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2019 (8) TMI 1825 - HC - Indian LawsDishonor of Cheque - petitioner is the Director of the company - company is being let off and under liquidation - simultaneous criminal proceedings of Section 138 of N.I. Act can be proceeded continuously against the company and its director/managing director/employees or not - petitioner/accused/Director of company can be prosecuted for the offence under Section 138 of N.I. Act. in pursuant to business transaction of company or not - Director of company has resigned from his post prior to issuance of cheque - such resigned director can be prosecuted for the offence punishable under section 138 of N.I. Act or not? - vicarious liability of a Director. When the company is being let off and under liquidation, in these circumstances proceedings of criminal Court under Section 138 of N.I. Act against the company and its Director/Managing Director/officials shall be continued or not? - HELD THAT:- It is found that the company is under liquidation for the purpose of winding up its affairs and distributing assets of company. Nowtherefore, this Court has to read Sections 279, 372 and 373 of Company Act 2013 (Section 446, 586 and 587 of old Company Act, 1956) to resolve this issue as to whether, company can be prosecuted or not? On reading of the above mentioned Sections, it is provided that where an order has been made for winding up, or a provisional Liquidator has been appointed for, a company registered in pursuance of this part, no suit or other legal proceeding shall be proceeded with or commenced against the company or any contributory of the company in respect of any debt of the company, except by leave of the tribunal and except on such terms as the tribunal may imposed - thus, the criminal Court has power to take cognizance on the complaint filed by an aggrieved person to institute proceedings under Section 138 of N.I Act against the Directors of company even if the company is under liquidation and merely on the basis of appointment of liquidator, power of criminal Court could not be curtailed. Whether the petitioner/accused/Director of company can be prosecuted for the offence under Section 138 of N.I. Act. in pursuant to business transaction of company or not? - HELD THAT:- Section 141 of the Negotiable Instruments Act, 1881 deals with the offences committed by the companies and say that if an offence is committed by a company under Section 138 Negotiable Instruments Act, 1881, every person, at the time, the offence was committed, was in-charge and responsible to the company in the conduct of the business of the company, is liable alongwith the company to be proceeded against and punished accordingly. Further, it is provided that no person shall liable to punishment if he proved that an offence was not committed under his knowledge or he has exercised all dues diligence to prevent to commission of such offence. Looking to the trend set up by the complainants to implead all the Directors, company secretaries, etc., of the accused company, irrespective of whether they were actually involved in the commission of alleged offence or not, the Hon'ble Apex Court has issued several pronouncements to settle the issues. In the case of Aneeta Hada Vs. Godfather Travels and Tours Private Ltd., [2012 (5) TMI 83 - SUPREME COURT], it has been held that when the company would be prosecuted then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments made in the complaint. To summarize, there cannot be any vicarious liability unless there is prosecution against the company. Thus, the Director of company shall be prosecuted for business transaction of company under Section 138 of N.I. Act subject to the specific averments in the complaint and after arraying the company, as an accused in complaint. At this stage, it is necessary to be noted that the complainant has made the company as respondent No. 1/accused No. 1 in his complaint. Whether petitioner/Director namely Santosh can be prosecuted when he has resigned from company prior to issuance of alleged cheques and same were not signed by him? - HELD THAT:- If the Director has already resigned from the company, in such cases, Form 32, under the Companies Act, 1956 comes to an aid. Form 32 is filed with the Registrar of Companies and it indicates the status of the Directors. Thus when a Director resigns and his resignation is accepted by the Company, the Company become obliged to file a Form 32 indicating change in status of the Directors - In the present case the petitioner-Santosh has filed the certified copy of Form 32 u/s. 399 of Companies Act, 2013, dated 06.12.2013, date of issuance is 23.06.2016 (Annexure-D). Further on perusal of Form 32, it is reflected that petitioner has submitted his resignation on 06.11.2013. It has held in the case of MRS. ANITA MALHOTRA VERSUS APPAREL EXPORT PROMOTION COUNCIL (APPAREL EXPORT PROMOTION COUNCIL) [2011 (11) TMI 532 - SUPREME COURT] that if the person has proved his resignation on the relevant date when the offence has occurred, then the proceedings against such a person are liable to be quashed. It has also been held by the Court that the certified copy of annual return coupled with simple copy of Form 32 should have been accepted as a proof of petitioner's resignation and proceedings against him be quashed. In almost similar circumstances, in the case of HARSHENDRA KUMAR D. VERSUS REBATILATA KOLEY [2011 (2) TMI 1278 - SUPREME COURT], Hon'ble the Apex Court found that director of that case has resigned prior to issuance of dishonoured cheques. The acceptance of the appellant's resignation is duly reflected in the resolution of company and in the prescribed form (Form 32), the company informed to the Registrar of the Company about his resignation. The Hon'ble Court has found that the cheques were not issued by the appellant/director of that case and he has resigned prior to issuance of alleged cheques. The Hon'ble Court has observed that if in such circumstances, the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant. Thus, if the director of company is succeeded to prove his resignation that he gave the same prior to issuance of alleged cheques, and in the absence of the specific allegations in the averments of the complaint against him, cannot be prosecuted. There is no specific allegations against the petitioner that he was responsible for business affairs of company in day to day manner. There is only allegation against him that he had knowledge about disputed transaction. In the present case, petitioner is succeeded to prove his resignation prior to issuance of cheque and apart from that it is found that he is not the signatory of the alleged cheques and also no specific averments in the complaint against him, therefore, in the present case, complainant has failed to specify the act of the director Santosh in day to affairs, thus, he is entitled to get relief from this court. Petition allowed.
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