1. The petitioner, a Chartered Accountant and Professional Non-Executive Director in M/s.Nisu Fincap Ltd., which was formerly known as Medha Finance & Securities Ltd. has preferred this petition on 1.2.2007 u/s.482 of the Criminal Procedure Code for quashing the complaint lodged by the Registrar of Companies, Gujarat on 28.3.2003 u/ss.403, 406, 415, 418, 420 and 422 of the Indian Penal Code before the Navrangpura Police Station, Ahmedabad, which is registered as C.R.No.I – 861 of 2003.
2. By an order dated 21.2.2007, rule was issued with interim relief in terms of paragraph 8B of the petition and thereby further proceeding of such criminal complaint was stayed relying upon Form No.32 produced by the petitioner on record at page 24. The matter was thereafter adjourned for atleast seven times before different Courts after service of notice upon the respondents, being State of Gujarat and Registrar of Companies, who were represented through their advocates.
3. The brief facts of the petitioner are as under;
3.1 The petitioner being a Chartered Accountant was appointed as Professional Non- Executive Director of Nisu Fincap Ltd., which was formerly known as Medha Finance & Securities Ltd. on 6.7.1995. The company had issued prospectus for public issue on 5.1.1996.
3.2 The petitioner had resigned as Director from the company on 1.4.1997. It is the case of the petitioner that he has never participated as a Director of the company and never attended any board meeting or general meeting of the company and did not receive any sitting fee or any kind of remuneration either directly or indirectly in any kind from the company during his tenure as a Director of the company, which came to an end on 1.4.1997. However, he received a show-cause notice dated 29.3.2002 from the respondent No.2 regarding violation of Sections 63, 68 and 628 of the Companies Act, 1956 by the company, which was replied in detail by him on 3.6.2002. Inspite of specific reply in detail by the petitioner that as he has already resigned as Director of the company since 1.4.1997, he cannot be held liable for the offences, if any, committed by the company; respondent No.2 has preferred a Criminal Case No.136 of 2002 in the Court of Addl.Chief Metropolitan Magistrate, Ahmedabad against the petitioner as well as other Directors of the company for the offences punishable u/ss.63, 68 and 628 of the Companies Act.
3.3 It is further stated that even after one complaint is filed under the Companies Act, the respondent No.2 has preferred another complaint by way of FIR before the Navrangpura Police Station u/ss.403, 406, 415, 418, 420 and 424 of the IPC, which is registered as C.R.No.I – 861 of 2003, which is under challenge in the present petition.
4. Heard learned advocate Mrs.Sangeeta N.Pahwa for the petitioner, learned A.P.P. Ms.Jirga Jhaveri for respondent No.1 and learned advocate Mr.N.D.Gohil for respondent No.2.
5. On above factual aspect, petitioner has prayed to quash such second FIR being C.R.No.I – 861 of 2003 pending before the Navrangpura Police Station on the ground that there cannot be two complaints for the same offences and that in fact, the petitioner has already resigned on 1.4.1997 and, therefore, complaint against the petitioner cannot sustain. It is also stated that there are no allegations, which can attract or prove even prima-facie, the commission of any offence qua the petitioner and, therefore, such FIR amounts to abuse of process of law and needs to be quashed.
6. On perusal of record, it is clear that the FIR in question being C.R.No. I – 861 of 2003 is filed on 28.8.2003 whereas before such FIR, a criminal case being No.136 of 2002 was filed by respondent No.2 before the Metropolitan Magistrate Court, Ahmedabad for the same irregularities regarding non-submission of accounts of Nisu Fincap Ltd. If we peruse both such complaints, it clearly emerged that M/s.Nisu Fincap Ltd. was incorporated on 21.10.1994 and it came out with a public issue of equity shares vide their prospectus date 5.1.1996 whereas show-cause notice was issued on 29.5.2002. However, in the criminal case No.136 of 2002, there is no specific statement that company has committed breach for which year so far as offences u/ss.63, 68 and 628 of the Companies Act are concerned. Even the show-cause notice dated 29.5.2002 does not disclose the year for which there is a breach, if at all it is committed by the company or its Director. However, it is first time disclosed in the complaint before the Navrangpura Police Station on 28.8.2003 that company has not filed accounts from the year 1999 – 2000. Therefore, it is submitted by Mrs.Pahwa, learned advocate for the petitioner that the allegation regarding commission of offences u/ss.63, 68 and 628 of the Companies Act is not certain and when allegations under the IPC are specifically for the year 1999 – 2000 and thereafter, considering the fact that petitioner has already resigned as Director of the company from 1.4.1997, he cannot be held liable or responsible neither for any activity of the company nor for the commission of offence, if at all any committed by such company from the year 1999 and thereafter.
7. As against that it is submitted by Mr.N.D.Gohil, learned advocate for the respondent No.2 that since prospectus were published in 1996 and that public issue was floated after such prospectus and company has collected huge amount based upon such prospectus before the resignation of the present petitioner, he cannot escape from his responsibility and liability and, therefore, there is no substance in the petition and requested to dismiss the same. Except said ground that prospectus was issued in the year 1996 and public issue was also floated immediately thereafter, there is nothing on record and learned advocate Mr.N.D.Gohil could not show any activity or misdeed, if at all committed by the present petitioner in any manner.
8. On perusal of the record and considering the submissions of both the sides, it is crystal clear that the prospectus were issued in the year 1996 followed by public issue. The present petitioner has resigned as Director of the company on 1.4.1997, which fact is placed on record in the form of certified copy of Form No.32, which is supported by affidavit of the petitioner and when such form was certified by Assistant Registrar of Companies i.e. Officer of respondent No.2 and when respondents have not come forward either to plead or prove that the factum of resignation and date of resignation is not correct and that the petitioner was Director of the company at the relevant time, there is not reason to disbelieve such fact that though the petitioner was initially the Director of the company, he was not concerned with such company from 1.4.1997, when his resignation was recorded by respondent No.2.
9. Then the crucial issue remains for consideration is regarding the irregularities, offences or anything that have been committed by the company or by the present petitioner. It is clear from the record that the complainant has not stated either in the show- cause notice or in the complaint under the Companies Act before the Metropolitan Magistrate Court, Ahmedabad or even in the complaint before the Navrangpura Police Station for the alleged offences under IPC that company has not forwarded the accounts right from the year 1996 till the date of complaint; on the contrary, though there is vague statement in the show-cause notice and in the complaint under the Companies Act before the Metropolitan Magistrate Court, Ahmedabad, there is clear disclosure in the complaint before the Navrangpura Police Station, which is assailed in the present petition, that the company has not forwarded the accounts from the year 1999 – 2000 and it is continued till filing of such complaint. If it is so, then, it is clear that respondent No.2 – Authority has received the accounts from the year 1996 till the year 1999 and when the petitioner has resigned from the company in the year 1997, then he cannot be held responsible and liable either for the offences or for the irregularities if at all it was committed by the company or its remaining Directors from the year 1999 onwards. It is also clear from the record that while filing the complaint in the year 2002 before the Metropolitan Magistrate Court being Criminal Case No.136 of 2002 for the alleged offences under the Companies Act, the respondent No.2 – Authority has clearly disclosed the name and addresses of the Directors of the company and, therefore, it is surprising to note that while filing a complaint before the Navrangpura Police Station, within less than a year i.e. on 28.8.2003, it is vaguely stated against the column of accused that Promoters/Directors, who had signed prospectus of Nisu Fincap Ltd. It is also to be noted that when respondent No.2 – Authority possesses all the record with it regarding all the Promoters/Directors and all other details of the company in their office, the reason for not disclosing the name of persons as accused before the police authority gives an impression that respondent wants to give freedom to the police to call upon any person as the Director or Promoter of the company and to harass them irrespective of the factual details readily available with them, more particularly, resignation of the present petitioner, which was there on record for long period, say more than five years.
10. Considering the above facts and circumstances of the matter, there is substance in the arguments of Mrs.Pahwa that, there cannot two prosecution for the same allegations and that impugned FIR is second complaint for the similar allegations for which private complaint is already filed and pending at the time of filing of said petition; ingredients of commission of offence alleged in the impugned FIR could not attract the liability of the present petitioner since he has already resigned in the year 1997; the respondent No.2 – complainant has willfully hide and failed to disclose the fact of reply of show-cause notice to them; the impugned FIR is lodged after the period of six years and, therefore, the petition deserves to be allowed by quashing the complaint.
11. The petitioner has also relied upon following decisions – (1) T.T. Antony Vs.State of Kerala reported in (2001)6 SCC 181, which confirms that second FIR for the same set of allegations is nothing, but clear abuse of process of law and indicates malafide action. Thereby there cannot be second FIR and, thus, no fresh investigation on receipt of every subsequent information in respect of the same cognizable offence or same occurrence giving rise to one or more cognizable offences. It is certain that first instance of information about the commission of cognizable offence either before the police or before the Metropolitan Magistrate is to be treated as complaint and all such subsequent informations will be covered by Section 162 of the Cr.P.C. and, therefore, as provided u/s.173 of the Cr.P.C., if investigating agency or the competent Authority comes across any further information pertaining to the same incident, normally with the leave of the Court, such information pertaining to the same incident is to be forwarded to the Court as further evidence, if any collected, with further report/reports u/s.178(8). Though such procedure relates to the investigation of both the complaints by the police, the legal position cannot be altered or changed that there cannot be two separate complaints for the same set of allegations and more particularly when the complainant is one and common and once they have filed a complaint under the Companies Act before the competent Court, if the complainant is of the opinion that similar set of allegations also constitute other offences under any other enactments, then also, they are free to furnish such information to the same Court, to consider the further proceedings with such additional information, but law does not permit to file separate complaint raising identical allegations in the complaint.
12. The petitioner also relies upon the case of Sagar Suri and Anr.Vs.State of U.P. & Ors. reported in 2000 SCC (Cri.) 513, which is repeatedly referred and followed by the Apex Court in several decisions (AIR 2010 SC 3363 – Preeti Gupta Vs.State of Jharkhand, AIR 2011 SC 2552 – Bhajan Singh Vs.State of Haryana and AIR 2010 SC (Supp.) 347 – Md.Ibrahim Vs.State of Bihar) and the outcome of such decisions can be summarised in following words.
“It is the duty and obligation of the criminal Court to exercise a great deal of caution in issuing the process particularly when matters are essentially of civil in nature.”
“Prompt and early reporting of the occurrence by the informant with all its vivid details gives an assurance regarding its true version. In case, there is some delay in filing the FIR, the complainant must give explanation for the same. Undoubtedly, delay in lodging the FIR does not make the complainant's case improbable when such delay is properly explained. However, deliberate delay in lodging the complaint may prove to be fatal. In such case of delay, it also cannot be presumed that the allegations were an after thought or had given a coloured version of events. The court has to carefully examine the facts before it, for the reason, that the complainant party may initiate criminal proceedings just to harass the other side with mala fide intentions or with ulterior motive of wreaking vengeance. The court proceedings ought not to be permitted to degenerate into a weapon of harassment and persecution. In such a case, where an FIR is lodged clearly with a view to spite the other party because of a private and personal grudge and to enmesh the other party in long and arduous criminal proceedings, the court may take a view that it amounts to an abuse of the process of law.”
“The Apex Court has time and again drawn attention to the growing tendency of complainants attempting to give the cloak of a criminal offence to matters which are essentially and purely civil in nature, obviously either to apply pressure on the accused, or out of enmity towards the accused, or to subject the accused to harassment. Criminal courts should ensure that proceedings before it are not used for settling scores or to pressurise parties to settle civil disputes. But at the same, it should be noted that several disputes of a civil nature may also contain the ingredients of criminal offences and if so, will have to be tried as criminal offences, even if they also amount to civil disputes.”
13. The petitioner has also relied upon the case of State of Haryana Vs.Bhajanlal & Ors.
reported in AIR 1992 SC 604, order dated 13.4.1994 passed in Misc.Criminal Appln.No.2123 of 1990 of this Court, (2010)8 SCC 524, AIR 2011 SC 1090, (2010)158 Company Case 21 (AP), the sum and substance of all above reported cases are common to the effect that there cannot be a second FIR for the same offences; complaint filed after couple of years cannot be entertained and person who has resigned as a Director cannot be held responsible or liable for the activities of the company after his resignation. So far as the allegations regarding cheating etc. are concerned, the Apex Court has specifically confirmed that primary requirement to make out an offence of cheating u/s.415 punishable u/s.420 of the IPC is dishonest/fraud intention at the time of inducement is made and, therefore, in the given case, the Apex Court has held that when appellant ceased to be a Director of the company from 27.12.1997 and when alleged offences, if any, were stated to be committed during the period from 24.5.1998 to 17.9.1999, it was held that the appellant before the Supreme Court cannot be held responsible for any activities of the company after he ceased to be a Director of the company. The Supreme Court has further considered that company had invited the investment from the depositors to invest in the business/benefit funds after receiving due approval of the scheme from the Reserve Bank of India and, therefore, in any event, the element of cheating as alleged cannot be made out and, therefore, it was held that appellant before the Supreme Court cannot be compelled to face the criminal prosecution. Thus, the Apex Court has set-aside the judgment of the High Court and quashed the criminal proceedings.
14. We are having similar situation in the present case and, therefore, I do not hesitate to held that the impugned FIR is required to be quashed for the reason that the allegations are for the year 1999 onwards only whereas petitioner has resigned in the year 1997, impugned FIR is second one and more particularly complainant/respondent No.2 was very much aware about the activities of the company right from the year 1996, but they waited till the year 2002 – 2003 and tried to harass the petitioner by not disclosing the correct information to the police while filing the impugned FIR, therefore, the petition deserves to be allowed.
15. The petition is allowed as prayed for. Thereby, the FIR being C.R.No.I-861 of 2003 pending with the Navrangpura Police Station upon complaint by the present respondent No.2 on 23.9.2003, is hereby quashed against present petition. Thereby it is made clear that the quashing is with reference to the present petitioner only and even said original complainant/respondent No.2 has right to take action against the company or its Directors as per law and they are free to take action in accordance with law.
16. Rule is made absolute accordingly.
(binoy) (S.G.SHAH, J.)