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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 ..... 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 in their respective crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 dated May 6, 1996, and since he has ceased to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resh 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 revisions of the accused Suresh P. Prabhu was not at all taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 138 is a company, every person who, at the time the offence was committed, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 complaint Criminal case No. 16 of 1997, it was alleged that it was during the tenure of accused No. 2, who t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 means that as per this proviso, a person exercising powers under the proviso may be different from the managing director. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication 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, there is no provision in the Companies Act about the resignation of a director and, therefore, this aspect has to be considered with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essai 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 advocates for the complainants, Mr. Nadkarni, Mr. Tamba, Mr. Mulgaokar and Mr. Kholkar, contended that none of the documents relied upon by the accused Suresh P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashtra [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 complainants who are represented by Mr. Tamba and others have jointed accused Suresh P. Prabhu as managing director-cum-chairman. Those authorities which I am not taking into consideration from out of the above are as under : Sham Sunder's case (supra). This wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submission of Form No. 32 by the company secretary from the Bombay office to the Registrar of Companies. These two documents were exhibits A and B and they were relied upon in the said application for recall of process. After the complainants filed reply to the said application, accused Suresh P. Prabhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w'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 any material placed by the accused on record for claiming recall of the process. According to Mr. Nadkarni, in such an application for recall the allegations in the complaint only could be seen and nothing more. He, therefore, contended that the contention of the accused Suresh P. Prabhu about his resignation or the date of resignation or the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shnaveni [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 made in the complaint are intrinsically true, the Magistrate acting under section 203 has to satisfy himself that there is sufficient ground for proceeding. In order to come to this conclusion, he is entitled to consider the evidence taken by him or recorded in an enquiry under section 202, or statements made in an investigation under that section, as the case may be. He i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 injustice, apart from averting an exercise in futility at the expense of valuable judicial/public time. . . ." (p. 683) 40. Then reliance was placed upon a judgment of this court in Kusum A. Bardeskar's case (supra), where the High Court took cognizance of the fact of resignation of the director on the basis of Form No. 32 and quashed the proceedings against petitioner No. 2 in that case. Then also re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the application for recall, there is no allegation that the theory of the accused Suresh P. Prabhu about his resignation is a fake, bogus, theory or that it is an afterthought or invented to overcome criminal prosecution. 44. In that view of the matter, what is clear so far as the complainants represented by the learned advocate Mr. Tamba are concerned, is that there is no real dispute about the fact of resignation of accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations, 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 accused Suresh P. Prabhu. In the complaints the fact of resignation of the accused Suresh P. Prabhu is not at all referred to. They are not relying upon Form No. 32 and they are disputing the contention of the accused Suresh P. Prabhu, that he resigned on May 6, 1996. In a similar situation when the question of resignation was in dispute, I had held, as pointed out by learned advocate Mr. Nadkarni, that being a disputed question of fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 produced before the magistrate and before the Sessions Judge by both the parties for the following reasons : The claim and contention of the accused Suresh P. Prabhu is that he tendered his resignation on May 6, 1996. It is true that the letter of resignation tendered by him in the court before the magistrate was a simple letter and it is not certified to be a true copy by the company to whom the letter was submitted. However, it cannot be said that this l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 the date given in the fifth column and in the sixth column which is "brief particulars of change" it is written "resigned as director". According to learned advocate Mr. Tamba, in view of this fact, the date of resignation of accused Suresh P. Prabhu is to be taken as March 15, 1997, and not 6th or 7th May, 1996. 53. With respect, I am unable to agree with this submission because of the provision of section 303(2) of the Companies Act, as quoted above. What is expec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 Suresh P. Prabhu is consistent from the beginning and the documents tendered by him are consistent with this stand, then it has to be accepted that this is not a case requiring the accused Suresh P. Prabhu to face trial and prove his defence. The court can, in the circumstances, safely accept the defence of the accused Suresh P. Prabhu that he resigned on and from May 6, 1996, and ceased to have any connection or concern with the accused company or that on and from that date he was not in char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 arguments of the learned advocate Mr. Nadkarni for example, he is challenging the factum of resignation. In the judgments delivered by me and relied upon by the learned senior advocate Mr. Nadkarni, in the case of P. Rajarathinam ( supra) and Bharath i N. Wadhwana (supra), the complainants had disputed the fact of resignation as in the criminal revision applications filed by learned advocate Mr. Nadkarni and, therefore, the matters were remanded. In the case of Dushyant D. Anjaria (supra) decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accused Suresh P. Prabhu is shown as chairman-cum-managing director. That is sufficient compliance with section 141 of the said Act and further, the dispute between these complainants and the accused Suresh P. Prabhu, is about the factum of resignation. Therefore, regarding these two criminal revision applications and the complaints, arising out of them, the accused Suresh P. Prabhu will have to prove his defence at the time of trial. 60. So far as the complainants represented by the learned advocate Mr. Mulgaokar are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Revision Application Nos. 27, 28 and 29 of 1999 and the criminal revision applications filed by learned advocate Mr. P.A. Kholkar, i.e., Nos. 40 and 41 of 1999, are allowed. The order of recall of process passed by the learned Sessions Judge against the accused Suresh P. Prabhu, is set aside and the matter is remanded to the trial court for decision on merits. (c)Similarly, the criminal revision applications filed by the learned advocate Mr. J.P. Mulgaokar, namely, Criminal Revision Application Nos. 32, 33, 34, 35, 36, 37, 38 and 39 of 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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