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2021 (5) TMI 525 - HC - Companies LawSiphoning of funds - collection of money from the public issue by publishing prospects in the year 1994 by the directors and promoters of the Company - petitioner was professional director - It is the case of the petitioner that being professional director of the Company, the petitioner was not responsible for day-to-day transactions including the financial transactions of the Company - HELD THAT - The contentions raised on behalf of the respondents are required to be rejected as it is not in dispute that the petitioner was appointed as a professional director of the company in the year 1994 and in view of the facts which are emerging from the record, the impugned complaint filed by the respondent no.2 is also not sustainable as the petitioner being professional director is not involved into day today affairs of the company and there is no material on record to even suggest that the petitioner availed any benefit in capacity of professional director of the company. Therefore, the averments made in the complaint on its face value do not disclose any ingredient of the alleged offence under Sections 403, 406, 409, 415, 418, 420, 424, 120 B and 114 of the Indian Penal Code so far as the petitioner is concerned and therefore, considering the bare averments made in the complaint, the same deserves to be quashed and set aside qua the petitioner and accordingly same is hereby quashed and set aside. Application allowed.
Issues Involved:
1. Maintainability of the Second Petition for Quashing. 2. Violation of Right to Speedy Trial. 3. Multiplicity of Complaints. 4. Lack of Specific Allegations Against the Petitioner. 5. Delay and Laches in Filing the FIR. 6. Absence of Ingredients for Offences Under IPC. Detailed Analysis: 1. Maintainability of the Second Petition for Quashing: The court held that the second petition for quashing is maintainable even if the earlier petition was withdrawn. The court referenced several decisions, including *Ahmedabad Manufacturing and Calico Printing Company Limited v. Workmen* (1981) and *R.S. Shah v. Vinod Brahmbhatt & Ors.* (1995), which established that withdrawal of a petition does not equate to its dismissal. The court also cited *Anil Khadkiwala v. State (Government of NCT of Delhi)* (2019), affirming that a second application for quashing is permissible if the earlier one was dismissed or withdrawn. 2. Violation of Right to Speedy Trial: The court emphasized the right to a speedy trial as an inalienable right under Article 21 of the Constitution, referencing *Pankaj Kumar Versus State Of Maharashtra* (2008), which articulated that undue delay in trial violates this right. The court noted that the criminal case had been pending for over 24 years without significant progress, causing undue mental stress and trauma to the petitioner. The court cited *Dhirajlal Depchand Shah v/s State of Gujarat* (2015), where prolonged delay without progress justified quashing the proceedings. 3. Multiplicity of Complaints: The court found that the second complaint (FIR) was impermissible as it was based on the same set of allegations as the first complaint filed under the Companies Act. The court referenced *Gaurang Shethwala v/s State of Gujarat* (2007), which held that there cannot be two prosecutions for the same allegations. The court also cited *K.S. Ranganathan v/s State of Gujarat* (2008), which emphasized that additional charges should be added to the first complaint rather than filing a new one. 4. Lack of Specific Allegations Against the Petitioner: The court observed that the FIR lacked specific allegations against the petitioner, who was a professional director not involved in the day-to-day affairs of the company. The court referenced *Managing Director, Castrol India Ltd v/s State of Karnataka* (2017), which required clear and categorical statements in the complaint to establish vicarious liability. The court also cited *Rameshchandra Manilal Kotia v/s State of Gujarat* (1998), which underscored the necessity of specific involvement in the alleged offences. 5. Delay and Laches in Filing the FIR: The court noted that the FIR was filed after a significant delay, which was unjustifiable and amounted to harassment. The court referenced *Hafeez Rustom Dalal v/s Registrar of Companies* (2003), which held that actions taken after a long delay are unsustainable. The court also cited *Gaurang Shethwala v/s State of Gujarat* (2007), where a similar delay led to the quashing of the FIR. 6. Absence of Ingredients for Offences Under IPC: The court found that the FIR did not disclose any ingredients of the alleged offences under Sections 403, 406, 409, 415, 418, 420, 424, 120B, and 114 of the IPC. The court referenced *Bhagyesh Bhatnagar v/s State of Gujarat* (2005), which held that vague and general allegations without specific instances do not constitute a prima facie case. Conclusion: The court quashed the FIR and the criminal case against the petitioner, ruling that the continuation of the proceedings would be an abuse of the process of law. The court also directed the trial court to release the petitioner’s passport forthwith. The judgment underscores the importance of specific allegations, timely prosecution, and the right to a speedy trial.
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