2010 (2) TMI 585 - HC - Companies Law

Whether the petitioner who only subscribed to the Memorandum and Articles of Association of the Company does not make him a person in charge of and responsible to the Company for conduct of its business? Held that - As the factual issue involved in this case need adjudication after trial, we need not examine the contention of the respondent that the document relied upon by the petitioner being his defence, cannot be considered in these proceedings, as neither they are public documents nor admitted documents. Petition dismissed.

Summary

Issues Involved:
1. Quashing of criminal complaint under sections 24(1) and 27 of the SEBI Act, 1992.
2. Determining whether the petitioner was a director or a person in charge of the company.
3. Applicability of section 482 of the Code of Criminal Procedure for quashing the complaint.
4. Evaluation of evidence and documents submitted by both parties.

Issue-wise Detailed Analysis:

1. Quashing of Criminal Complaint under Sections 24(1) and 27 of the SEBI Act, 1992:
The petitioner sought to quash the criminal complaint filed by the respondent under sections 24(1) and 27 of the SEBI Act, 1992. The primary ground for quashing was that the petitioner was neither a director nor a person in charge of and responsible to the company, N.R. Plantations (India) Limited, for the conduct of its business. The petitioner claimed that merely subscribing to the Memorandum and Articles of Association did not make him responsible for the company's business conduct.

2. Determining Whether the Petitioner Was a Director or a Person in Charge of the Company:
The petitioner relied on the Memorandum and Articles of Association, Form-32, and Form-29 to demonstrate that he was not a director. The Memorandum showed the petitioner as one of the initial subscribers, while Form-32 listed three other individuals as directors. The respondent, however, presented letters from the company indicating that the petitioner was a promoter and director. The court noted that the documents filed by the petitioner did not show him as a director but did show him as a promoter. The respondent's documents contained positive statements that the petitioner was a promoter and director.

3. Applicability of Section 482 of the Code of Criminal Procedure for Quashing the Complaint:
The court referred to precedents such as State of Haryana v. Bhajan Lal and R. Kalyani v. Janak C. Mehta to outline the scope of section 482 Cr. P.C. The court emphasized that it should not weigh evidence or compare evidence sets at this stage. The allegations in the complaint must be taken at face value, and if they disclose the ingredients of the alleged offence, the court should not interfere. The court highlighted that quashing petitions should be entertained with care and circumspection and that the trial court is the appropriate forum for evidence appreciation.

4. Evaluation of Evidence and Documents Submitted by Both Parties:
The court observed that the petitioner had not provided Form-32 for all relevant years or any certificate from the Registrar of Companies to prove he was never a director. The offence by the company was a continuing one, and the petitioner would be liable if he was in charge at any point during the offence period. The court noted that the respondent's documents created a disputed fact regarding the petitioner's directorship, which needed trial adjudication. The court also referenced decisions like Raj Chawla v. SEBI and K.K. Ahuja v. V.K. Vora to underscore that even non-directors could be held liable if they were in charge of the company's business.

Conclusion:
The court concluded that the factual issues required trial adjudication and could not be resolved under section 482 Cr. P.C. The petition was dismissed, allowing the trial to proceed to determine the petitioner's liability based on the evidence presented.