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TMI Blog2001 (3) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of process issued against the accused Suresh Prabhakar Prabhu was quashed and set aside. All the criminal writ petitions have been filed by the accused Suresh P. Prabhu challenging certain observations and findings of the Sessions Judge in the same order, even though ultimately the Order of the Sessions Judge was in his favour. 2. I heard learned advocate Mr. G.K. Tamba in respect of his ten criminal revision applications, Mr. Nadkarni, learned senior advocate, in respect of his three criminal revision applications, learned advocate Mr. J.P. Mulgaokar, in respect of his eight criminal revision applications and learned advocate Mr. Kholkar, in respect of his two criminal revision applications. So far as the criminal revision applications of Mr. Tamba are concerned, reply to the same was given by Mr. Shirish Gupte, learned senior advocate and so far as the criminal revision applications of Mr. Nadkarni and others are concerned, the reply was given by Mr. Amit Dessai, on behalf of the accused Suresh P. Prabhu. Similarly, in the criminal writ petitions arguments were advanced by Mr. Amit Dessai, on behalf of the petitioner and all the advocates appearing for the complainants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suresh P. Prabhu stood rescinded and all the complaints were dismissed as against Suresh P. Prabhu only. 6. It is against this order that all the 23 complainants have filed these 23 criminal revision applications and since the learned Sessions Judge had made certain observations and given certain findings against the accused Suresh P. Prabhu in his aforesaid judgment, i.e., the impugned judgment, the accused Suresh P. Prabhu filed 23 separate criminal writ petitions so that findings against him should not go unchallenged and the complainants/revision petitioners before this court, should not advance an argument that since the findings have not been challenged by him they should be held as against him while deciding the criminal revision applications. 7. I heard learned advocates for the complainants at length and so also the learned advocate for the accused Suresh P. Prabhu, as stated above, groupwise, as well as advocates in the criminal writ petitions. 8. The ground taken by the accused Suresh P. Prabhu before the Judicial Magistrate First Class while claiming recalling of the process was that all the cheques issued by the company were subsequent to his resignation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate, Mr. Vahanvati, on behalf of the accused Suresh P. Prabhu that the resignation becomes effective from the date on which it is tendered, i.e., May 6, 1996. 11. When the matter went before the Sessions Court, the Sessions Court quashed the issue of process on the ground that in all the 23 complaints there were no allegations that the accused Suresh P. Prabhu was in charge of the management of the company or in charge of the day-to-day affairs of the company. The learned Sessions Judge also found that summoning an accused in a criminal case is a serious matter, on the basis of the judgment of the Supreme Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate AIR 1998 SC 128 and since the magistrate has not carefully scrutinized the documents brought before him and not tried to ascertain the truthfulness of the allegations, the order of recalling process was liable to be set aside because in none of the complaints there were allegations sufficient to fulfil the requirements of section 141 of the said Act. However, according to all the advocates for the complainant arguing before me the aforesaid ground on which the learned Sessions Judge allowed the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and the day-to-day affairs of the company. According to Mr. Tamba, the very fact that the accused Suresh P. Prabhu was the managing director was sufficient to hold that he was in charge of the management of the company. So far as the criminal revision applications filed by Mr. Mulgaokar and the two criminal revision applications filed by Mr. Kholkar are concerned, they also adopt the arguments of Mr. Tamba on the basis of their complaints before the magistrate. Factually, in the complaints or complainants represented by the learned advocate Mr. Kholkar, vide Criminal Case Nos. 7 and 6 of 1997, the accused Suresh P. Prabhu is shown as chairman-cum-managing director of accused No. 1-company, whereas in the complaints filed by the learned advocate Mr. Mulgaokar, vide Criminal Case Nos. 29/OA/97/C, 23/OA/97/C, 28/OA/97/B, 24/OA/97/D, 27/OA/97/A, 22/OA/97/D, 25/OA/97/C and 30/OA/97/D, the accused Suresh P. Prabhu is shown in the title as, "formerly chairman-cum-managing director". 14. So far as this controversy is concerned, it will be necessary to reproduce section 141 of the Act, which reads : "Offences by companies. (1) If the person committing an offence under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1 is the company Western India Financial Services Ltd.). 16. It will be, therefore, clear that so far as the three complainants represented by Mr. Nadkarni are concerned, there are allegations against the accused Suresh P. Prabhu firstly that he was the chairman and managing director, and secondly, that he was in charge and was responsible for the conduct of the business of the company. Looking to the provisions of section 141 of the said Act reproduced above and the aforesaid allegations in the complaint, it has to be held that the allegations were sufficient in the complaint and the learned Sessions Judge committed a mistake of fact in concluding that no allegations were there in this regard, i.e., with reference to section 141 of the said Act in the complaints filed by the complainants represented by Mr. Nadkarni. 17. So far as the complaints filed by the complainants represented by Mr. Tamba are concerned, it was contended by Mr. Tamba as stated above, that in all those complaints the complainants had joined accused Suresh P. Prabhu as accused No. 2 in his capacity as chairman-cum-managing director of the company and in para 9 of those complaints, for example in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se complaints could not be dismissed. The same is the case with the complaints or complainants represented by the learned advocate Mr. Kholkar, because in his complaints, Criminal Case Nos. 7 and 6 of 1997, respectively, he has also shown the accused Suresh P. Prabhu as chairman-cum-managing director. 19. Mr. Gupte and/or Mr. Dessai appearing for the accused Suresh P. Prabhu however, contended that merely because the accused Suresh P. Prabhu was the managing director and chairman of the company that will not absolve the complainants from specifically alleging in the complaints that the accused Suresh P. Prabhu was in charge of and responsible to the company for the conduct of the business of the company. 20. In fact, the proviso to sub-section (26) of section 2 of the Companies Act, i.e., the sub-section defining "managing director", makes it abundantly clear that the power to do administrative acts of routine nature when so authorised by the board, as well as power to affix any seal of the company to any document or draw and endorse any cheque on the account of the company in any bank . . . shall not be taken to be included within the substantial powers of management. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xerox copy of Form No. 32 filed at exhibit A (annexure H) of Criminal Revision Application No. 13 of 1999, i.e., the criminal revision application filed by the learned advocate Mr. Tamba. They, therefore, contended that when exhibit A (annexure H) certified xerox copy of Form No. 32 is an authenticated public document and when such a document shows March 15, 1997, as the date of resignation of the accused Suresh P. Prabhu then, the same date has to be accepted in preference to the resignation letter of the accused Suresh P. Prabhu, upon which reliance was strongly placed by the accused Suresh P. Prabhu. They have also denied the date of election of the accused Suresh P. Prabhu to the Lok Sabha, the result of the election, he subsequently being taken as cabinet minister and his contention that he could not hold an office of profit and for that reason he resigned from the directorship of the company with which he was connected. They also criticised all the documents relied upon by the accused Suresh P. Prabhu in support of his contention. 23. On the other hand, Mr. Dessai and Mr. Gupte, contended that firstly the accused Suresh P. Prabhu had resigned from May 6, 1996. Secondly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tendered before the Judicial Magistrate First Class and there was no reasons to disregard to disbelieve those documents. 25. Mr. Gupte and Mr. Dessai further contended that whether the accused Suresh P. Prabhu has tendered his resignation or not could not be said to be a disputed question in the facts and circumstances of the case and, consequently, it was required to be held that the accused Suresh P. Prabhu ceased to have any kind of concern with the company from the date of his resignation since its acceptance comes under the articles of association of the company and under the different rulings of the courts and particularly of a judgment delivered by Justice Lodha in the case of Dushyant D. Anjaria v. Wall Street Finance Ltd. [2001] 105 Comp. Cas. 655 1 (Bom.). The resignation becomes effective as soon as it is tendered and, therefore, the accused Suresh P. Prabhu was liable to be exonerated from the complaint in the sense that the process issued against him was liable to be recalled on that ground alone and the findings of the learned Sessions Judge against the accused Suresh P. Prabhu in that regard were liable to be quashed and set aside. 26. However, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi v. Ram Kishan Rohtagi [1983] 1 SCC 1; 4. State of Haryana v. Brij Lal Mittal [1998] 93 Comp. Cas. 329 (SC); 5. Kusum A. Bardeskar v. Babulal Tarachand Shah [1998] 4 LJ 654; 6. Pannalal Sunderlal Choksi v. State of Maharashtra [2000] 4 Mah. LJ 674; 7. Dushyant D. Anjaria s case ( supra ). 29. In Glossop v. Glossop [1907] Ch. D 370, a judgment of the Chancery Division, which was subsequently followed by other High Courts and the Supreme Court and mainly in Satish Mehra s case ( supra ) and also upon circulars and clarifications upon company law and communications, etc., so far as resignation of directors is concerned. 30. Out of the aforesaid authorised cited by Mr. Gupte and Mr. Dessai, I am not taking into consideration the authorities cited in support of the contention that in a complaint under section 138 of the said Act and for compliance with section 141 of the said Act, allegations against the director that he was in charge of the day-to-day affairs of the company are necessary, because the complainants who are represented by Mr. Nadkarni, have made specific allegations satisfying the requirements of section 141 of the said Act and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1940, but the Supreme Court found that there were no allegations that these directors were in charge of the company and responsible for the conduct of its business and, therefore, it was held that they could not be prosecuted. It is not necessary to consider all these judgments because so far as the complainants represented by Mr. Nadkarni are concerned, necessary allegations in that regard against the accused Suresh P. Prabhu are there and so far as the complainants represented by Mr. Tamba are concerned, the accused Suresh P. Prabhu is jointed as managing director-cum-chairman. 31. At this juncture before considering the rival submissions, it is necessary to take into consideration the objection raised by Nadkarni that in an application for quashing the issue of process, the court can only look into the allegations made in the complaint and not to the defence raised by the accused, or the documents relied upon by the accused. 32. So far as the factual aspect of the matter is concerned, the accused Suresh P. Prabhu when he applied for recalling of the process before the magistrate, relied upon the following documents : resignation letter dated May 6, 1996, and submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration, for it is settled that the power of review has to be conferred by law specifically, or by necessary implication and the Code of Criminal Procedure does not confer such power, since the Supreme Court found that K.M. Mathew s case ( supra ) required reconsideration. Mr. Nadkarni, contended that since K.M. Mathew s case ( supra ) is before the Supreme Court for reconsideration, it could not be relied upon. 34. On the other hand, Mr. Dessai and Mr. Gupte appearing for the accused Suresh P. Prabhu contended that merely because the judgment in K.M. Mathew s case ( supra ) is referred to a larger Bench, it will not cease to operate, at least until it is set aside, altered or changed by the larger Bench. In my opinion, K.M. Mathew s case ( supra ) has to be accepted till the same is changed, set aside or modified by the larger Bench. Therefore, it has to be held that the accused has a right to apply to the magistrate for recall of the process (which has been done in the instant case). 35. The next objection of Mr. Nadkarni was that even if such a power is presumed, pursuant to K.M. Mathew s case ( supra ), neither the magistrate, nor any court can look into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the case decided by the Supreme Court in Rajathi s case ( supra ). In that case the Supreme Court was concerned to see if the High Court was justified in invoking its inherent power under section 482 of the Criminal Procedure Code and the Apex Court found that the High Court was not so justified. This was on the basis of the judgment in Krishnan v. Krishnaveni [1997] SCC (Crl.) 544. The Supreme Court found that in the case before it the High Court had minutely examined the evidence for coming to the conclusion that the wife was living separately without any reasonable cause and that she was able to maintained herself. The court held that it was not necessary for the High Court to examine the whole evidence. According to Mr. Nadkarni, considering the documents, facts and circumstances relied upon by the accused Suresh P. Prabhu would be tantamount to consideration of evidence in defence minutely. 37. Mr. Nadkarni, also relied upon a judgment of the Supreme Court in the case of Chandra Deo Singh ( supra ) where in para 12 of the said judgment the Supreme Court held that : ". . .since the object of an enquiry under section 202 is to ascertain whether allegations ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra ), the question in that case was whether the Sessions Judge could look into any material other than that produced by the prosecution to decide whether there was sufficient ground to proceed against the accused. The Supreme Court held as per para 13 that : "There is nothing in the Code which shrinks the scope of such audience to oral arguments. If the accused succeeds in proceeding any reliable material at that stage which might fatally effect even the very sustainability of the case, it is unjust to suggest that no such material shall be looked into by the court at that stage." Further, reliance was placed by Mr. Gupte and Mr. Dessai on a judgment of the Supreme Court in Om Prakash Sharma v. CBI [2000] 5 SCC 679, and it was observed by the Supreme Court : ". . . The question, at the present stage of the proceedings before the trial court would be to address itself to find whether there is sufficient ground for proceeding to the next stage against the accused. If the accused could produce any reliable material even at that stage which might totally affect even the very sustainability of the case, a refusal to even look into the materials so produced may result in inju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants who are represented by the learned advocate Mr. Tamba, for the following facts and reasons : In all those complaints, represented by the learned advocate Mr. Tamba, the accused Suresh P. Prabhu has given reply to the notice given by the complainants upon dishonour of the cheques to him as well as to the company. In his reply to the notice, the accused Suresh P. Prabhu has specifically averred and pleaded the fact of his resignation and the date of resignation being May 6, 1996. In all those complaints, the complainants have in their complaints admitted to have received the reply and have tried to deal with the allegations of accused Suresh P. Prabhu about his signature. In all those complaints, the complainants have relied (in their respective complaints) upon certified xerox copy of Form No. 32 issued by the Registrar of Companies. In the application for recall of process filed by the accused Suresh P. Prabhu, in those complaints replies have been filed by the complainants and it is alleged that from the aforesaid Form No. 32 the accused Suresh P. Prabhu resigned sometime in March 1997, and not in May 1996, as alleged by him and in all those complaints or in the reply to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lege that he was so, namely chairman and managing director, on the date of issuance of the cheque or its dishonour. There are absolutely no allegations in that regard. Consequently, there is nothing in those complaints to show that the accused Suresh P. Prabhu was in charge of the company or in charge of the day-to-day affairs of the company on the date of the cause of action. 47. It is true that in all these criminal revision applications, generally speaking, there is a challenge to the resignation of the accused Suresh P. Prabhu. However, after going through the original complaints filed by all the 23 complainants, I have found factually the position as stated above and, therefore, these 23 complaints are required to be dealt with separately, though groupwise. One group is represented by the learned advocate Mr. Tamba, the other group by the learned advocate Mr. Nadkarni, the other group by the learned advocate Mr. Mulgaokar and the other group by the learned advocate Mr. Kholkar. So far as the complainants represented by the learned advocate Mr. Nadkarni are concerned, I have already stated that there is basic challenge by his complainants to the fact of resignation by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Registrar of Companies, where the date of resignation of the accused Suresh P. Prabhu is shown as May 6, 1996. In addition, the complainants have in all those cases filed the circular issued by the company wherein the fact of resignation of the accused Suresh P. Prabhu on May 6, 1996, is specifically mentioned, so as to bring it to the notice of the complainants. In addition to the replies filed by the complainants to the application of the accused Suresh P. Prabhu for recall, their stand is that the accused Suresh P. Prabhu resigned as per the date mentioned in Form No. 32. 49. It will, therefore be clear that so far as the complainants represented by learned advocate Mr. Tamba are concerned, the dispute is not about the resignation, but the dispute is about the date of resignation and, therefore, it has to be seen whether this dispute can be resolved by this court only on the basis of the documents tendered by the parties, or whether the matter is required to be sent back to the trial court to decide this question at the time of deciding the complaints on merits. My finding is that these questions can be decided by this court on the basis of the documents produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law it is required to be submitted by the company and what is the effect of the entries in the said Form No. 32. This Form No. 32 is covered by section 303, sub-section (2) of the Companies Act, which provides that : "(2). The company shall, within the periods respectively mentioned in this sub-section, send to the Registrar a return in duplicate in the prescribed Form containing the particulars specified in the said register and a notification in duplicate in the prescribed Form of any change among its directors, managing director, managers or secretaries, specifying the date of the change. The period within which the said return is to be sent shall be period of thirty days from the appointment of the first directors of the company and the period within which the said notification of a change is to be sent shall be thirty days from the happening thereof." 52. In Form No. 32 for example, which is annexure H in Criminal Revision Application No. 13 of 1999, there are six columns on the first page and the fifth column is about the date of appointment or change and against the name of the accused Suresh P. Prabhu, which is at serial No. 2 in the said Form, March 15, 1997, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company or negligence and laches on the part of the company in intimating the date of resignation to the Registrar, the director who has resigned could not be saddled with responsibility and liability. Mr. Gupte and Mr. Dessai relied upon a number of authorities right from Glossop s case ( supra ), in support of their contention that the resignation of a director becomes effective on and from the date it is tendered or submitted and from the articles of association of the company, i.e., the accused company in this case, the resignation becomes effective from the date it is tendered and there is no formality of the board accepting the same. No serious dispute was raised by learned advocate Mr. Tamba over this view of the court right from Glossop s case ( supra ) and, therefore, suffice to say that when the articles of association of this company provided that resignation will be effective from the date it is tendered and when the accused Suresh P. Prabhu has raised a defence that he tendered it on a particular day, i.e., March 6, 1996, and when the fact of resignation is not in dispute, but the date of resignation is in dispute and further, when the stand of the accused Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceed in his complaint on the evidence he adduces and proof of a fact, both for the complainant and the defence of the accused will be separate depending on the documents filed, the nature of examination-in-chief the nature of the cross-examination, the nature of objections raised to the admissibility of the documents, its decision by the court and the oral submissions ultimately made on the basis of the evidence recorded. The trial court will have to give separate and distinct findings when the matter goes on for trial. Therefore, merely because all these criminal revision applications are clubbed together before this court and they are decided by this common judgment for the sake of convenience, will not absolve the parties from proving the facts independently and separately in respect of their complaints or, in that view of the matter, for the accused to prove his defence. Therefore, even if some of the criminal revision applications are liable to be dismissed, for example, the revision applications represented by the learned advocate Mr. Tamba, on the aforesaid ground, the court cannot dismiss the other revision applications because, as observed and found by me, from the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ints, the accused Suresh P. Prabhu was impleaded as managing director and chairman of the company and, therefore, it was not necessary to specifically allege that he was in charge of the company, or that he was in charge of the day-to-day affairs of the company. 58. Further, to sum up, so far as the other complainants represented by the learned senior advocate Mr. Nadkarni, there is a basic and fundamental challenge to the factum of resignation and not only about the date of resignation. Therefore, the accused Suresh P. Prabhu will have to prove in those complaints that he resigned on the date which he alleges in his application for recall of process. So far as criminal revision applications filed by learned senior advocate Mr. Nadkarni are concerned, the complainants represented by him had alleged, in their respective complaints, that the accused Suresh P. Prabhu, was in charge of the company, or was responsible for the day-to-day management of the company. Therefore, there is compliance with section 141 of the said Act. 59. So far as the two criminal revision applications filed by Mr. Kholkar are concerned, i.e., Criminal Revision Application Nos. 40 and 41 of 1999, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of dishonour of the cheque or the date of issuance of the cheque, he was in charge of the company. Therefore, so far as the complainants represented by the learned advocate Mr. Mulgaokar are concerned, the objections of the learned advocates Mr. Gupte and Mr. Dessai it will have to be held that these complaints lack in material particulars and the finding of the learned Sessions Judge so far as section 141 of the said Act is concerned, in that regard will have to be upheld. Since these complaints of complainants represented by the learned advocate Mulgaokar do not fulfil the requirements of section 141 of the said Act, the other issue regarding the resignation of the accused Suresh P. Prabhu need not be taken into consideration. 62. In the result, I pass the following order : ( a )Criminal Revision Application Nos. 13, 14, 15, 17, 18, 19, 20, 21, 22 and 23 of 1999, filed by the learned advocate Mr. G.K. Tamba are dismissed and the order of the appellate court recalling process against the accused Suresh P. Prabhu, is confirmed, though on different grounds. ( b )All the criminal revision applications filed by the learned senior advocate Mr. V.B. Nadkarni, i.e., Criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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