A.L.Mudaliar v. The Assistant Registrar of Companies

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 05.08.2009CORAM:THE HONOURABLE MR.JUSTICE C.S.KARNANCrl.O.P.No.35577 of 2007 andM.P.No. 1 of 2007A.L.Mudaliar.. Petitioner/Accused No.3VersusThe Assistant Registrar of Companieshaving office at "Shastri Bhavan",26, Haddows Road, Chennai – 600 006... Respondent/ComplainantPetition filed under Section 482 Cr.P.C seeking to call forthe records in E.O.C.C.No.113 of 2007 filed by the respondentabovenamed and pending on the file of the Additional ChiefMetropolitan Magistrate's Court (Economic Offences – II), Egmore,Chennai – 600 008 and quash the same.For Petitioner : M/s. Rajah and VenkatesanFor Respondent : M/s. S.Haja Mohideen Gisthi Addl. Central Govt. Standing Counsel O R D E R The Petitioner has filed the above Criminal Original Petition tocall for the records in E.O.C.C.No.113 of 2007 filed by therespondent abovenamed and pending on the file of the Additional ChiefMetropolitan Magistrate's Court (Economic Offences – II), Egmore,Chennai – 600 008 and quash the same.2. The respondent's case is that the complainant filed thecomplaint under section 159 r/w section 162 of the Companies Act,1956. The complainant has stated that the accused 2 to 6 are theDirectors/Managing Director/Whole Time Director/Company Secretaryand officers of the company, when the offence was committed as perthe particulars filed in the office of the complainant and theirofficers, who is in default within the meaning of section 5 of theAct. The annual general body meeting of the company for the https://hcservices.ecourts.gov.in/hcservices/ financial year 31.03.2006 should have been held latest by 30.09.2006and the annual return made up to that date should have been filedwith the complainant within 60 days from the said date ie., on orbefore 29.11.2006, and in case no annual general body meeting washeld within 60 days of the due date of the annual general meeting interms of section 159 of the act.3. The accused have not filed the annual return made up to30.9.2006 before the complainant, thereby, have committed an offenceunder section 159 of the act, which is punishable under section 162of the act. A show cause notice was issued on 13.12.2006 by thecomplainant in this behalf. As per section 162 of the Companies Act,every officer of the company, who is in default shall be punishablewith fine. Further the offences under section 159 of the Act is acontinuing one, within the meaning of the section 472 of the Code ofCriminal 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 aNon-Executive Director of the 1st accused company and he resigned asearly as 13.03.1998 itself. So, he cannot be held responsible forthe alleged violations that occurred in the year 2006. Whatever thecomplaint which has been made against the accused persons will notbind the 3rd accused/the petitioner herein. The petitioner pointedout that he has received a show cause notice 02.07.1998 from theRegistrar of Companies requiring him to show cause why action shouldnot be taken against him for failure to provide details regarding thecompany. The petitioner vide his letter dated 11.07.1998 repliedthat he had resigned from the company in March 1998 and had nothingto do with the working of the company. The petitioner received nofurther communication from the Registrar of Companies. Similarly,the petitioner has received another notice dated 29.06.2000 from theRegistrar of companies requiring the company to pay penalty for notholding the Annual General Meeting. The petitioner had replied tothis show cause notice vide his letter dated 22.07.2000 stating thathe had resigned from the board, long back, and in any case, he wasonly a non-executive director. Thereafter, there has been nocommunication from the Registrar of Companies. Similar notices wereissued in 2001 and 2005 and the petitioner had replied to thesenotices appropriately.5. The petitioner has stated that every time such notice weresent, he had appropriately replied stating that he had resigned fromthe board long back. After receipt of these replies, no furtheraction was taken by the Registrar of Companies. After that , therespondent has preferred the above Criminal Case against thepetitioner, in spite of the fact that the petitioner had resignedfrom the board of company. The petitioner, supporting his case, hasfiled nine documents. The 2nd document is the petitioner's letter to https://hcservices.ecourts.gov.in/hcservices/ Indian Aluminium Company Ltd. The 3rd document is Extract of Minutesof the 388th meeting of the Board of Directors of Indian AluminiumCompany Ltd held on 04.04.1998, in which it was recorded that the'petitioner (A.L.Mudaliar) resigned as Director of the said companywith effect from 13th March 1998.'6. The learned counsels argued for their respective parties.The petitioner's counsel cited a judgement of Bombay High Courtreported in Vol.113 Company Cases, 443 (Saumil Dilip Mehta ..vs..State of Maharashtra and others). The operative portion of the saidjudgment is as follows:- "when a director has tendered his registration andthe board of directors has accepted it and has acted onit, such a director cannot be held liable for theliability incurred by the said company after the date ofacceptance of his registration except the liabilitywhich has been incurred by him for purchase of shares ofthe said company and nothing more."7. In spite of the fact that the petitioner communicated aletter to the respondent that he resigned from the accused company asearly as 13.03.1998, the respondent had not taken his resignationinto consideration. The counter statements filed by the respondentis also considered.8. Considering the facts and circumstances of the case, theCourt feels that due to non-application of mind by the respondent thepetitioner has been arrayed as 3rd accused in E.O.C.C.No.113 of 2007on the file of Additional Chief Metropolitan Magistrate's Court,Egmore, Chennai. Hence, the court is warranted to interfere withthe proceedings in E.O.C.C.No.113 of 2007, and quash the same asagainst the petitioner/3rd accused alone.9.Accordingly, the Criminal Original Petition is allowed.Consequently, connected Miscellaneous Petition is closed. This Courtfurther directs the learned Magistrate to dispose the case within sixmonths.Sd/Asst.Registrar/true copy/Sub Asst.Registrarmra https://hcservices.ecourts.gov.in/hcservices/ To1.The Assistant Registrar of Companieshaving office at "Shastri Bhavan",26, Haddows Road, Chennai – 600 006.2. Additional Chief Metropolitan Magistrate(Economic Offences – II), Egmore, Chennai – 600 008 .3. -do- Through The Chief Metropolitan Magistrate, Egmore, Chennai - 08.4.The Public Prosecutor, High Court, Madras-104.1 cc To Mr.Rajah, Advocate, SR.36239.Crl.O.P.No.35577 of 2007 and M.P.No. 1 of 2007 NG(CO)RVL 19.08.2009