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TMI Blog2018 (12) TMI 1884X X X X Extracts X X X X X X X X Extracts X X X X ..... in. 3.1 The primary allegation of Registrar of Company (herein after referred to as "the RoC"), Gujarat in this case is that the Company-Neesa Technology Limited, or Neesa Group, Ahmedabad has not complied with the order of the "Company Law Board" dated 13.10.2014. Hence, the prosecution. 4. A perusal of the aforesaid complaint reveals that the vide order dated 13.10.2014, the Company Law Board has ordered that the said company to refund some of its FDR (Fixed Deposit Receipts) of 17 investors within 30 days, which the RoC alleged that the Company did not comply with the said order. The relevant observation in the complaint is incorporated herein as below. "It is observed from the financial statements that the Board Reports have not been attached in complete manner with every Balance sheet laid before a Company in General Meetings during the Financial year ended as at 31.03.2012, 31.03.2013 and Year end on 31.03.2014 as required under sub section (1) & (2) of Section 217 of the Companies Act, 1956. Company has also failed to provide information in the form regarding conservation of energy etc. as required under clause (e) of subsection (1) and Board has also failed to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the company matter, based on an inspection report dated 07.07.2015. The inspection was done after 15-months from the resignation of the petitioner; the inspection observations leading to these cases are not at all attributable to the tenure of the petitioner in any way under the law by any stretch of imagination, thus not applicable to the petitioner. The main and only issue, that led to the inspection of the company, as admitted by the respondents in their affidavits, was some NCD matter (Non-Convertible debenture) issued by the company declaring on private placement basis within the period from 08.04.2013 to 22.08.2013, while the petitioner did not exist in the company during this period of the NCD issue, it was not in his knowledge and it was outside the tenure of the Petitioner. On the same NCD matter also, the National Regulator-SEBI (Securities and Exchange Board of India), after 2-years of investigation and undue pecuniary orders; has finally exonerated the Petitioner. It is submitted by the petitioner that in fact, the SAT (Securities Appellate Tribunal) had also intervened and ordered in his favour in the matter on an appeal, by quashing SEBI's impugned order qua-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminal cases against the petitioner, which is absolutely illegal according to Article 20(2) of the Constitution of India. 5.5 The petitioner has also placed reliance on Section 283(1)(g) of the Companies Act, 1956 (in force at that time) such prescribes Automatic Vacation of Office due to not attending of any Board Meeting. It is submitted that for 3.5 years until July 2017, the RoC maintained wrong records and showed a wrong web-site display in the web site/web portal of Ministry of Corporate Affairs (MCA), Government of India, displaying the petitioner as a sitting Managing Director/Director of the company and misused his wrong records to frivolously prosecute the petitioner in all these criminal cases in the matter of said company. 5.6 It is submitted that in case of Anneta Hada Vs. Godfather Travels and Tours passed in Criminal Appeal No. 838 of 2008, the Apex Court, vide judgment dated 27.04.2012, has held that as a matter of Principle of Law; that in a Company Matter; if the Company is not arraigned as an accused, any individual cannot be held as an accused in such matters and such cases are not maintainable. Therefore, it is submitted by the petitioner that these 34 crimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he post on which the petitioner was appointed as Director of the Company seems to be a mere paper arrangement only and unquestionably his tenure is of approximately four months i.e. from 07.11.2013 to 06.03.2014. The petitioner has resigned from the company on 06.03.2014 and only after the intervention of this Court vide order dated 20.04.2017 and 05.07.2017 passed in Special Civil Application No. 4497 of 2017, his resignation was accepted. This Court, vide order dated 05.07.2017, passed in Special Civil Application No. 4497 of 2017 has observed thus:- "In view of this submission and the affidavit which has been filed, it is evident that Section 168 of the Companies Act, 2013, read with Rules of the Companies (Appointment and Qualification of Directors) Rules 2014, persons like the petitioner cannot be made to suffer merely because the Company has failed to comply with the requirement. It is stated and confirmed by the learned Assistant Solicitor General Shri Vyas that one of the Director and Managing Director of the Group of Company Shri Sanjay Gupta is behind the bar in connection with the offence against him. Therefore, looking to the background of the facts as stated-ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts have admitted that the tenure of the petitioner was between 07.11.2013 to 06.03.2014. 8.1 Section 283 of the Companies Act reads thus:- 283. Vacation of office by directors. (1) The office of a director shall become vacant if- (a) he fails to obtain within the time specified in sub- section (1) of section 270, or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company; (b) he is found to be of unsound mind by a Court of competent jurisdiction; (c) he applies to be adjudicated an insolvent; (d) he is adjudged an insolvent; (e) he is convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months;] (f) he fails to pay any call in respect of shares of the company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of the call unless the Central Government has, by notification in the Official Gazette, removed the disqualification incurred by such failure]; (g) he absents himself from three consecutive meetings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Director absents himself from three consecutive meetings of the Board of Directors, or from all meetings of the Board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board, he ceases to be the Director. 8.2 Section 292 of the Act reads thus:- Certain powers to be exercised by Board only at meeting. (1) The Board of directors of a company shall exercise the following powers on behalf of the company, and it shall do so only by means of resolutions passed at meetings of the Board:- (a) the power to make calls on shareholders in respect of money unpaid on their shares; (b) the power to issue debentures; (c) the power to borrow moneys otherwise than on debentures; (d) the power to invest the funds of the company; and (e) the power to make loans: [Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the managing agent, secretaries and treasurers, the manager or any other principal officer of the company or in the case of a branch office of the company, a principal officer of the branch office, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised by Board only at the meeting. Section 292(1)(e) says that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the managing agent, secretaries and treasurers, the manager or any other principal officer of the company or in the case of a branch office of the company, a principal officer of the branch office, the powers specified in clauses (c), (d) and (e) to the extent specified in sub- sections (2), (3) and (4) respectively, on such conditions as the Board may prescribe. 9. Assuming that the petitioner has in fact taken some decisions as per the say of the respondents, there is nothing to show that he had attended any Board Meetings as a Director or otherwise or he has formed any committee or has taken any decision during his tenure of three months by exercising powers of Director. No material is produced on record to show that the petitioner in fact had participated in any of the Board Meetings or had appointed any Committee as envisaged in Section 292 of the Act. As per section 283(1)(g) of the Act, the petitioner would seize to function as a Director, as he did not attend the Board Meetings for a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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