2023 (1) TMI 512 - HC - Companies Law

Vicarious liability of Directors who resigned - Non-submission of annual return and holding of annual general meeting in the relevant year - non-submission of financial statement within the stipulated time with Registrar of Companies - not having registered office capable of receiving and acknowledging the communication - AGM has not been held proceedings has not been forwarded to Registrar - HELD THAT - This is a case where admittedly petitioner worked as Director of the Company between the period 30th September, 1992 till 13th March, 1995 and then resigned. In 2011, under the mistaken belief, complaint was filed against present petitioner also for alleged non-compliance of Section 220 of Act, 1956 for which penalty is provided under Section 162 of the Act, 1956 - Admittedly, alleged non-compliance is for the period 2008-2009 and year 2009-2010 where some defaults on the part of the Company are made. Admittedly, petitioner resigned w.e.f. 13th March, 1995. Much thereafter, alleged defaults have been committed. In the case of State of Haryana Vs. Bhajanlal 1990 (11) TMI 386 - SUPREME COURT , seven parameters were prescribed under which court can interfere for resorting to extraordinary jurisdiction. Here contingency No.5 is attracted and same states that Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. It appears that petitioner made out his case for interference. Once, he resigned in the year 1995, then he cannot be fastened with any liability for a period of 2008-2009 and 2009-2010 - Petition allowed.

Issues Involved:
1. Allegation of violation of Section 166 read with Section 159 of the Companies Act, 1956.
2. Allegation of violation of Section 129 read with Section 137 of the Companies Act, 2013.
3. Allegation of violation of Section 12(1) of the Companies Act, 2013.
4. Allegation of violation of Section 96 read with Section 129 of the Companies Act, 2013.
5. Application under Section 239 of Cr.P.C. for discharge.
6. Application under Section 91 of Cr.P.C. for calling SEBI records.
7. Involvement of Section 482 of Cr.P.C. for quashing the proceedings.

Detailed Analysis:

1. Allegation of violation of Section 166 read with Section 159 of the Companies Act, 1956:
The petitioner was accused of non-submission of annual return and holding of annual general meeting for the years 2008-2009 and 2009-2010. The complaint was filed in 2011 alleging violation of Section 162 of the Companies Act, 1956. However, the petitioner had resigned as a director on 13th March 1995, which was supported by the acceptance of resignation by the Registrar of Companies. The petitioner argued that he had no role in the company's affairs during the alleged period of non-compliance.

2. Allegation of violation of Section 129 read with Section 137 of the Companies Act, 2013:
The petitioner faced allegations of non-submission of financial statements within the stipulated time for the years 2011-2012, 2012-2013, and 2013-2014. The complaint was based on the same premise that the petitioner was responsible for the company's compliance, despite his resignation in 1995.

3. Allegation of violation of Section 12(1) of the Companies Act, 2013:
The petitioner was accused of not having a registered office capable of receiving and acknowledging communication in 2014. The petitioner argued that he was not associated with the company during this period.

4. Allegation of violation of Section 96 read with Section 129 of the Companies Act, 2013:
The petitioner was accused of not holding the AGM and forwarding the proceedings to the Registrar for the years 2011-2012, 2012-2013, and 2013-2014. The petitioner reiterated his non-involvement in the company's affairs post his resignation in 1995.

5. Application under Section 239 of Cr.P.C. for discharge:
The petitioner filed an application under Section 239 of Cr.P.C. for discharge, arguing that he had resigned in 1995 and presented supporting documents, including SEBI's acknowledgment of his resignation. The Trial Court rejected this application, leading to the filing of the present petition under Section 482 of Cr.P.C.

6. Application under Section 91 of Cr.P.C. for calling SEBI records:
The petitioner also filed an application under Section 91 of Cr.P.C. to call for SEBI records to verify his resignation and exoneration. This application was also rejected by the Trial Court.

7. Involvement of Section 482 of Cr.P.C. for quashing the proceedings:
The petitioner invoked Section 482 of Cr.P.C. to quash the proceedings, arguing that he had no role in the company's affairs during the alleged periods of non-compliance. The court noted that SEBI had twice exonerated the petitioner, recognizing his resignation in 1995. The court referred to the judgments in Rajeev Thapar and others Vs. Madal Lal Kapoor and Bhushan Kumar and another Vs. State (NCT Of Delhi) and others, emphasizing the need to quash proceedings where no prima facie case is made out.

Conclusion:
The court concluded that continuing the trial would result in harassment to the petitioner, as he had been exonerated by SEBI and had no involvement in the company's affairs during the alleged periods of non-compliance. The petition was allowed, and the proceedings against the petitioner were quashed. The trial was allowed to proceed against the other accused in accordance with the law.

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