2005 (4) TMI 317 - HC - Companies Law

Summary

Issues:
- Declaration of alleged action as arbitrary and illegal
- Quashing of proceedings in FIR No. 95 of 2004

Issue 1: Declaration of alleged action as arbitrary and illegal
The petitioner sought a declaration that being implicated in criminal cases against a company after resigning as a director was arbitrary and illegal. The petitioner resigned from the company, settled liabilities, and informed shareholders through notices. Despite this, criminal complaints were lodged against the company and its directors. The police registered cases without verifying the resignation status with the Registrar of Companies. The petitioner argued that the actions of the respondents were arbitrary and illegal, leading to the request to quash the proceedings in FIR No. 95 of 2004.

Issue 2: Quashing of proceedings in FIR No. 95 of 2004
The respondents, in their counter-affidavit, stated that the petitioner was the managing director of the company and was accused of collecting deposits but failing to repay them. Cases were registered based on complaints from depositors. The Registrar of Companies confirmed that the petitioner continued as a managing director until a later date than claimed. The court noted that the relief sought by the petitioner was twofold: to prevent the registration of criminal cases and to quash FIR No. 95 of 2004. The court found that the petitioner's plea of being absolved of liability due to resignation was not tenable. The court emphasized that no investigation could be quashed unless the allegations did not make out a case, and in this instance, the allegations did not appear to be maliciously instituted. The court concluded that the petitioner's liability as a director needed to be determined through investigation, and hence, the petition was dismissed.

This judgment highlights the importance of verifying resignation status and the necessity of investigations to determine liability in criminal cases. The court's decision underscores the need for thorough examination of allegations before quashing proceedings and upholds the principle that criminal investigations should proceed to establish facts and liabilities accurately.