Joymalya Bagchi, J.@mdashAs all these cases involve same questions of law and fact, they are heard analogously and are being disposed of by a common judgment and order.
2. This is a second round of litigation by and between the parties. By judgment and order dated 25th June, 2012, a learned Single Judge of this Court quashed the impugned criminal proceeding under Section 138 read with Section 141 of Negotiable Instrument Act, 1881. In the earlier bout of litigation, the instant prosecution had been assailed before this Court under Section 482 Cr.P.C. by the petitioners. In the said proceeding the High Court had framed two questions:-
(1) Whether the Directors can be prosecuted on the bald assertion made in the complaint, that "the Directors thereof and were at the time when the offence committed in charge of and were responsible for the conduct and day to day business of the said accused No. 1 Company"?
(2) Whether the Director who has resigned can be prosecuted after his resignation has been accepted by the Board of the Directors of the Company?
3. After hearing the parties by judgment and order a learned Single Judge of this Court quashed the impugned proceeding, inter alia, on the ground of absence of material averments in the petition of complaint. This Court observed except the averment that the petitioners being the directors of the accused Company were in charge of and responsible for the conduct of day-to-day business of the Company, nothing had been stated in the complaint as to what part was played by them, how they are responsible for the funding of the Company, issuance of cheques and whether they had control of the funds of the Company. This Court did not express any opinion on the second question framed. The aforesaid judgment and order was assailed by the complainant/opposite party No. 1 before the Hon''ble Supreme Court. The Apex Court by its judgment and order dated 17th October, 2014, affirmed the quashing of the proceeding against Sobha Mehta. By the self-same judgment, the Apex Court remanded the matter for fresh hearing before this Court so far as the other directors were concerned in the light of the decisions considered and conclusion drawn in the aforesaid judgment. It was further observed in the said judgment that the matter be considered independently and as expeditiously as possible and preferably within six months.
4. Pursuant to such order of remand the matter was placed before this Court for hearing on 28th November, 2014, whereupon the learned senior counsel appearing for the petitioners submitted that a review petition had been filed against the aforesaid judgment and order dated 17th October, 2014, before the Hon''ble Supreme Court. Accordingly, the proceeding before this Court was adjourned. Finally, on 14.3.2015 the parties placed the order dismissing the review petition before this Court and matter was fixed for hearing on merits. On 23rd July, 2015, the petitioner took out an application for disclosing documents of unimpeachable quality to establish that they were not in charge of and responsible to the accused Company for the running of its day-to-day business at the time of commission of the offence. Such leave was given by this Court on 27th July, 2015, and thereupon on 3rd August, 2015, the petitioners filed three supplementary affidavits enclosing various documents in support of their respective claims. Affidavit-in-oppositions were filed to such supplementary affidavits and replies thereto have also been filed on behalf of the petitioners. Since the pleadings in the supplementary affidavits filed in support of the petitioners in all the matters are same in order to avoid further delay and dilation of the proceeding by order dated 24.9.2015. I directed that the Affidavit-in-oppositions and replies thereto filed in this case shall govern other connected cases also. The aforesaid narration of events is necessitated to demonstrate that it was the delay and dilation at the behest of the petitioners which is instrumental for the delay in disposal of the matter on remand.
5. Be that as it may, the moot question which falls for decision is whether the impugned proceeding instituted against the petitioners is liable to be quashed in view of the materials produced by them in the supplementary affidavits.
6. At the outset, it has been strenuously argued by Mr. Sengupta and Mr. Dey, learned senior counsels appearing on behalf of the petitioners that the remand is "an open remand for fresh hearing on all points". Hence, this Court must again reexamine the issue as to whether there are requisite averments in the complaint relating to the specific roles played by the petitioners in respect of the alleged offence so as to justify the continuation of the impugned prosecution.
7. To appreciate the scope and ambit of the order of remand it is essential to set out paragraph 33 and 34 of the said judgment and order dated 17th October, 2014.
"33. We may summarize our conclusions as follows:
a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the 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.
c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of the absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an arm-twisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed;
d) No restriction can be placed on the High Court''s powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but, nothing prevents it from taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.
34. We will examine the facts of the present case in light of the above discussion. In this case, the High Court answered the first question raised before it in favour of the respondents. The High Court held that "in the complaint except the averments that the Directors were in charge of and responsible to the Company at the relevant time, nothing has been stated as to what part was played by them and how they were responsible regarding the finances of the Company, issuance of cheque and control over the funds of the Company". After so observing, the High Court quashed the proceedings as against the respondents. In view of this conclusion, the High Court did not go into the second question raised before it as to whether the Director, who has resigned can be prosecuted after his resignation has been accepted by the Board of Directors of the Company. Pertinently, in the application filed by the respondents, no clear case was made out that at the material time, the Directors were not in charge of and were not responsible for the conduct of the business of the Company by referring to or producing any incontrovertible or unimpeachable evidence which is beyond suspicion or doubt or any totally acceptable circumstances. It is merely stated that Sidharth Mehta had resigned from the Directorship of the Company on 30/9/2010 but no incontrovertible or unimpeachable evidence was produced before the High Court as was done in Anita Malhotra to show that he had, in fact, resigned long before the cheques in question were issued. Similar is the case with Kanhaiya Lal Mehta and Anu Mehta. Nothing was produced to substantiate the contention that they were not in charge of and not responsible for the conduct of the business of the Company at the relevant time. In the circumstances, we are of the opinion that the matter deserves to be remitted to the High Court for fresh hearing. However, we are inclined to confirm the order passed by the High Court quashing the process as against Shobha Mehta. Shobha Mehta is stated to be an old lady who is over 70 years of age. Considering this fact and on an overall reading of the complaint in the peculiar facts and circumstances of the case, we feel that making her stand the trial would be an abuse of process of the court. It is however, necessary for the High Court to consider the cases of other Directors in light of the decisions considered by us and the conclusions drawn by us in this judgment. In the circumstances, we confirm the impugned order to the extent it quashes the process issued against Shobha Mehta, an accused in C.C. No. 24035 of 2011. We set aside the impugned order to the extent it quashes the process issued against other Directors viz. Kanhaiya Lal Mehta, Anu Mehta and Siddharth Mehta. We remit the matter to the High Court. We request the High Court to hear the parties and consider the matter afresh. We are making it clear that we have not expressed any opinion on the merits of the case and nothing said by us in this order should be interpreted as our expression of opinion on the merits of the case. The High Court is requested to consider the matter independently. Considering the fact that the complaints are of 2011, we request the High Court to dispose of the matter as expeditiously as possible and preferably within six months."
8. A perusal of the aforesaid paragraphs of the judgment delivered by the Apex Court clearly indicate if a complaint contains the basic averment that a director was in charge of and responsible for the conduct of business of the Company at the relevant point of time when the offence was committed, the Magistrate shall be entitled to issue process against such director. High Court, ordinarily in exercise of its inherent jurisdiction under Section 482 Cr.P.C. shall refuse to quash such a complaint containing basic averment against a director. However, in a given case, on an overall reading of the complaint and in spite of the existence of such basic averment therein the High Court may quash the proceeding if the director is able to produce some unimpeachable and incontrovertible material which is beyond suspicion and doubt or some totally acceptable circumstance which may clearly indicate that the director could not have been concerned with the issuance of the cheque and that the prosecution against the director is an abuse of the process of Court. After having held, as aforesaid, the Apex Court remanded the matter to consider the cases of other Directors "in the light of the decisions considered by us and the conclusions drawn by us in this judgment."
9. In view of the aforesaid observation in the order of remand, I am of the opinion that it is no longer open to the petitioners to argue that basic averments for initiation of prosecution is absent in the petition of complaint. It is, no doubt, open for them to produce ''unimpeachable and incontrovertible materials'' before this Court so as to establish that the basic averments in the petition of complaint are "patently absurd and inherently improbable" so that it can be unhesitatingly concluded that the petitioners were in no way in charge of and responsible to the accused Company for the running of its day to day business at the time of Commission of the alleged offences. In this perspective, let me examine the documents produced by the petitioners in their respective supplementary affidavits.
Affidavit of Petitioner No. 1, Anu Mehta:
10. It has been pleaded that she is not the signatory of the cheque and did not draw any remuneration from the Company. She was inducted as a director of the Company being the wife of co-director Shanti Lal Mehta who was exclusively entrusted to run the affairs of the Company. In support of such contention, copy of resolution dated 31.1.2006 certified by co-accused Shanti Lal Mehta as Chairman of Shreyansh Buildestate Pvt. Ltd. (as the accused Company M/s. Navkar Buildestate Pvt. Ltd. was formerly nomenclatured) was relied upon. Pleadings of the complainant Company before the Company Law Board in Company Petition in 107 (Cal) of 2012 was also relied upon to establish that Shanti Lal Mehta was exclusively in charge of and responsible to the accused Company for running of its day-today business.
Affidavit of Petitioner No. 2, Kanhaiya Lal Mehta:
11. It has been pleaded that petitioner No. 2, Kanhaiya Lal Mehta who is a septuagenarian is presently suffering from cancer. Copies relating to his medical treatment have been annexed. It has also been pleaded that due to ill health he resigned from the Company in 9th March, 2012. Copy of the resignation letter and the board resolution of the board accepting such resignation both dated 9th March, 2012, were also annexed to the said affidavit. He was not the signatory of the cheque and did not draw salary from the Company.
Affidavit of Petitioner No. 3, Siddharth Mehta:
12. It has been pleaded that he was pursuing his studies in Management at Mumbai at the relevant point of time. He was director of the Company from 23.06.2010 to 30.09.2010. Reliance in support of his claim is placed on, letter of resignation dated 30.9.2010 and board resolution of the even date. Reliance has also been placed on a certificate dated 27th July, 2015, issued by the Company Secretary enclosing a copy of entry made in the Ministry of Corporate Affairs, Government of India, showing that petitioner No. 3 retired from the directorship of the Company on 30.9.2010. In addition thereto, it has been pleaded that petitioner No. 3 was pursuing as Management studies at Mumbai and that he had gone to United States in 2008 and 2010 in connection with his studies. It is further averred that he was pursuing his studies in Family Management Business from S.P. Jain Institute of Management and Research, Mumbai in 2011 at the time of commission of the offence. He was not signatory of the cheque and did not draw salary from the said Company. On the other hand, he had travelled to United Arab Emirates in connection with his business and joined another Company named Sterling Marbles Granite Company LLC, Sharjah.
Reply to the said Affidavits:
13. Opposite party No. 1/complainant has filed counters to the said affidavits and denied and disputed the averments contained therein. With regard to petitioner No. 3, the opposite party has denied and disputed the fact that he had resigned in 2010. Documents annexed to the affidavit-in-opposition show that purported resignation was communicated to the Registrar of Companies by submitting Form-32 application as late as on 23rd of August, 2011. It has been further pleaded that 54 criminal cases are pending against the petitioners and their group Companies at the behest of the opposite party No. 1/complainant. Petitioner No. 3 is a director in twelve of such companies and transacted business on behalf of the companies including the present Company with the opposite party No. 1/complainant. It has further been pleaded that documents relating to pursuing of higher education are not of impeachable character and cannot be relied upon at this pre-mature stage to quash the impugned prosecution against the said petitioner. More so, such documents even if believed to be true does not completely negate the possibility of involvement of the petitioner No. 3 in playing a role in the affairs of the accused Company at the time of dishonour of the cheque in 2011. With regard to petitioner No. 2, it has been pleaded that his resignation was admittedly after the commission of the offence and there is no question of absolvence of his liability on the strength of such resignation. It has further been pleaded that the purported medical documents relating to ailments and/or treatment of the petitioner No. 3 do not show that he was bed ridden at the time of the commission of the offence and, therefore, the said documents can neither be said to be unimpeachable in character nor can they be pressed into service to establish that petitioner No. 3 was not in a position to take active part in the affairs of the Company at the time of commission of the offence. It has also been pleaded that petitioner No. 2 is the head of the family and represented the present Company and other group Companies in their transactions with the opposite party No. 1/complainant including the present one resulting in the issuance of the dishonoured cheque. With regard to the petitioner No. 1 it has been averred that she played an active role in the affairs of the accused Company and also in collateral and connected transactions between the group companies of the petitioners on the one hand and the opposite party No. 1/complainant on the other hand. A list of cases instituted against the petitioners is also annexed to show that they played an active role in the transactions between the petitioners'' group of companies and the opposite party No. 1/complainant, as aforesaid. This probabilise the prosecution version that petitioner No. 3 was not a mere name lender director in the accused Company but was in charge of and responsible to it for the running of its day to day business. There is no controversy that she was a director of the accused Company at the time of commission of the offence. It has also been pleaded that board resolution dated 31.1.2006 of M/s. Shreyansh Buildestate Pvt. Ltd. is certified by her husband who is a co-accused and by no stretch of imagination can be said to be an unimpeachable and incontrovertible document which can be relied upon to quash the prosecution at the preliminary stage. It has further been denied and disputed that the pleadings in Company petition can be pressed into service for quashing the impugned proceeding or that such pleadings give an unequivocal impression that Shanti Lal Mehta was the sole person controlling the affairs of the accused Company.
Dialectics at the Bar:
14. Mr. Sengupta, learned Senior Counsel for the petitioners argued that petitioner No. 3 having resigned on 30.9.2010 cannot be prosecuted in respect of a cheque which was dishonoured in 2011. It is further argued in view of the state of health of petitioner No. 2 and the fact that petitioner No. 1 is a housewife whose husband is in charge of the affairs of the Company, prosecution against the petitioners ought to be dropped. Per contra, Mr. Bhattacharya appearing for the opposite party No. 1/complainant submitted that the purported resignation of petitioner No. 3 on 30.9.2010 is doubtful as the Form-32 application in respect of such resignation was filed with ROC as late as on 23rd August, 2011, after the dishonour of the cheque in July, 2011 and the dispatch of the notice of dishonour dated 20th August, 2011. Hence, according to me the factum of resignation as on 30.9.2010 is an afterthought which has been manufactured to avoid criminal liability and such version ought to be thrashed out on evidence during trial and not accepted as an irrefutable state of affairs at the preliminary stage. An opportunity ought to be given to the parties to establish their rival versions during trial. It is further submitted that nature of other documents relied on behalf of the petitioner are neither unimpeachable in character nor such documents by any stretch of imagination give rise to an irresistible and incontrovertible impression that the petitioners were not in charge of and responsible to the Company for running its day to day affairs at the time of commission of the offence.
Ratio Decidendi:
15. Firstly, it must be understood that all defences and/or documents in support thereof cannot be utilized by an accused under Section 482 Cr.P.C. to improbabilise the basic averment that he was in control and in charge of the day-to-day affairs of the Company at the time of commission of the offence. The High Court under Section 482 Cr.P.C. cannot hold a mini trial of all defences raised by an accused based on disputed questions of fact and the order of remand cannot be construed to vest such jurisdiction on the Court as the petitioners would like me to believe. It is only documents of sterling quality and unimpeachable nature which can be relied upon at this stage by an accused to quash a prosecution by establishing the basic averment in the impugned complaint is "patently absurd and inherently improbable" rendering the prosecution an abuse of process of Court as held in
16. In this regard, it may be profitable to refer to
"29. Regarding the argument of the accused having to face the trial despite being in a position to produce material of unimpeachable character of sterling quality, the width of the powers of the High Court under Section 482 of the Code and Article 226 of the Constitution is unlimited whereunder in the interests of justice the High Court can make such orders as may be necessary to prevent abuse of the process of any court or otherwise to secure the ends of justice within the parameters laid down in Bhajan Lal case."
17. Judged from this angle, I am of the opinion that only those documents produced by petitioner No. 1 or petitioner No. 2 in their supplementary affidavits which are of unimpeachable character or of sterling quality may be relied upon dispensing with their formal proof during trial to come to a conclusion that the basic averments pleaded in the complaint are patently absurd or inherently improbable. Petitioner No. 1 has merely pleaded that she is housewife and had been inducted as a director of the accused Company as her husband was in charge of and responsible to the Company for the running its day-to-day affairs. This is a defence based on facts which are to be probabilised during trial but certainly such defence is neither based on incontrovertible or unimpeachable documents nor on admitted facts so as to be accepted as gospel truth at this stage. On the contrary, opposite party No. 1/complainant claims that she was active in the affairs of the Company and played a role in the transactions between the complainant Company and the accused Company as well as other group Companies belonging to the family of the petitioners. A list of criminal cases which have been instituted by the opposite party No. 1/complainant Company against the petitioners arising from collateral and connected transactions between the opposite party No. 1/Company and the group Companies belonging to the family of the petitioners have been annexed in support of such claim. Such rival versions are to be tested on evidence and petitioner No. 1 cannot be given a reprieve from trial on her mere ipse dixit that she is a house wife and in no way connected with the affairs of the Company. Reliance on the purported board resolution dated 30th January, 2006, which is certified by her husband and co-accused Shanti Lal Mehta, inter alia, stating that the latter is in exclusive charge of the affairs of the Company is not an unimpeachable public document which can be relied upon to quash the impugned proceeding against the petitioner at this stage. It purports to be a resolution of a board of directors of a Company and such a document like any other document has to be proved in accordance with law. It is also trite law that the proof of a document is the proof of its contents and not the truth thereof. Accordingly, I do not think it prudent to reach a conclusion on the strength of the board resolution which is neither a public document of unimpeachable character and sterling value that the petitioners were not in charge of the affairs of the accused Company at the relevant time. Similarly, the medical documents relied upon in favour of petitioner No. 2 also do not give rise to such an irrevocable conclusion of exoneration. It has been pertinently pleaded that he was the head of the family which controlled the accused Company and played a pivotal role in its affairs in 2011 at the time of commission of the offence. In fact, in the supplementary affidavit it has been specifically pleaded that he was detected with cancer only in 2015. Medical documents show that he was operated upon in 2013. Hence, there is no unimpeachable evidence on record to show that the petitioner No. 2 was absolutely bed-ridden and unable to play a role in the day to day affairs of the Company in 2011 (i.e. the time of commission of offence) rendering the basic averments pleaded in the complaint patently absurd or inherently improbable. Finally, coming to petitioner No. 3 it has been pleaded that he had retired from the Company on 30.9.2010. In support of this contention reliance has been placed on a letter dated 27th July, 2015, issued by the Chattered Accountants enclosing a entry in the records maintained by the Ministry of Corporate Affairs, Government of India, endorsing the fact that petitioner No. 3 resigned on 30.9.2010 from the said Company. There is, however, no material on record as to the date on which such entry was made in the records of the Ministry of Corporate Affairs, Government of India. On the other hand, in rebuttal the opposite party No. 1/complainant has produced documents on the strength of which they claim that the purported resignation as on 30.9.2010 was intimated to the Registrar of the Companies on 23rd August, 2011, after the commission of the offence. No doubt, Form-32 filed by the Company with the Registrar of the Companies or entry in the records maintained in the Ministry of Company Affairs with regard to the resignation of a director are public documents. However, in terms of Section 303(2) of the Companies Act, 1956 such resignation by way of change in the directorship of the Company is to be reported to the Registrar of Companies by filing Form-32 application within 30 days of such change. It appears that Form-32 relating to the resignation of the petitioner No. 3 was filed on 23rd August, 2011, not only after the expiry of the statutory period but also after the commission of the alleged offence of dishonour of the cheque in question. In spite of repeated queries, petitioner No. 3 was unable to clarify the position as to why such resignation purportedly made on 30.9.2010 was reported to the Registrar of Companies as late as on 23rd August, 2011, and that too after the dishonour of cheques and issuance of the notice of dishonour. It is nobody''s case that the Company was in the hands of a rival group who wanted to embarrass petitioner No. 3 and thereby intentionally neglected to communicate such resignation to the Registrar of Companies. On the other hand, it is the case of the petitioner No. 3 that the Company was in the control and management of his father, namely, Shanti Lal Mehta. No doubt, it may be a case of remissness or forgetfulness on the part of the Company or it may be as the complainant would try to probabilise a fabricated resignation which was engineered as an afterthought to avoid criminal liability. Production of certified copy of a public document is proof of its contents. However, truth of the contents of such a document would depend on the contemporaneity and regularity of its creation in accordance with the procedure contemplated in law. If a public document is created contemporaneously in accordance with procedure established in law it would be the best and most convincing evidence as to the truth of its contents. On the other hand, if a public document is created belatedly beyond the statutory period contemplated in law, its lack of contemporaneity to the facts recorded therein would cast a brooding shadow on the truth of its contents. This doubt is more reinforced if such a public document is created after the commission of an offence and is pressed into service to seek exemption from its liability. Under such circumstances, to rely on such a public document which was not created within the time stipulated by law to quash a proceeding under Section 482 Cr.P.C. and thereby deny opportunity to the parties to lead evidence relating to the circumstances leading to its belated creation and its impact on the truth of its contents, would amount to denial of access to justice to the complainant resulting in a breach of the fundamental right of equal access to justice which an integral part of the rule of law as enshrined under Article 14 /21 [See,
18. In similar circumstances, the Apex Court in
"7. As rightly contended by learned counsel for the appellant factual disputes are involved. What was the effect of delayed presentation before the Registrar of Companies is essentially a matter of trial. Whether Respondent 1 had intimated the company and whether there was any resolution accepting his resolution (sic resignation) are matters in respect of which evidence has to be led. Therefore, the High Court was not justified in its view."
19. In
"10. Thus, in the light of the aforesaid averments as found by us in the criminal complaint, we are of the considered opinion that sufficient averments have been made against the respondents that they were the partners of the firm at the relevant point of time and were looking after the day-to-day affairs of the partnership firm. This averment has been specifically mentioned by the appellant in the complaint even though denied by the respondents but the burden of proof that at the relevant point of time they were not the partners, lies specifically on them. This onus is required to be discharged by them by leading evidence and unless it is so proved, in accordance with law, in our opinion, they cannot be discharged of their liability. Consequently, the High Court committed an error in discharging them. Also, at the cost of repetition, by virtue of their own submissions before the High Court (reproduced in para 4 above), the respondents have admitted the fact that the appellant had referred to them in their capacity as partners who were in charge of the affairs of the firm in the initial complaints. The question as to whether or not they were partners in the firm as on 31-3-2004, is one of fact, which has to be established in trial. The initial burden by way of averment in the complaint has been made by the appellant.
11. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, proviso to Section141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the court that the offence was committed without his knowledge or he had exercised due diligence to prevent the commission of such offence, he will not be liable to punishment. Needless to say, the final judgment and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced--if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal."
20. In the aforesaid report the Court further held when there is dispute relating to factual issues like creation of a partnership or retirement of partners therefrom and there were allegations and counter-allegations between the parties, the rule of specific averment in
"14. In the present case, there are several disputed facts involved--for instance, the date when the partnership came into being, who were the initial partners, if and when the respondents had actually retired from the partnership firm, etc. Strictly speaking, the ratio of S.M.S. Pharmaceuticals can be followed only, after the factum that the accused were the Directors or partners of a company or firm, respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counter-allegations between the parties regarding the very composition of the firm, the above rule of "specific averment" must be broadly construed.
15. Indeed, it would be nothing short of a travesty of justice if the Directors of a company or partners of a firm, who, having duped a third party by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the company/firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint--such a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding with respect to an offence under Section 141 of the Act, must be exercised keeping this advisory note and caveat in mind."
21. Failure to report the resignation of a director to the Registrar of Companies within the statutory timeframe or at least prior to the commission of the offence keeps the factum of resignation away from the realm of public scrutiny of an outsider who continues to deal with the Company on the innocent belief that the said individual is still a director of the Company. It perpetuates that an impression of continuation of jural relationship between the said director and the Company in the minds of third parties who are dealing with the Company. That apart, a delayed communication to ROC of the factum of resignation particularly after the commission of the offence, leaves scope for manipulation of the records of a Company to fabricate a resignation at an anterior date to escape criminal liability. Under such circumstances, to quash a prosecution against such a director on the mere plea of prior resignation (which was not in the public domain at the time of commission of the offence) without giving an opportunity to the complainant to lead evidence to establish his claim of sham resignation engineered at an anterior date to avoid criminal liability would amount to an unjust denial of access to justice to a victim of crime and would not enure to the ends of justice.
22. In
23. I further hold that the pleadings in the Company petition relied on by the petitioners do not give a conclusive impression that Shanti Lal Mehta was in exclusive charge of the day to day activities of the Company. On the other hand, it also discloses roles of the petitioners, particularly petitioner Nos. 1 and 2, in the transactions between the Company and the opposite party No. 1/complainant negating the plea of exclusive control of the Company by co-accused Shanti Lal Mehta.
Conclusion:-
24. For the aforesaid reasons, I do not find any merit in the petition and the same is accordingly dismissed.
25. The Trial Court is directed to proceed with the matter as expeditiously as possible and conclude the trial preferably within six months from the date of communication of this order.
26. I, however, clarify that observations made in this judgment are for the purpose of disposal of this petition and shall not have any bearing in the course of trial of the case. Bearing in mind the health, age and special circumstances relating to the petitioners and the nature of the offence, I give liberty to them to pray for dispensation of their personal attendance during trial under Section 205 /317 Cr.P.C. before the trial Court in the event such application is made, the trial Court shall be at liberty to consider the same in accordance with law in the light of the aforesaid factors.
