TMI Blog2023 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... the same powers of a director. Moreover, they are subject to all obligations and limitations of a director. They are also entitled to seek appointment as a permanent director at the Annual General Meeting. The additional director must utilize his/her powers in the best interest of the company and the shareholders. Many people claim that the ROC knows about this director, as the company had already filed DIR 12 at the time of his appointment as additional director. So, following regularization DIR 12 is not required to be filed, which is absolutely a wrong understanding. Since he is now a director, and not an additional director. Therefore, ROC must be informed by filing a new DIR 12 that the additional director has been regularized as a director in the Company - additional directors are on equal footing, in terms of, of power, rights, duties, and responsibilities, as other directors are. Yet, tenure of additional director is up to the date of forthcoming AGM unlike directors which are duly appointed by shareholders in the general meeting. If the company wishes to continue with an additional director beyond the AGM, then it will have to go for his/her regularization. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues of Service Tax, VAT, Provident Fund, ESIC which had been deposited on account of any dispute except disputed amount of WBST/VAT of Rs 49.24 Lakhs under the Commercial Tax Party and Revision Board and CST 11.13 Lakhs. This has resulted in violation of provisions of Section 217(3) of the Companies Act, 1956 and the said violation was pointed out to the Directors of the company vide Show Cause dated 30th May, 2016. However, the reply which has been received was not satisfactory and hence, the competent authority has issued instruction to launch prosecution for the aforesaid violation vide their letter dated 28th March, 2016. The petitioner herein has been arraigned along with others as a director of Mani Square Limited. But the opposite party deliberately chose to overlook the fact that the purported violation is in respect of the financial year ending on 31st March, 2014 and not the periods subsequent thereto when the petitioner was appointed as an independent director of M/s Mani Square Limited with effect from 2 nd June, 2014 and therefore, the liability which was attempted to be thrust on the petitioner by the opposite party is totally untenable inasmuch as the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... director on the Board of the said company since 2nd June, 2014 and prescribed Form DIR-12 was duly filed with the Registrar of Companies on 8th June, 2014. (d) The petitioner resigned from the Board of the said company on 31st December, 2016 by submitting Form DIR-11 evidencing such resignation. Mr. Ganguly, has further submitted that the alleged violation mentioned in the impugned petition of complaint pertained to the financial year ending on 31st March, 2014 and the petitioner was not director of the company as on 31st March, 2014 and therefore, under no stretch of imagination, the prosecution could be allowed to be continued against the petitioner. That according to the General Circular No. 1/2020-F.No.16/1/2020/Legal, Government of India, Ministry of Corporate Affairs dated 2nd March, 2020 wherein it has been categorically directed by the appropriate authority of the Government of India that unnecessary Criminal Proceedings should not be initiated against the independent directors and non-executive directors, Non-KMP (Non-Key Managerial Personnel) and non-promoters. The Learned Magistrate failed to consider the aforesaid submissions in proper perspective and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad with Companies (particular of employees) Rule, 1975, shall contain the following particulars, namely of the employees:- (a) Designation of the employee. (b) Remuneration received. (c) Nature of employment, whether contractual or otherwise. (d) Other terms and conditions. (e) Nature of duties of the employee. (f) Qualifications and experience of the employee. (g) Date of commencement of employment. (h) The age of the employee. (i) The last employment held by such employee before joining the company. (j) The percentage of equity held by the employee in the company within the meaning of sub-clause (iii) of clause (a) of sub-section (2A) of section 217 of the Act. But the Board s Report attached to the Balance Sheet for the year ended 31.03.2014 does not contain nature of employment whether contractual or otherwise, nature of duties of the employee and the percentage of equity shares held by the employee in the company as required under Section 217(2A). Therefore, leading to violation of Section 217 (2A) of the Companies Act, 1956 read with Companies (particular of employees) Rule, 1975. On hearing the learned Advocates for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective of the director being an independent director/alternate director/any other Director, the appointment can only be as additional director. Hence the interpretation of the RoC that the petitioner was additional and not Independent Director is wrong and misinterpreted. The said DIR 12 on page 23 under the column designation it is stated Additional Director because this is the requirement of the Act that any director appointed by the Board has to be appointed as Additional Director, however the next column below the said column designation i.e. category, states in the said form DIR 12 as independent . The RoC has deliberately suppressed to mention in its report the second column category which establishes the fact that the petitioner has been appointed as Independent Director only. The petitioner has never attended any board meeting nor was present during the meeting in which the report of the Board was considered and are in dispute. The petitioner has also not signed the said report, hence he was not the part of the board which considered approval of the report, hence cannot be held liable for any shortcomings of disclosure in the said report. The Director s sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the records it is seen that the petitioner was then an Additional Director of the Company. Admittedly the other accused persons have pleaded guilty. The main contention of the petitioner is that he was not attached to the company in the financial year 2013-2014 and as such he is not liable in any manner what so ever. The case of the opposite party is that the board report of the financial year 2013-2014 was filed on 5th September 2014 when the petitioner was an Additional Director and as such prima facie becomes liable for the said offences, as filed in this case. The difference between Directors and Additional directors:- Basis Director Additional Director Section A director is appointed as per provisions of Section 152 of the Companies Act, 2013. Section 161 contains the provisions for appointment of an additional director. Power to Appoint Members of a company appoint a director. Additional director is appointed by the Board of the Company Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of NCT of Delhi, Criminal Appeal nos. 1263, 1264 and 1265-1267 of 2019, held:- 27. The liability of the Directors /the controlling authorities of company, in a corporate criminal liability is elaborately considered by this Court in the case of Sunil Bharti Mittal. In the aforesaid case, while considering the circumstances when Director/person in charge of the affairs of the company can also be prosecuted, when the company is an accused person, this Court has held, a corporate entity is an artificial person which acts through its officers, Directors, Managing Director, Chairman, etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. At the same time it is observed that it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the Statute specifically provides for. It is further held by this Court, an individual who has perpetrated the commission of an offence on behalf of the company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Further it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. In absence of specific allegations against the Managing Director of the company and having regard to nature of allegations made which are vague in nature, we are of the view that it is a fit case for quashing the proceedings, so far as the Managing Director is concerned. In the present case the petitioner as seen from the documents was an Additional Director on the date the board report was filed. To counter the same evidence is required to be adduced during trial so also to decide as to whether the petitioner at the relevant time of filing the report was a Director, Additional Director or an Independent Director. The responsibility of an Additional Director being the same as that of a director (but difficult from an independent director) they remain responsible, as the statute provides for the same. Thus to quash the proceedings by exercising this Courts inherent powers would amount to an abuse of the process of Court and would also amount to serious miscarriage of justice. CRR 1752 of 2020 is thus dismissed. There will be no order as to costs. All connected Application stand disposed of. Interim order if any stands vacated. Copy of this judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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