merit consideration. On

12-10-2017, 1st respondent/Registrar of Companies, in terms of

sub-section 5 of Section 248 of the Companies Act, 2013 strikes off

the Company from the register. Several Companies form a part of

the order. The Company/2nd respondent is at Sl.No.2898.

Therefore, the Company is struck off from the Register. Since the

petitioner has sought for calling of all the records from the 1st

respondent, a notification is appended to the counter affidavit filed

by Sri H. Shanthi Bhushan. The Notification is notifying certain

Rules called "the Disposal of Records (in the Offices of the

Registrars of Companies) Rules, 2003. Rule 4 thereof reads as

follows:

".... .... ....

4. Destruction of documents.- Subject to the previous order of the Registrar of Companies, the following records in his office may be destroyed after the expiration of the period of their preservation as specified below:-

(a) Records to be preserved for 35 years:

(i) Register of Security Bonds; and

(ii) Succession List of Officers.

(b) Records to be preserved for 21 years: All papers, registers, refund orders and correspondence relating to the companies liquidation accounts.

            (c)     Records to be preserved for 5 years:

            (i)     Copies of Government orders relating to
                    companies;
            (ii)    All   papers,     registers,     refund   orders    and
                    correspondence       relating     to   payment     from

companies unpaid dividend account under section 205A of the Act and all papers, statements, registers and abstracts relating to the amounts deposited in the fund established under section 205C of the Act;

(iii) Registered documents of companies which have been fully wound up and finally dissolved together with correspondence relating to such companies;

(iv) Papers relating to legal proceedings from the date of disposal of the case and appeal, if any;

(v) Copies of statistical returns furnished to Government;

(vi) All correspondence including correspondence relating to scrutiny of balance-sheets, prosecutions, reports to the Regional Directors and Company Law Board including inspections under section 209A of

the Act, and the correspondence relating to complaints:

Provided that in case of prosecution matters, the date is to be recorded from the date of disposal of the case and appeal, if any."

Rule 8 reads as follows:

".... .... ....

8. Record of document destroyed to be maintained.- The Registrar of Companies shall maintain a Register in two parts, in the form set out in the Appendix annexed hereto, wherein he shall enter brief particulars of the records destroyed and shall certify by his own hand writing therein the date and mode of destruction."

Rule 4 depicts that documents would be preserved only for 5 years

in terms of clause (c) of Rule 4. The Company was declared to be

defunct and closed and struck off from the register in the year 2017

itself. The petitioner being fully aware of this fact now seeks to get

the documents from the 1st respondent close to 6 years after the

name of the Company being struck off, through the present

petition. This prayer, as contended by Sri H.Shanthi Bhushan, is

untenable and mischievous.

12. For all the aforesaid reasons, the petition lacking in merit,

stands rejected.

Pending applications I.A.No.1 of 2023 and I.A.No.3 of 2023

stand disposed accordingly.

Sd/-

JUDGE

bkp CT:MJ