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2019 (1) TMI 1759 - HC - Companies LawDisbursement of loans to accused without prior sanction of the Registrar of Companies - contravention of section 295 (4) of the Companies Act - time limitation - HELD THAT:- In the case of Srikumar Menon and Ors. vs. Registrar of Companies [2012 (6) TMI 5 - HIGH COURT OF CALCUTTA], a show-cause notice was sent under section 295(1C) of the Act. An application was filed under section 633(2) of the Companies Act, where without permission of the Central Government, intercorporate deposits were created. For such violation, conviction prescribed was maximum imprisonment of 6 months for the offender. The complaint was filed, however, objection was raised on the ground that it was barred by limitation under section 468 of the Code of Criminal Procedure. In Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors. [2003 (2) TMI 31 - BOMBAY HIGH COURT], the complaint was filed for delay in remitting the tax deducted. The applicant has taken stand that he was nonexecutive Director of the company and they are also practising advocates and, therefore, they are prohibited under the law to act as full time directors - The status of the applicant/accused in the case of Homi Phiroz Ranina & ors. vs. The State of Maharashtra & ors., is similar to the status of the petitioner in the case in hand. The applicant is also a practising advocate and solicitor. So, he could only act as non-executive Director unless specific material is brought on record, the liability of a principal or active Director cannot be fixed on him - Admittedly, he is not a signatory to the cheque, which is the subject matter of the complaint. The other point in respect of the status of the petitioner as an active partner and was having knowledge of not taking prior approval for disbursement, is not made out in the averments. A specific role is attributed to accused Nos.1 and 2. Accused No.2 is a Managing Director and therefore, he has signed the cheque. The petitioner had not signed the books of accounts but he has signed the balance sheet - on the basis of only signature, it cannot be said that there is enough material to show the knowledge of the petitioner of disbursement of the loan without prior approval. A significant circumstance also to be addressed to is that the accused Nos.1 and 2 are the Directors of those companies in whose favour the loans were disbursed. Thus, the accused Nos.1 and 2 had direct interest in the disbursement of loan. There is nothing to show that the petitioner has any interest or any connection with the other two companies - no case is made out to issue process under section 295 (4) of the Companies Act, 1956 is made out to swaddle the vicarious liability on the petitioner. The process issued by the learned Magistrate under section 295 (4) of the Companies Act, 1956 on 24.5.2002 and the summons dated 3.11.2015 are quashed and set aside.
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