TMI Blog2022 (12) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... e out a case against him, or that it do not disclose any cognizable offence at all. It can also not be said that the allegations made in the FIR are only absurd and inherently improbable, or that there is no sufficient ground for proceeding against him. The factual aspects of the case as discussed above, would definitely discard any intention of malafide or malice of the complainant, who intends to proceed against the accused person on the basis of available materials against him, prima facie constituting an offence. This should not lead to quashing a proceedings initiated to unearth the truth. See BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] Petitioner though being designated or appointed in the accused company as a Director , he was not entrusted with the management, affairs or policy of the same as part of his duty as a Director - Company s records and more so the specific averments in the complaint show otherwise. This, at one end, prima facie constitutes a contravention/offence and make out a case against him and at the other, duly complies with the statutory provision and dictum of the Hon ble Supreme Court in N. Rangachari s judgment (mentioned earlier). Hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received in India within a period of six months from the date of shipment and the time period for receipt of such export proceeds has also not been extended by the Reserve Bank of India. Complainant alleged that such an act of the company and other accused persons including the present petitioner as the Director of the company, of refraining from securing the full export value of the goods exported, from the country of final destination and thereby delaying the securing of the export proceeds beyond the prescribe period, amounts to, inter alia, a contravention of provisions of Sections 18 (2) and 18 (3) of the Foreign Exchange Regulation Act, 1973. 5. Since allegedly the accused persons, at all the material times, were in charge of and responsible for the management, affairs and conduct of business of the accused company, hence, under the provisions of Section 68 (1) and 68 (2) of the said Act, they are also liable for the same offence, as the company itself. They have also contravened the provisions of Section 18 (2) and (3) of the Act as the company itself. This has prompted the opposite party no. 2 to proceed against the petitioner and other accused persons under Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, which are of the status of public documents, that after expiry of the six months period from the date of consignment, when contravention can be said to have set in, the petitioner was already disassociated and no way connected with the accused no.1/company and all his relations with the same were severed by that time. It is his submission that during the period when he was a Director of the concerned company, allegation of any contravention to have been made in connection with the concerned shipments would not arise, if the statutory mandates are to be followed because of the reason that he retires before expiry of the period of six months from the date of export. He accordingly states that his implication is only illegal, erroneous and malicious too and that he should be exonerated by way of quashment of the entire proceedings against him. 10. Opposite party no.2 is represented in this case. The crux of contention on behalf of the opposite party no.2 is that the prima facie materials are available against the petitioner, he being a Director of the accused no. 1/company at the relevant point of time, though not at a time after expiry of six months period from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal too. Order of the trial court has dealt with this petition of the present petitioner and rejected the same on the grounds stated earlier in this judgment. Court s attention is drawn to the certified copy of the annual return of the company made up to 31 December 1996, wherein the status of the present petitioner is mentioned as the Director of the company and the date of his seizing to be the same has also been mentioned to be 2nd August 1996, that is the date of registration of his resignation in the books of the Registrar of Companies. Certified copy of form number 32 dated 5th August 1996 is also relied on. 13. Mr. Ganguly, Learned Sr. Advocate has emphasised about the unimpeachable nature of the documents as mentioned above to address the same to be uncontrovertible public documents. 14. Court s attention is also drawn to the relevant statutory provisions. By referring to section 68(1) of the said act, it has been submitted that according to the said provision of law, when any contravention of the provisions under the act has been made by a company, every person who, at the time of commission of the contravention, was in charge of, and was responsible to, the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the opposite party No.2. Mr. Chakrabarti, Ld. Advocate for the same, has emphasised regarding interpretation of the provisions of law, that of section 18(3) of the Act, in particular. According to him, last day of the prescribed six months period is only the outer limit, that is the cut off date, within which the company or any responsible person holding office of the same should not refrain from doing as necessary to repatriate the sale proceeds of exported goods. Therefore he disputes the argument of the petitioner as regards the starting point of alleged contravention which would entangle a person for the same under the provisions of the statute. He says that during the period from the date of shipment of the goods till the date when the six months period expires, the petitioner has been in office as a Director of the accused company for 4 months period. Therefore, he says, that the petitioner cannot simply gloss over his responsibility as to the contravention made of the mandates of law. He points out to the relevant dates of the five shipments spreading from 5th April 1996 to 6th May 1996 and also to the opportunity notice given to the present petitioner to which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, a Director would generally connote a person who may be in charge of and responsible to the company for conduct of its business. 23. In the case of N. Rangachari vs. Bharat Sanchar Nigam Limited reported in (2007) 5 SCC 108, the Hon ble Supreme Court laid down following, (though in connection with a case under the Negotiable Instruments Act, 1881, however the provisions being pari materia with the provisions of this Act, can be followed in this case) : 20. In other words, the law laid down by this court is that for making a Director of the Company liable for the offences committed by the Company under section 141 of the N.I.Act, there must be specific averments against the Director showing as to how and in what manner the director was responsible for the conduct of the business of the company . It was further held that a person in the commercial world having a transaction with company is entitled to presume that the Directors of the company are in charge of the affairs of the company. 24. Here, the provision under section 68(1) of the Foreign Exchange Regulation Act, 1973, and also the relevant portion of Section 18 of the same, may be resorted to, for once. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing market conditions expect to receive on the sale of such goods in the overseas market, he shall not, except with the permission of the Reserve Bank on an application made to the Reserve Bank by the exporter in this behalf, authorise or permit or allow or in any manner be a party to, the sale of such goods for a value less than that declared: Provided that no permission shall be refused by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter: Provided further that where the exporter makes an application to the Reserve Bank for permission under this clause and the Reserve Bank does not, within a period of twenty days from the date of receipt of the application communicate to the exporter that permission applied for has been refused, it shall be presumed that the Reserve Bank has granted such permission. Explanation .-In computing the period of twenty days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the exporter for making a representation under the first proviso shall be excluded. (2) Where any export o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has been very carefully designed. Every possible situation has been conceived and appropriate prophylactic measures to ensure the preservation of foreign exchange and preservation of siphoning off the foreign exchange which is very much essential to the economic life of the nation, have been embedded therein. 27. This provision has taken into its sweep, along with the juristic person, i.e, the company, every other person who might be responsible for conduct of business thereof to be booked for any offence/contravention. Accordingly a Director of a company who is generally entrusted with such a responsibility is similarly liable for an offence as the company itself, in case he is in charge of or responsible for the conduct of the business of the company at the relevant time when the offence was committed. This is an exception to the normal rule in cases involving criminal liability, in which, no one is to be held criminally liable for an act of another. 28. An inquisitive consultation with the complaint in this case has shown that the complainant has mentioned therein that the present petitioner along with the other accused persons were in charge of and responsible to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or she was in charge of and was responsible to the company for conduct of its business is not sufficient. 32. Finally on behalf of the petitioner the case of National Small Industries Corporation Limited was referred to in which the following principles were derived :- 39. From the above discussion, the following principles emerge: (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter expiry of six months statutory period, but the last day of the sixth month from the date of export is only the outer limit and end of the timespan. Law requires the exporter to affairm in the declaration made under section 18(1)(a) that full export value has already been paid or will be paid within the prescribed period in the prescribed manner. The words within the prescribed period appearing in section 18(1)(a) would definitely mean the prescribed period of six months, as provided under the statute. Therefore it is the mandate of law that all activities for repatriation of export value would be within the outer limit of sixty days time and in case this goal is not accomplished within sixty days from the export date, the statutory presumption of not taking any reasonable steps by the concerned person for recovery of the same would arise. The argument by the petitioner regarding the date of commission of the alleged offence to be after expiry of the sixty days statutory period is refutable in view of the statutory provisions, as discussed above. Elucidation of the afore stated statutory provisions in any manner other than this would render the provisions of statute, as mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner s involvement and makes out a case against him. At the moment there is no material available to construe that the petitioner rebuts the presumption of law so arises against him. Regard may have to the judgment of Gunmala Sales Private Ltd vs. Anu Mehta, reported in (2002) 1 SCC 234 , the Hon ble Apex Court has been pleased to hold as follows while delineating the scope and the power of High Court under section 482 of the Code:- (a) Once a complaint is filed under section 138 read with section 141 of the Negotiable Instruments Act, the basic averment is made that the Director was in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director. (b) If a petition is filed under section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director; In Standard Chartered Bank vs. State of Maharashtra, repor ..... 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