Allowed

Har Bhagwan Arora v. Ambika Papers Pvt. Ltd. and Anr.

Bombay HC14 Nov 2011APL/972/2011

Case brief

AI extract

What is this about?

The court quashed criminal proceedings under section 138 NI Act against an applicant who had resigned as a director before the cheques were issued and dishonoured. Relying on statutory forms proving resignation, the court held the applicant not liable for subsequent company debts.

What did the court decide?

Process issued against the applicant under section 138 r.w. 141 of NI Act is quashed and set aside.

Har Bhagwan Arora Vs Ambika Papers Pvt. Ltd. and Anr. — Company and Corporate | Bombay HC (2011)

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apl-972/11

srp

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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CRIMINAL APPL. NO. 972 OF 2011
WITH
CRIMINAL APPL. NO. 963 OF 2011
WITH
CRIMINAL APPL. NO. 964 OF 2011
WITH
CRIMINAL APPL. NO. 965 OF 2011
WITH
CRIMINAL APPL. NO. 966 OF 2011
WITH
CRIMINAL APPL. NO. 967 OF 2011
WITH
CRIMINAL APPL. NO. 968 OF 2011
WITH
CRIMINAL APPL. NO. 969 OF 2011
WITH
CRIMINAL APPL. NO. 970 OF 2011
WITH
CRIMINAL APPL. NO. 971 OF 2011 WITH
CRIMINAL APPL. NO. 962 OF 2011

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apl-972/11

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Mr. Har Bhagwan Arora. ..Applicant. Versus Ambika Papers Pvt. Ltd & Anr. ..Respondents.

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Mr. Amit Ghag for the applicant.

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Mr. Subodh Desai a/w Ms. Deeksha Dadwal i/b Harari & Co., for R-1.

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Mr. Rajesh More, APP for the State.

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Coram : RANJIT MORE, J. Date : November 14, 2011 .

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P. C. :

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Heard learned Counsel for the parties.

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Rule. Rule made returnable forthwith, by consent. Mr.Subodh Desai, Counsel waives service for the respondent no.1 and Mr. More, APP waives service for Respondent no.2. As short question is involved, Petition is taken up for final disposal forthwith, by consent.

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The facts of all the aforesaid Applications are more or

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less similar. Parties are the same. Therefore, in order to avoid repetition and for the sake of brevity, the facts of Criminal Application No. 972 of 2011 are mentioned hereinbelow.

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This criminal application is filed under section 482 of the Code of Criminal Procedure, 1973 for quashing the proceeding of CC. No. 5677/SS/2009 pending before the Metropolitan Magistrate, 23^rd Court, Esplanade, Mumbai. The applicant has also prayed for setting aside of the order dated 7/4/2010

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passed by the learned Metropolitan Magistrate, 23^rd Court, Esplanade, Mumbai whereby process is issued against him for the offence punishable under section 138 read with 141 of the Negotiable Instruments Act, 1881.

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Respondent no.1 filed complaint bearing CC No. 5677/ SS/2009 against the applicant and 11 others alleging that Accused No.1–M/s. Blue Bird (India) Ltd is its customer and Accused no.2 is the Chairman & Managing Director of Accused No.1. Accused No.3 was alleged to be the Jt. M.D. and Accused nos. 4 to 12 are alleged to be the Directors of Accused no.1 – company. It was further alleged that Accused no.1 placed purchase orders with the complainant from time to time for purchase of copiers and writing/printing papers for which the Complainant maintained running account in the name of Accused no.1. It was averred that as per the books of the Complainant, Rs.2,34,47,223/- was due and outstanding towards the copier and writing/printing papers goods supplied to the Accused from time to time on credit basis. The complainant raised 6 invoices against part of the amount due and payable by the Accused. Accused No.1 in pursuance of these invoices, with a view to clear the outstanding amount of

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the complainant towards the aforesaid invoices, issued 6 cheques. Particulars of those cheques are given in the complaint.

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on 29/10/2009 the complainant deposited the said cheques with his Banker. However, said cheques returned dishonoured on 30/10/2009 with the remark “insufficient funds”. The complainant thereafter on 12/11/2009 issued legal notice to all the Accused. Though all the Accused received said notice, amount due was not paid and therefore respondent no.1 filed above complainant under section 138 r.w. 141 of N.I. Act, 1881.

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Respondent no.2 – Complainant has alleged that Accused nos.2 to 12 were in charge of the day-to-day affairs and are responsible for the conduct of business of Accused no.1 company. After recording the verification of complainant, the Magistrate issued process against all the Accused for the offence punishable u/s 138 r.w. 141 of N.I. Act, 1881.

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As stated above, the present application is filed for quashing the said process insofar it relates to the present Applicant. Learned counsel for the applicant submitted that Accused No.3, i.e., the present applicant, was appointed as Director of Accused No.1-company on 22/11/2003 and

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thereafter w.e.f. 16/12/2004 he was working as Jt. Managing Director of the Company. He further submitted that the Applicant resigned from the directorship of the said Company w.e.f. 30/6/2008, i.e., much prior to the issuance of the cheques in question. In order to substantiate his arguments, he relied upon the certified copy of Form-32 maintained under section 303(2) of the Companies Act, 1956. He also relied upon Form-20B maintained as per the provisions of Section 159 of the Companies Act, 1956.

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Mr. Desai, learned counsel for respondent no.1 – original Complainant, on the contrary, supported the impugned order and he relied upon the Division Bench judgment of this Court in Suhas Bhand v/s. State of Maharashtra [2009(11) BLR 3774].

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Having considered rival submissions of the learned counsel appearing on behalf of the respective parties and having gone through the compilation of application, I find merit in the application. Page 29 of this application is the copy of Resignation Letter of the Applicant addressed to the Board of Directors of the company. On perusal of the same, it is clear

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that Applicant has resigned from the Directorship of Accused no.1 – company w.e.f. 30/6/2008.

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Form-32 maintained under section 303(2) of the Companies Act, 1956 is annexed at page 25 to the Application. The certified copy obtained from the office of Registrar of Companies is also made available for my perusal. The said Form 32 discloses that the applicant has resigned from the directorship of Accused no.1 company w.e.f. 30/6/2008.

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Form 20B is also annexed at page 32. The applicant has produced before me for my perusal the certified copy thereof obtained from the office of Registrar of Companies. Clause-V of Form 20B gives details of the Directors, Managing Director, Manager and Secretary who ceased to be associated with the company since the date of last AGM. This clause further shows that the Applicant was appointed as Director on 22/11/2003, however, he ceased to be Director w.e.f. 30/6/2008. Page-47 is annexure to Form-20B. It gives the list of Directors in past and present as on 26/9/2008. In the said list, name of the Applicant is at serial no.6 against which it is mentioned that he ceased to be Director of the Company w.e.f. 30/6/2008.

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12.The documentary evidence mentioned above unequivocally

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goes to show that initially on 22/11/2003, the applicant was appointed as Director and from 16/12/2004 he was working as Joint Managing Director of the company and he resigned from the Directorship of said Company w.e.f. 30/6/2008. The cheques in question were issued on 13/9/2009, i.e. subsequent to the date of resignation given by the Applicant and those cheques were dishonoured on 30/10/2009. Obviously, the Applicant was not concerned with the Accused No.1 Company at that point of time.

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So far the case of Suhas Band (supra) is concerned, paragraph no. 33(1) thereof is relevant, which reads thus :

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“(i) If the accused in a criminal prosecution under section 138 of the N.I. Act produces a certified copy of Form No. 32 certified by the ROC and there is no dispute of the factum of his resignation, the accused is entitled to be discharged from the prosecution.”

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. In my view, the Applicant’s case is squarely covered by the above observations of the Division Bench. The applicant cannot be held liable for the dues of accused no.1 company in respect of the dishonoured cheques in question. As such, the process u/s 138 r.w. 141 of N.I. Act, 1881 could not have been

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issued against the Applicant. In that of the matter, the process issued as against the present Applicant only is quashed and set aside. Rule is made absolute accordingly in all the aforesaid Criminal Applications.

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(RANJIT MORE, J.)

Har Bhagwan Arora v. Ambika Papers Pvt. Ltd. and Anr.

Case brief

What is this about?

What did the court decide?

Har Bhagwan Arora v. Ambika Papers Pvt. Ltd. and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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