2013 (7) TMI 1113 - HC - Indian Laws

Summary

Issues Involved:
1. Liability of directors who resigned before the issuance of cheques.
2. Applicability of Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881.
3. Admissibility and relevance of Form No.32 as evidence.

Summary:

Issue 1: Liability of Directors Who Resigned Before the Issuance of Cheques
The petitioners, accused 4 to 7, sought to quash the criminal proceedings in S.T.C.Nos.1290, 1292, and 1293 of 2007, arguing that they had resigned from their directorships of the first accused Company before the alleged transactions and issuance of cheques. The court noted that the certified copies of Form No.32, issued by the Registrar of Companies, confirmed their resignation dates as 03.01.2007, 15.11.2003, 31.10.1999, and 31.12.2003, respectively. The court held that the petitioners could not be held responsible for the cheques issued on various dates in May and July 2007, as they were not in charge of the company at the relevant time.

Issue 2: Applicability of Sections 138, 141, and 142 of the Negotiable Instruments Act, 1881
The court examined Section 141(1) of the Negotiable Instruments Act, 1881, which states that every person in charge of and responsible for the conduct of the business of the company at the time the offence was committed shall be deemed guilty. The court emphasized that vicarious liability arises only if the person was responsible for the company's business at the time of the offence. Since the petitioners had resigned before the alleged transactions, they could not be held vicariously liable.

Issue 3: Admissibility and Relevance of Form No.32 as Evidence
The court considered the certified copies of Form No.32 as public documents under Sections 74 and 76 of the Indian Evidence Act, 1872. These documents were deemed admissible and genuine, proving that the petitioners had resigned from their directorships before the alleged transactions. The court also referred to precedents, including K.K.Ahuja vs. V.K.Vora and Anita Malhotra vs. Apparel Export Promotion Council, which supported the petitioners' case.

Conclusion:
The court concluded that the petitioners were not responsible for the conduct of the company's business at the time of the alleged offence. Therefore, the criminal proceedings in S.T.C.Nos.1290, 1292, and 1293 of 2007 were quashed in respect of the petitioners alone. The petitions were allowed, and the connected miscellaneous petitions were closed.