2017 (5) TMI 313 - HC - Companies Law

Liability of A Director who had resigned from the company - vicarious liability - Offences punishable under Sections 406, 420 and 114 of IPC - Held that - It is evident even from perusal of the FIR that the complainant himself was aware about legal status of the petitioner that the petitioner is no more attached to the company against which the FIR is registered. A perusal of the FIR would also indicate that all the allegations in FIR, insofar as representing or inducing the complainant are concerned, are directed against other accused persons, where no role of the petitioner is coming out. It has also come on record that the petitioner has resigned from the company much prior to even date on which the complainant contacted the existing Directors of the company for the purpose of transaction and thereafter, in series of transactions, the goods were sent by relying upon representation made by other accused persons and this would not attribute any role to the petitioner. The resignation which is there on record is a document which is evidence sufficient to come to conclusion that the relation between the petitioner and Shivami Enterprise has thus ended. Over and above, the communication to the Sales Tax authorities to discontinue his name from VAT / TIN numbers is also indicative of the fact that intention of the petitioner was to once and for all terminate any relation with Shivami Enterprise. In view of the aforesaid, this Court has no hesitation in coming to conclusion that no further prosecution of the petitioner under this FIR is warranted. Over and above this, when the Investigating Agency has cited the petitioner as witness No.5 in the charge sheet, there is more so reason for this Court to quash the FIR qua the present petitioner.

Summary

Issues:
Quashing of FIR under Sections 406, 420, and 114 of IPC based on allegations of fraud and non-payment of dues against the petitioner.

Analysis:
The petition was filed under Section 482 of the Criminal Procedure Code seeking to quash the FIR registered against the petitioner for offenses punishable under Sections 406, 420, and 114 of IPC. The FIR alleged that the petitioner, along with other accused persons, was involved in fraudulent activities related to a business transaction involving the supply of goods. The complainant accused the petitioner of using official numbers of the company even after resigning and being inactive. The petitioner argued that he had resigned from the company before the transaction in question and had no involvement in the alleged offenses.

The petitioner's counsel presented evidence to support the claim of resignation, including official documents and communications with tax authorities confirming the termination of his association with the company. The counsel also relied on the concept of vicarious liability in criminal jurisprudence and cited a judgment by the Apex Court to argue that the petitioner should not be held liable for the alleged offenses.

The complainant's counsel contended that the petitioner, despite resigning, remained active in other companies associated with the accused company, indicating a pattern of fraudulent activities. The investigation revealed that the petitioner was listed as a witness in the charge sheet, suggesting a limited role in the alleged offenses.

After considering the arguments and reviewing the case papers, the Court found that the complainant was aware of the petitioner's resignation and that the allegations in the FIR primarily targeted the other accused persons. The Court noted the documentary evidence of resignation and communication with tax authorities, concluding that the petitioner had severed ties with the accused company. Citing the principle of vicarious liability discussed in the Apex Court judgment, the Court ruled in favor of quashing the FIR against the petitioner.

The Court emphasized that the observations and findings in the judgment applied only to the present petitioner and allowed the petition, quashing the FIR registered against the petitioner under Sections 406, 420, and 114 of IPC. The judgment highlighted the lack of evidence implicating the petitioner in the alleged offenses and the investigative agency's decision to list the petitioner as a witness, further supporting the decision to quash the FIR.