Telangana High Court
Arun Kumar Agarwal vs The State Of Telangana And 3 Others on 25 April, 2023
Bench: K.Surender
THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION Nos.705, 706, 707, 1088, 1089, 1128,
1129 and 1185 of 2020
COMMON ORDER:
The only grievance of the petitioner in all these criminal
petitions is that the Company-A1 was under resolution
process/dissolved and by virtue of the Judgment rendered by the
Honourable Supreme Court in Ajay Kumar Radheyshyam
Goenka v. Tourism Finance Corporation of India Limited in
Crl.A.No.172 of 2023 dt.15.03.2023, when the company is in
the process of resolution, the erstwhile Director cannot represent
the Company.
2. The relevant paragraphs of Ajay Kumar Radheyshyam
Goenka's case reads as follows;
"50. It is equally true that once the corporate debtor comes under
the resolution process, its erstwhile managing director(s) cannot
continue to represent the company. Section 305(2) of the Cr.P.C.
states that where a corporation is the accused person or one of the
accused persons in an inquiry or trial, it may appoint a
representative for the purpose of the inquiry or trial and such
appointment need not be under the seal of the corporation.
Therefore, it is only the Resolution Professional who can represent
the accused company during the pendency of the proceedings under
IBC. After the proceedings are over, either the corporation entity
may be dissolved or it can be taken over by a new management in
which event the company will continue to exist. When a new
management takes over, it will have to make arrangements for
representing the company. If the company is dissolved as a result of
the resolution process, obviously proceedings against it will have to
be terminated. But even then, its erstwhile directors may not be able
to take advantage of the situation. This is because, this Court in
Aneeta Hada v. Godfather Travels & Tours (P) Limited (2012) 5
SCC 661, even while overruling its decision in Anil Hada v.
Indian Acrylic Ltd. Reported in (2000)1 SCC 1, as not laying down
the correct law in so far as Anil Hada (supra) states that the
director or any other officer can be prosecuted without impleadment
of the company, proceeded to hold that the matter would stand on a
different footing where there is some legal impediment as the
doctrine of lex non cogit ad impossibilia gets attracted. It was
specifically observed that the decision in Anil Hada (supra) is
overruled with the qualifier as stated in para 51. Considering the
same, the ratio of the decision of this Court in Ajit Balse (supra)
upon which strong reliance is placed on behalf of the appellant is of
no avail.
52. Thus, where the proceedings under Section 138 of the NI Act
had already commenced and during the pendency the plan is
approved or the company gets dissolved, the directors and the other
accused cannot escape from their liability by citing its dissolution.
What is dissolved is only the company, not the personal penal
liability of the accused covered under Section 141 of the NI Act. They
will have to continue to face the prosecution in view of the law laid
down in Aneeta Hada (supra). Where the company continues to
remain even at the end of the resolution process, the only
consequence is that the erstwhile directors can no longer represent
it."
3. Further, it is held that it is the resolution professional who
can represent the accused company during the pendency of the
proceedings under IBC (Insolvency and Bankruptcy Code, 2016).
4. In view of the aforesaid Judgment of the Honourable
Supreme Court, the learned Magistrate is directed to strictly follow
the said observations of the Honourable Supreme Court.
5. Accordingly, all the criminal petitions are disposed off.
Needless to say, the name of the representative of the company as
arrayed by the complainant cannot be proceeded against during
the resolution process.
Miscellaneous applications pending, if any, shall stand
closed.
__________________
K.SURENDER, J
Date: 25.04.2023
tk
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL PETITION Nos.705, 706, 707, 1088, 1089, 1128,
1129 and 1185 of 2020
Dt.25.04.2023
tk
