TMI Blog2013 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies [1994 (1) TMI 208 - HIGH COURT OF RAJASTHAN] and considering section 5 of the Act it is held that the Directors are Officer in default only where company does not have managing director, whole-time director or manager. Department of Company Affairs have also issued Circular No. 6/1994 [F. No. 3/41/93-CL-V] dated 24th June, 1994 that where penal provisions provide for punishment of ‘officers in default' prosecution be filed against the managing director(s); whole-time director(s) 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. Considering the aforesaid, to continue the criminal proceedings against original accused No. 6, who was at the relevant time only ordinary director, would not be maintainable and the same would be abuse of process of law and the court and, therefore, this is a fit case to exercise the powers under section 482 of the Code and to quash and set aside the criminal proceedings against the petitioner-original accused No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection was carried out under section 290A of the Act and the concerned officer detected the default and contraventions, which are as under : "The company has not maintained the register of members and index of members. The details of the shareholders along with the names of the shareholders, folio number, date of appointment, date of cessation, etc., maintained in computer files/floppies and such details can be read on the screen of the computer." 3. It is further alleged in the said complaint that, therefore, the company as well as its managing directors and the directors have committed the breach of sub-section (1) of section 150 and sub-section (2) of section 150 of the Act. In the said complaint the learned Additional Chief Metropolitan Magistrate, Ahmedabad directed to issue summons against the accused persons, inclusive of the petitioner for the offence punishable under section 150(1) and 150(2) of the Act. Being aggrieved and dissatisfied with the impugned criminal proceedings, the petitioner-original accused No. 6 has preferred the present Special Criminal Application under article 226 of the Constitution of India read with section 482 of the Code. 4. Shri S P Majmuda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show any contrary decision to the decision of the Rajasthan High Court as well as Andhra Pradesh High Court. He is also not in a position to dispute that relying upon the decision of the Rajasthan High Court, the Department of Company Affairs had in fact issued a circular that in case when breach is alleged to have been committed by the company and the concerned 'Officer who is in default', in that case if the company had already appointed the managing director, whole-time directors, managers in that case the prosecution is not to be initiated against ordinary director and, therefore, considering the above, it is requested to pass an appropriate order considering the facts and circumstances of the case. 8. Heard the learned advocates appearing on behalf of the respective parties at length. At the outset, it is required to be noted that respondent No. 2 had instituted the impugned criminal proceedings against original accused No. 1-company-Reliable Finstock Services Ltd and others for breach of section 150(1) and 150(2) of the Act and the petitioner is arraigned as accused No. 6 as director of original accused No. 1-company. It is not in dispute that Shri J Jayandra M Shah was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board in this behalf or where no such director is so specified, all the directors can be said to be the officer who is in default and, therefore, on fair reading of section 5 of the Act where the company, who is alleged to have committed the default does not have managing director or managing directors and/or whole-time director or whole-time directors, manager or any director's who may be specified by the Board in this behalf then and then only all the directors can be said to be the "officer who is in default". 11. In the present case, as stated hereinabove, admittedly original accused No. 2 was appointed as managing director of original accused No. 1-company and original accused No. 1-company had also the whole-time directors and the manager. The petitioner was arraigned as an accused only as a ordinary director. Considering the aforesaid, when the company had a managing director ; whole-time director and manager as mentioned in clauses (a) to (c) of section 5 of the Act there cannot be any prosecution against the petitioner who was an ordinary director of original accused No. 1-company as he cannot be said to be "officer who is in default". 12. An identical question came to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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