The Petitioner has filed the above Criminal Original Petition to call for the records in E.O.C.C.No.114 of 2007 filed by the respondent abovenamed and pending on the file of the Additional Chief Metropolitan Magistrate's Court (Economic Offences II), Egmore, Chennai 600 008 and quash the same.
2. The respondent's case is that the complainant filed the complaint under
section 159 r/w
section 162 of the Companies Act, 1956. The complainant has stated that the accused 2 to 6 are the Directors/Managing Director/Whole Time Director/Company Secretary and officers of the company, when the offence was committed as per the particulars filed in the office of the complainant and their officers, who is in default within the meaning of
section 5 of the Act. According to the provisions of
Section 220 of the Act, the company and its Directors are under statutory obligation to file with the complainant Balance Sheet and Profit and Loss Account in the prescribed form duly placed in the Annual General Meeting within 30 days from the said date ie., on or before 30.10.2006, and in case no annal genegal meeting was held within thirty days of the due date of annual general meeting.
3. The accused have not filed the copies of the Balance Sheets, Profit and Loss Account before the complainant, thereby, have committed an offence which is punishable under
section 162 of the act. A show cause notice was issued on 13.12.2006 by the complainant in this behalf. As per
section 162 of the Companies Act, every officer of the company, who is in default shall be punishable with fine. Further the offences under
section 159 of the Act is a continuing one, within the meaning of the
section 472 of the Code of Criminal Procedure. Therefore, no question of limitation arises. Hence, the accused have to be punished for the above default.
4. The petitioner's/accused No.3's contention is that he was a Non-Executive Director of the 1st accused company and he resigned as early as 13.03.1998 itself. So, he cannot be held responsible for the alleged violations that occurred in the year 2006. Whatever the complaint which has been made against the accused persons will not bind the 3rd accused/the petitioner herein. The petitioner pointed out that he has received a show cause notice 02.07.1998 from the Registrar of Companies requiring him to show cause why action should not be taken against him for failure to provide details regarding the company. The petitioner vide his letter dated 11.07.1998 replied that he had resigned from the company in March 1998 and had nothing to do with the working of the company. The petitioner received no further communication from the Registrar of Companies. Similarly, the petitioner has received another notice dated 29.06.2000 from the Registrar of companies requiring the company to pay penalty for not holding the Annual General Meeting. The petitioner had replied to this show cause notice vide his letter dated 22.07.2000 stating that he had resigned from the board, long back, and in any case, he was only a non-executive director. Thereafter, there has been no communication from the Registrar of Companies. Similar notices were issued in 2001 and 2005 and the petitioner had replied to these notices appropriately.
5. The petitioner has stated that every time such notice were sent, he had appropriately replied stating that he had resigned from the board long back. After receipt of these replies, no further action was taken by the Registrar of Companies. After that , the respondent has preferred the above Criminal Case against the petitioner, in spite of the fact that the petitioner had resigned from the board of company. The petitioner, supporting his case, has filed nine documents. The 2nd document is the petitioner's letter to Indian Aluminium Company Ltd. The 3rd document is Extract of Minutes of the 388th meeting of the Board of Directors of Indian Aluminium Company Ltd held on 04.04.1998, in which it was recorded that the 'petitioner (A.L.Mudaliar) resigned as Director of the said company with effect from 13th March 1998.'
6. The learned counsels argued for their respective parties. The petitioner's counsel cited a judgement of Bombay High Court reported in Vol.113 Company Cases, 443 (Saumil Dilip Mehta ..vs.. State of Maharashtra and others). The operative portion of the said judgment is as follows:-
"when a director has tendered his registration and the board of directors has accepted it and has acted on it, such a director cannot be held liable for the liability incurred by the said company after the date of acceptance of his registration except the liability which has been incurred by him for purchase of shares of the said company and nothing more."
7. In spite of the fact that the petitioner communicated a letter to the respondent that he resigned from the accused company as early as 13.03.1998, the respondent had not taken his resignation into consideration. The counter statements filed by the respondent is also considered.
8. Considering the facts and circumstances of the case, the Court feels that due to non-application of mind by the respondent the petitioner has been arrayed as 3rd accused in E.O.C.C.No.114 of 2007 on the file of Additional Chief Metropolitan Magistrate's Court, Egmore, Chennai. Hence, the court is warranted to interfere with the proceedings in E.O.C.C.No.114 of 2007, and quash the same as against the petitioner/3rd accused alone.
9. Accordingly, the Criminal Original Petition is allowed. Consequently, connected Miscellaneous Petition is closed. This Court further directs the learned Magistrate to dispose the case within six months.
mra To
1. The Assistant Registrar of Companies having office at "Shastri Bhavan", 26, Haddows Road, Chennai 600 006.
2. Additional Chief Metropolitan Magistrate (Economic Offences II), Egmore, Chennai 600 008 .
3. The Public Prosecutor, High Court, Madras 104