When directors can be treated as 'officer who is in default' under section 5

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..... of the abovesaid judgment of the Hon'ble Rajasthan High Court. The Department is of the view that this judgment has correctly interpreted the provisions of section 5 as amended in 1988. It may, therefore, please be ensured that where the penal provisions provide for punishment of 'officers in default', prosecution be filed against the managing director(s), whole-time directors) and manager, apart from the secretary, if any, and the company and only in those cases where there is no such managerial personnel (i.e., managing director/whole-time director/manager), prosecution be filed against all ordinary directors, apart from the secretary, if any, and the company. ANNEX Tibrewal, J. - In this petition under section 482 of Code of Crim .....

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..... ishment. Section 5 of the Companies Act defines officer who is in default and ft provides as under : 5. Meaning of "officer who is in default" - For the purpose of any provision in this Act which enacts that a officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression "officer who is in default" means all the following officers of the company, namely : (a) the managing director or managing directors; (b) the whole-time director or whole-time directors; (c) the manager; (d) the secretary; (e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to .....

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..... a case against the petitioners, it would be in the interest of justice to quash the complaint to prevent abuse of the process of the Court. See R.P. Kapur v. State of Punjab AIR 1960 SC 866 and Madhu Limaye's case AIR 1987 SC 47. The result of the above discussions is that this petition deserves to be allowed and it is, hereby, allowed. The criminal proceedings against the petitioners in Complaint No. 47/91 are quashed and the complaint against them is, hereby, dismissed. However, the case shall proceed against the remaining accused, namely, the company and Shri P.C. Maheshwari, the managing director of the company. - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - tax .....

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