The High Court of Bombay rejected writ petitions challenging the discharge of persons accused under Section 138 of the Negotiable Instruments Act. The Court held that Form No.32 establishing resignation was sufficient and mere denial without further contention did not keep the issue open for evidence.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
APPELLATE SIDE
CRIMINAL WRIT PETITION NO. 1192 OF 2004
ALONG WITH
CRIMINAL WRIT PETITIONS NOS.1193/2004,
1194/2004, 1195/2004, 1196/2004, 1197/2004,
1198/2004and 1199/2004.
Fortis Financial Services Ltd. ... Petitioners
(Orig.Complainant)
Versus
State of Maharashtra & Ors. ... Respondents
Mr. Abdul Sagir Khan i/b. A.S.Khan & Associates for
the Petitioners.
Ms. Manjula Rao for Respondents Nos. 2 & 3.
Mrs. M.M.Deshmukh, P.P. for State.
CORAM: S.K.SHAH,J.
DATE : 26th June,2006.
P.C.
1. In all these Writ Petitions common question of
law is involved, therefore, I dispose of the same by
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this common order.
2. These Writ Petitions are filed against the order
passed by the learned Additional Sessions Judge,
Greater Bombay, in various Revisions filed against the
order of process passed by the learned Magistrate
against the Respondents Nos. 2 and 3 (who are accused
Nos. 2 and 4). To set the facts correctly, in Writ
Petition No.1199 of 2004, Arun H. Merchant - accused
No.4 is not made party and therefore he is not a party
to the same.
3. After the process was issued, original accused
Nos.2 and 4, who are Respondents Nos. 2 and 3 herein
(except Writ Petition No.1199 of 2004), filed an
Application for discharge alleging that at the time of
issuance of the cheques, they had resigned from the
Company as Directors. The accused No.2 allegedly
resigned with effect from 31.10.1998 and accused No.4
(Respondent No.3) - Arun H. Merchant had resigned
with effect from 29.7.1999. They have produced the
Form No.32 along with their resignation.
4. The learned Magistrate however, did not recall
the process issued for the offence punishable under
Section 138 of the Negotiable Instrument Act against
the Respondents. Therefore, they filed Revision
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Applications and the same were allowed by the learned
Additional Sessions Judge, Greater Bombay, and the
process issued against the accused Nos. 2 and 4 in
all these Writ Petitions (except in Writ Petition
No.1199 of 2004) is recalled and they are discharged.
The learned Additional Sessions Judge has held that
the Form No.32 has been filed by Respondents Nos. 2
and 3. The learned Judge specifically dealt with the
fact that the Respondent No.2 had resigned from the
Company with effect from 31.10.1998 and the Respondent
No.3 (accused No.4) had resigned with effect from
29.7.1999 and the cheques were issued after the date
of their resignation and, therefore, they could not be
prosecuted.
5. It is this order which is assailed in these Writ
Petitions.
6. I have heard learned Counsel on both sides. The
learned Counsel for the petitioner submits that in the
original complaint it was alleged that Respondents
Nos. 2 and 3 (accused No.2 and 4) were the Chairman,
Managing Director and Director of Accused No.1 -
Vitara Chemicals Limited.; that Accused No.1 had
availed of a scheme of Hire Purchase facility for
purchase of plant and machineries under an agreement
dated 1.11.1996 and had agreed to observe and perform
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all the terms and conditions. It was also averred
that Respondents Nos. 2 and 3 (original accused No.2
and 4) were the Chairman, Managing Director and
Director of the Company who were responsible for the
management of the Company and had issued the cheque in
favour of the Company for discharging their aforesaid
liability. With these allegations the complaint was
filed.
7. The learned Counsel for the petitioner submits
that the learned Additional Sessions Judge, Greater
Bombay, has committed an error in discharging the
Respondents on the basis of Form No.32. He
specifically pointed out the averments made in the
reply stating that "It is denied that the accused has
resigned." Therefore, relying on the Judgment of of
this Court in Criminal Application No.4827 of 2004 in
the case of Vijay Mallya vs. State of Maharashtra &
Anr., he submits that it is a matter of evidence
whether the Respondent No.2 had ceased to be Director
or not in that Company or they were continuing to
manage the affairs of the Company.
8. The learned Counsel for the Respondents however
submits that in two more cases, the Respondent no.2
has been discharged in one of them, in the case of
D.B. Mehta and others vs. Ramesh Rikhavdas Shah,
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reported in 2004 (3) Mh.L.J. page 3.
9. Coming to the Vijay Mallya’s case, there it
was a matter of evidence whether the Respondent
no.2 had resigned and ceased to manage the affairs of
the Company or not although Form No.32 was filed. In
that matter,it was specifically averred on behalf of
the complainant that the applicant not only denied
that the Director resigned as alleged, but further
contended that the complainant had placed reliance on
the documents to contend that the position was that
the Director continued to be in charge of the affairs
of the accused Company. In this eventuality it was
observed in that case that it would be a matter of
evidence whether or not in fact, the Director had
resigned and whether or not he was continuing to
manage the affairs of the Company. In the instant
case, however, what is stated is merely denial and
nothing more. Mere denial would not make a case that
the accused Nos. 2 and 4 were looking after the
affairs of the Company even though they had resigned.
10. Under the circumstances, I do not find any
illegality or impropriety committed by the learned
Additional Sessions Judge. Consequently, I do not
find any merit in these Writ Petitions.
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The Writ Petitions are, therefore, dismissed.
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(S.K.SHAH,J.)
2 issues framed by the court
Whether the discharge of accused persons who had resigned as directors and filed Form No.32 was illegal.
Whether a mere denial of resignation in reply is sufficient to leave the issue of managing affairs as a matter of evidence.
Colour shows how this judgement treated each authority
Vijay Mallya vs. State of Maharashtra & Anr.Distinguished¶35
Criminal Application No.4827 of 2004 in the case of Vijay Mallya vs. State of Maharashtra & Anr.
D.B. Mehta and others vs. Ramesh Rikhavdas ShahFollowed¶36
D.B. Mehta and others vs. Ramesh Rikhavdas Shah, reported in 2004 (3) Mh.L.J. page 3 · Who else cites this
2 provisions across 2 enactments
Fortis Financial Services Ltd.
State of Maharashtra
Respondents Nos. 2 & 3
S.K. Shah
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court