IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 06TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR.JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION NO.8259/2016 BETWEEN:
SHRI MAHESHWAR RAO M MANAGING DIRECTOR 306, 15TH CROSS RMV 2ND STAGE NEW BEL ROAD BENGALURU-560 094.
(BY SRI PRAMOD NAIR, ADVOCATE) AND:
THE REGISTRAR OF COMPANIES 2ND FLOOR, ‘E’ WING KENDRIYA SADAN KORAMANGALA BENGALURU-560 034 REPRESENTED BY SHRI M. JAYAKUMAR, ROC.
…PETITIONER ... RESPONDENT (NOTICE IS SERVED AND UNREPRESENTED) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.127/2016 PENDING ON THE FILE OF THE SPECIAL COURT FOR THE ECONOMIC OFFENCES, BENGALURU, AS AGAINST THE PETITIONER HEREIN.
THIS CRIMINAL PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER The petitioner was the Managing Director of Raichur Power Corporation Limited. He was served with a notice by the Registrar of Companies alleging violation of Section 149 of Companies Act, 2013 (for brevity ‘the Act’), on the ground that the Company of which the petitioner was the Managing Director failed to nominate a Woman Director to the Board of Directors as per Section 149(1) of the Act. A reply dated 19.07.2015, was sent by the Company Secretary through e-mail intimating the Registrar of Companies, namely, the respondent herein that the Board has issued appointment letter dated 14.07.2015, appointing Woman Independent Director under Section 149 of the Act, by name, Dr. Rupa Chanda and Mr.S.M.Zafrulla as Independent Director. However, the respondent herein presented a complaint under Section 200 of Cr.P.C., alleging violation of Section 149 of the Act read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, punishable under Section 172 of the Act, thereof, against the Company represented by the present petitioner as its Managing Director (accused No.2) and Shri Manathattai Subbarthnam Ananad (accused No.3).
2. The notice of the petition has been served on the respondent / Registrar of Companies represented by Sri Jaya Kumar. Respondent has not chosen to engage any counsel or to controvert the averments made in the petition.
3. Learned counsel for the petitioner submits that the prosecution initiated against the petitioner is not tenable for the reason that the petitioner being a public servant could not have been prosecuted for the alleged violation without prior sanction under Section 197 of Cr.P.C. Secondly, in view of the reply submitted to the respondent / complainant, the company has not committed any violation of Section 149 of the Act. The details of the persons nominated as the Woman and Independent Directors of the Board of Directors was within the knowledge of the respondent and hence, the initiation of the proceedings is wholly illegal and amount to abuse of the process of the Court.
4. In support of his submission, learned counsel has placed reliance on the decision of the High Court of Judicature at Madras in Crl.Op.No.8306 of 2016 and Crl.M.P.Nos.4342 & 4343 of 2016 dated 16.08.2017.
5. Considered the submissions and perused the records. Records reveal that criminal prosecution is lodged against the petitioner for non-compliance of the requirements of Section 149(1) of the Act. In the complaint, it is specifically averred that accused No.1 – Company is required to appoint Woman Director as per Section 149 of the Act read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014. It is further stated that from the records of accused No.1 – Company maintained in the office of the complainant, no Woman Director as required under Section 149 of the Act, has been appointed to the Board of Directors till date.
6. Though the above complaint is dated 08.02.2015, it is seen to have been filed only on 22.12.2015, as per the order sheet maintained by the Special Court for Economic Offences, Bengaluru. The reply submitted by the petitioner which has remained uncontroverted indicates that much before the said date, Woman Director was appointed by accused No.1 (Company). As such, no offence is committed by the petitioner violating the provisions of Section 149 of the Act entailing the prosecution of the petitioner for the said offence. As a result, the complaint and the consequent proceedings are liable to be quashed.
7. Secondly, the prosecution of the petitioner for want of the prior sanction also is a ground which enure to the benefit of the petitioner.
8. For both these reasons, petition is allowed.
Proceedings initiated against the petitioner in C.C.No.127/2016 pending on the file of the Special Court for the Economic Offences, Bengaluru, is quashed insofar as the petitioner is concerned.
Sd/- JUDGE nvj