TMI Blog2023 (3) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor from August, 2013 (Four months). And documents showing he had submitted his resignation is on record.As per Section 168 of the companies Act, it is the duty of the company who SHALL inform the ROC about the said resignation and process the same. The petitioner MAY also inform the ROC. Thus the resignation of the petitioner is in accordance with the provision of Section 168 of the Companies Act. For continuing liability which continues till the present.There is thus no such material on record against the Petitioner No. 1 to proceed towards trial and in the interest of Justice the proceedings against the petitioner is liable to be quashed. - CRR 773 of 2021 - - - Dated:- 27-3-2023 - HON BLE JUSTICE SHAMPA DUTT (PAUL) For the Petitioner : Mr. Debrup Bhattacharjee, Mr. Tirthankar Dey. For the SEBI : Mr. Sandipan Ganguly, Sr. Adv., Mr. Sudip Kumar Dutta. Judgment Shampa Dutt (Paul), J.: 1. The present revision has been preferred praying for quashing of the proceeding being Special Case No. SEBI/27/2017 under Sections 56, 60 and 70 read with Section 56, 60 read with Sections 2(36), 73 of the Companies Act, 1956 read with Section 465 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of materials on record, and after hearing the rival contentions advanced on behalf of the petitioner and the prosecution, by an order dated 29.07.2019 was pleased to reject such application preferred by the petitioner and was further pleased to fix the next date for framing of charge. 6. It is submitted that the Learned Judge failed to appreciate that the allotment of the Non-Convertible Debentures (NCD) took place during the Financial Year 2012-2013 which is calculated from 1st April 2012 to 31st March, 2013. 7. The petitioner states that the following facts are necessary for proper adjudication of the instant case :- I. The petitioner joined the company namely Chakra Infrastructure Limited being the accused no.1 before the Learned Court Trial, in the Month of November 2012 as an advisor to the company for a monthly remuneration of Rs. 20,000/- per month. II. Sometime in the month of June 2013 at the request of the Managing Director of the accused no. 1 company, the petitioner joined the accused no. 1/company as its Additional Director on 3rd July, 2013. III. In the month of November 2013 in the General Meeting of the members, the petitioner along with two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence ad shall be liable to be proceeded against and punished accordingly Explanation .- For the purposes of this section, - (a) company means anybody corporate and includes a firm or other association of individuals; and (b) director , in relation to a firm, means a partner in the firm. 8. It is further stated that the aforesaid provision makes it abundantly clear that a person who was/were in charge and responsible for conducting the day to day affairs/business of the company when the offence has been committed shall be deemed to be guilty of the offence. The petitioner was not associated with the accused no. 1, company, as its Additional Director during the Financial Year 2012-2013 and was in no way responsible for the day to day functioning/conducting of its business and the same fact would further appear from the documents relied upon by the Opposite Party herein for initiation of the present proceedings. 9. It is also submitted that the instant criminal proceeding to the extent it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision making process for issuance of Non-Convertible Debentures then the said Director could not be said to be an Officer-in-Default under Section 5 of the Companies Act; A plain reading of the petition of complaint would reveal that the petitioner joined the said company as its Additional Director on 3rd July 2013 and the said incident of issuance of Non- Convertible Debentures took place in the Financial Year 2012-2013 prior to his appointment. 15. It is submitted that the petitioner was not associated with the accused no.1/company, as its Additional Director during the Financial Year 2012-2013 and was in no way responsible for day to day conducting of its business. 16. It is submitted that the Learned Court failed to appreciate that the order issuing summons, order dated 29.07.2019 and the subsequent orders are baseless, unjustified, unwarranted and should be quashed, as the proceeding is even otherwise bad in law. 17. It is finally submitted that the Learned Trial Court without application of judicial mind, has come to the aforesaid finding against the petitioner and as such the instant proceedings being otherwise bad in law is liable to be quashed for the ends of jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased to dismiss the prayer for discharge of the petitioner on the ground that even though the petitioner was appointed as a director of the accused company after issuance of the debenture, no evidence has been brought forward to show that the resignation of the petitioner was accepted and on the contrary, record reveal that the petitioner continued to be a director of the accused company till the filing of the case. Hence, the petitioner has no scope to escape from his liability as one of the directors of the accused company, which was identified by SEBI as a wrongdoer. d) It is the specific case against the petitioner that even though he became a director of the accused company after the issuance of the debenture, he had a continuing liability to make repayments of the money illegally raised from the public by the accused company under Section 73(2) of the Companies Act, 1956 and Section 24/27 of the SEBI Act read with Regulation 28 of SEBI (Issue and Listing of Debt Securities) Regulations, 2008. It is submitted that the role and duty of a director is not limited to mere issuance of debenture instead it continues till the time the said amount of debenture repaid back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year 2012-2013, which is calculated from 1st April 2012 to 31st March, 2013. b) The petitioner joined the company in November, 2012 as Advisor. c) He joined as Additional Director on 03.07.2013. d) The petitioner resigned from the said post by a letter dated 28th November, 2013 submitted to the board of directors, which was duly received. e) He informed the same to the Opposite Party, which was recorded in their order dated 20.04.2016. f) Order of SEBI being number WTM/PS/07/IMD/ERO/APR/2016 is in respect of the company. g) The relevant portion of the order in respect of the petitioner is at paragraph 6(e) at page 10. Mr. Pranab Kumar Roy, vide letter dated March 09, 2015 (sent by his wife Ms. Nabanita Roy) read with letter dated September 16, 2014 submitted as follows:- i. He joined Chakra Group in January 2013 as Advisor to look after their B.Ed College and agriculture business for a monthly remuneration of Rs. 20,000/-. ii. In August 2013, at the request of Mr. Partha Chakraborty, he was inducted as a director in three companies of the Chakra Group, namely, Chakra Infrastructure Limited, Chakra Wealth Managemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y s Board pursuant to the offer and allotment of NCDs shall also be liable if the Company and the concerned directors have failed to make refunds as mandated under law. 20. The table at paragraph 22 (page 25) of the order shows that the petitioner still continues as a director since 03.07.2013 (no mention of the resignation rendered). 21. The complaint in this case has been filed on 10.02.2017 and the petitioner s prayer for discharge has been rejected vide order No. 45 dated 29.07.2019 by the learned Trial Court. 22. Written notes of argument has been filed on behalf of the petitioner and the following judgments have been relied upon:- i. Nimain Charan Biswal vs Securities and Exchange Board of India, Appeal No. 156 of 2020, On 30.07.2020. ii. Securities and Exchange Board of India vs Nimain Charan Biswal, Civil Appeal No(s). 3174/2020, on November 18, 2020. iii. Sayanti Sen vs Securities and Exchange Board of India, Appeal No. 163 of 2018, on 09.08.2019. iv. S.M.S. Pharmaceuticals Ltd. vs Neeta Bhalla and Anr., Criminal Appeal No. 664 of 2002, on September 20, 2005. 23. The Opposite Party has submitted as follows:- (a) The Opposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, lays down:- Section 168. Resignation of director.- (1) A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in immediately following general meeting by the company:- Provided that a director may also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed. (2) The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later:- Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure. (3) Where all the directors of a company resign from their offices, or vacate their offices under Section 167, the promoter or, in his absence, the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fulfillment of the following conditions, namely:- (a) Issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed. (b) Filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular, (c) Depositing, on or before the thirtieth day of April each year, such sum which shall not be less than twenty per cent of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account. (d) Certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits and where a default had occurred, the company made good the default and a period of five years had lapsed since the date of making g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is thus no such material on record against the Petitioner No. 1 to proceed towards trial and in the interest of Justice the proceedings against the petitioner is liable to be quashed. 35. CRR 773 of 2021 is allowed. 36. The proceeding being Special Case No. SEBI/27/2017 under Sections 56, 60 and 70 read with Section 56, 60 read with Sections 2(36), 73 of the Companies Act, 1956 read with Section 465 of the Companies Act, 2013 read with SEBI (issue of Capital and Disclosure Requirements) Regulations, 2009 (the ICDR Regulations) Section 117B of the Companies Act, 1956 read with Section 465 of the Companies Act, 2013 and the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (the ILDS Regulations) and Section 12(1) of the SEBI Act, 1992 read with Regulation 7 of the SEBI (Debenture Trustees Regulations 1993, which are punishable under Section 24 and 27 of the Securities and Exchange Board of India Act, 1992 pending before the Learned Judge-in-Charge, 5th Special Court, Kolkata and all orders passed therein including the order dated 29th July, 2019 qua the petitioner herein, are quashed. 37. There will be no order as to costs. 38. All connected Application ..... 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