TMI Blog2019 (1) TMI 1759X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibited 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002. 3. The learned Senior Counsel appearing for the applicant/accused has submitted that the order of issuance of process against the applicant/accused is illegal and bad in law on the following grounds: i) He submits that the applicant/accused is not an Executive Director but he was an alternate Director. He submits that in the averments made in the complaint, no substantial role is attributed to accused No.6, who is an advocate and solicitor by profession and is a senior partner in the firm M/s.Crawford Bayley Company, advocates Solicitors. He is not a signatory of the cheque which is subject matter of the prosecution. In the complaint also, it is specifically mentioned that the original accused No.2 has signed and issued the said cheque. The averments are mainly against the accused Nos.2 to 4 and not against accused No.6. ii) In the balance sheet of 30.6.1999, the amount of ₹ 112,240/- has been shown as the loan amount due from Jaykaba Trading and Investment Ltd., accused No.8 and ₹ 26 lakhs has been shown as amount due from Shakun Mulchanani and Kabir Mulchandani of M/s.Sprite Electronics Private Ltd. of which accused Nos.2 and 3 are the directors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Maharashtra Ors. (2003 (3) Mh.L.J. 34) 7. Mr.Singh, the learned Counsel appearing for Respondent No.2, while opposing this application has submitted that at the stage of issuance of process, the learned Judge has to only consider the averments made in the complaint. In the present case, the petitioner is admittedly a Director of the said company. It is also admitted that the loans were disbursed to the respondents/ accused Nos.7 and 8 without taking prior sanction of the government, which are the sister companies of the company. He submitted that there is no delay in filing the complaint because time was taken for show-cause notice dated 3.1.2002 issued by the office to accused No.6 and it was received by the wife of the accused on 26.5.2005 and it was served. The show-cause notice was served immediately at the residence of respondent No.6. The learned Counsel submitted that there is no delay in filing the complaint because the sanction to launch prosecution by the respondents was obtained by the complainant on 12.10.2002 and immediately in 2002. Then, the complaint was filed in May, 2002. 8. In support of his submissions, he relied on the judgment of the Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the applicant/accused of their liability and obligation as principal officers in the day to day affairs of the company as Directors of the company, the applicants cannot be prsoecuted for the offences committed by the company and held that it will be a travesty of justice to prosecute all the Directors if the offence is committed without their knowledge. The set of the facts are quite similar to the facts in the present case. The status of the applicant/accused in the case of Homi Phiroz Ranina ors. vs. The State of Maharashtra ors. (supra), 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. 12. In R.M. Subramaniam Ors. vs. Inspector of Labour, Tiruchirapalli (supra), a revision was preferred against conviction under the Industrial Disputes Act. A learned Single Judge of the Madras High Court in that case has held that where notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the complaint. 15. 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. The submissions of the learned Senior Counsel that the said balance sheet was signed in a routine manner as the signature of the Managing Director and the chairman were appearing, carries substance. Thus 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. In view of these facts and the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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