Allowed

Naresh Kumar Munjal v. M/S. Global Trade Finance Limited and Anr.

Bombay HC15 Feb 2012APL/624/2011

Case brief

AI extract

What is this about?

The High Court allowed the applicant's application to quash criminal proceedings under the Negotiable Instruments Act. While accepting that disputed Form-32 requires trial evidence, the Court quashed the case based on undisputed annual returns proving the applicant resigned before the cheques were issued, preventing abuse of process.

What did the court decide?

The criminal complaint proceedings are quashed against the applicant. Rule is made absolute.

Naresh Kumar Munjal Vs M/S. Global Trade Finance Limited and… — Cheque Dishonour | Bombay HC (2012)

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apl - 624/11 & Group.

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srp

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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CRIMINAL APPLICATION NO. 624 OF 2011

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with

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CRIMINAL APPLICATION NO. 593 OF 2011

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with

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CRIMINAL APPLICATION NO. 851 OF 2011

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with

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CRIMINAL APPLICATION NO. 624 OF 2011

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Naresh Kumar Munjal. ..Applicant. Versus Global Trade Finance Limited & Anr. ..Respondents.

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..Respondents.

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Mr. P. D. Prasad Rao a/w Mr. H. Rehman i/b D.H.Law Associates for the Applicant. Mr. Yashpal Thakur for Respondent no.1 Smt. P.P.Bhosale, APP for the State.

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Coram : RANJIT MORE, J. Date : February 15, 2012 .

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P. C. :

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Rule. Rule is made returnable forthwith. Learned

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counsel for the respondents waive service of the Rule. By consent of learned counsel, taken up for final hearing.

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Since parties and issue involved in above applications is one and the same, the above criminal

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applications are being disposed of by this common order. For the sake of brevity and convenience, the facts of Criminal Application No.624 of 2011 are only discussed.

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Respondent no.1 is the original complainant and Applicant is original accused No.8. It is the case of respondent no.1 that accused no.1-M/s. Sudarshan Overseas Limited [for short “said Company”] is a public limited company and accused nos.2 to 9 are the Directors of said Company. It is alleged that accused nos.2 to 9, on behalf of accused no.1 had approached respondent no.1 with a request for grant of trade finance facility and accordingly said facility had been granted to the said Company. It is further alleged that on 12/1/2009, the accused, in discharge of their liability towards the aforesaid trade finance facility, had issued 5 cheques amounting to Rs.19 crores, particulars of which are given in paragraph no.2 of the complaint [page 21 to the Application]. It is further stated in the said complaint that when said cheques were deposited by respondent no.1 with their banker, on 21/5/2009 same were returned dishonoured for the reason “funds insufficient.” Respondent No.1 thereafter served statutory notice on all the accused and filed complaint under section 138 of the N.I.Act, 1881. Respondent No.1 has

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specifically alleged that accused nos.2 to 9 were and are incharge of and responsible for the conduct of the business of accused no.1-said Company and are looking after day to day affairs of accused no.1 Company. The Magistrate after perusing the complaint and verification issued process against all the accused, including the applicant herein for the offence punishable under section 138 of the N.I.Act, 1881.

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The applicant has approached this Court under section 482 of the Code of Criminal Procedure, 1973 seeking quashment of complaint on the ground that he has resigned from the post of Director of accused no.1-Company with effect from 26/6/2007, i.e., much prior to the issuance of cheques in question and, therefore, he cannot be held liable for the dishonour of said cheques. The applicant has relied upon certified copy of Form-32 obtained from the office of Registrar of Companies [for short “RoC”]. Form-32 gives particulars of appointment of managing director, manager and secretary and the changes among them.

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Respondent no.1 by filing reply specifically denied and disputed the applicant’s contention that he had resigned

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on 26/6/2007 from the directorship of said Company. Respondent no.1 stated that though the applicant received the statutory notice, he has not replied to the said statutory notice. It is further contention of respondent no.1 that since factum of resignation by applicant is disputed by him, it is for the applicant to prove the truth of the contents of document, i.e. Form-32 by leading cogent evidence before the trial Court.

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The applicant thereafter filed rejoinder, wherein in para-9 he has specifically stated that accused no.1- company has filed annual returns for the year 2007 in Form 20-B with the RoC as per section 159 of the Companies Act, 1956. He has annexed to his rejoinder certified true copy of said Form 20-B obtained from the office of RoC. It is specific contention of the applicant that this Form 20-B also discloses that he resigned from the post of Director of accused no.1–Company with effect from 26/6/2007.

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Learned counsel for the applicant heavily relied upon two Apex Court rulings in (i) Harshendra Kumar D vs. Rebatilata Koley & Ors [(2011) 3 SCC 351] and (ii) Mrs. Anita Malhotra vs. Apparel Export Promotion Council & Anr.

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[AIR-2012 SC 31] to submit that the applicant could not have been arraigned as accused in view of his resignation much prior to the date of issuance of cheques in question. He submitted that the extract of Form-32 as well as annual return of the Company are “the public documents” and therefore these documents cannot be overlooked. These documents establish the fact that applicant resigned from the directorship of said Company on 26/6/2007, i.e., much prior to the issuance of cheques in question and, therefore process issued against applicant deserves to be quashed and set aside.

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Learned counsel for respondent no.1 contested the Application. He submitted that applicant has not given any reply to the statutory notice issued by respondent no.1. It is his submission that since respondent no.1 has disputed the factum of resignation by applicant as well as Form-32, therefore, alleged resignation of applicant becomes a disputed fact and same will have to be proved at the time of trial of criminal case before the trial Court. In support of his submissions, he relied upon following cases :

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(i) Suhas Bhand vs. State of Maharashtra & Anr [2009 All M.R. (Cri) 2614] by Division Bench of this Court ;

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(ii) Rallies India Ltd vs. Pnduru Vidya Bhushan & Ors [AIR

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2007 SC 1682] ;

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(iii) Rajesh B. Chalke vs. State of Maharashtra & Anr [2011(1) Mh.L.J. 244] Full Bench of this Court ;

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(iv) Order dated 6^th October 2010 in Criminal W.P. No. 614 of 2010 by the learned Single Judge of this Court;

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(v) Order dated 11^th October 2010 in Criminal W.P. No. 1982 of 2010 by the learned Single Judge of this Court;

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(vi) Judgment dated 20^th September 2011 in Criminal W.P. No. 1657 of 2011 by the learned Single Judge of this Court;

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Having gone through the compilation of application alongwith reply and rejoinder by respondent no.1 and applicant respectively and the decisions relied upon by the learned counsel, I find merit in the application.

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The Division Bench of this court in Suhas Bhand (supra) held that Form-32 certified by the RoC, though it is a public document, the truthfulness of its contents is required to be proved by leading evidence, if it is disputed by other side. The Apex Court in Rallis India Limited case (supra) was considering the effect of retirement of a partner from the partnership firm prior to issuance of cheques in question. The Apex Court in this case held that burden to prove that the

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accused was not partner at the relevant time is on the accused and same is required to be discharged at the time of trial. The Full Bench of this court in Rajesh Chalke (supra) held that when the directors produced documentary evidence to show that the resignation was electronically communicated to the RoC in the prescribed form before the date of the cheque in question, the Magistrate would grant such directors exemption for personal appearance and exemption for giving bond as a matter of course. Learned Single Judge of this Court in his order dated 6^th October 2010 in Crim.W.P.No.614/2010, relying upon the Division Bench decision in Suhas Bhand’s case (supra) held that where Form-32 is disputed, it is for the accused to prove the document at the time of trial by adducing evidence. Similar is the view taken by the learned Single Judge in his Order dated 11^th October 2010 in Criminal W.P. No. 1982 of 2010.

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The Apex Court had an occasion to deal with the similar question in Harshendra Kumar (supra) wherein the Apex Court has made following observations :

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“In our judgment, the above observations cannot be read to mean that in a criminal case where trial is yet to take place and the

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matter is at the stage of issuance of summons or taking cognizance, materials relied upon by the accused which are in the nature of public documents or the materials which are beyond suspicion or doubt, in no circumstance, can be looked into by the High Court in exercise of its jurisdiction under Section 482 or for that matter in exercise of revisional jurisdiction under Section 397 of the Code. It is fairly settled now that while exercising inherent jurisdiction under Section 482 or revisional jurisdiction under Section 397 of the Code in a case where complaint is sought to be quashed, it is not proper for the High Court to consider the defence of the accused or embark upon an enquiry in respect of merits of the accusations. However, in an appropriate case, if on the face of the documents – which are beyond suspicion or doubt – placed by accused, the accusations against him cannot stand, it would be travesty of justice if accused is relegated to trial and he is asked to prove his defence before the trial court. In such a matter, for promotion of justice or to prevent injustice or abuse of process, the High Court may look into the materials which have significant bearing on the matter at prima facie stage.

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As noticed above, the appellant resigned from the post of Director on March 2, 2004. The dishonoured cheques were issued by the Company on April 30, 2004, i.e., much after the appellant had resigned from the post of Director of the Company. The acceptance of appellant’s resignation is duly reflected in the resolution dated March 2, 2004. Then in the prescribed form (Form No. 32), the Company informed to the Registrar of Companies on March 4, 2004 about appellant’s resignation. It is not even the case of the complainants that the dishonoured cheques were issued by the appellant. These facts leave no manner of doubt that on the date the offence was committed by the Company, the appellant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaints are allowed to proceed against the appellant, it would result in gross injustice to the appellant and tantamount to an abuse of process of the court. ”

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These observations of the Apex Court make it clear that the material in the nature of public document or which are beyond suspicion or doubt can be read by the High Court in exercise of power under section 482 of the Code of Criminal Procedure, 1973. The Apex Court judgment in Harshendra

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Kumar (supra) is followed by another Bench of the Supreme Court in Anita Malhotra’s case (supra). In Harshendra Kumar (supra) the Supreme Court, on the basis of certified copy of Form-32, was pleased to quash the proceedings and in Anita Malhotra’s case the Apex Court relying upon the certified copy of Form-32 as well as certified copy of annual return of the Company quashed the criminal proceedings.

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Learned counsel for respondent no.1 relied upon the observations of the Apex Court in Harshendra Kumar (supra) in para 21 and submitted that the document, i.e., Form-32, in that case was not disputed by the complainant and therefore the Apex Court took into consideration that document. In so far as the facts in Anita Malhotra’s case (supra) is concerned, learned counsel for respondent no.1 submitted that in that case also the complainant did not dispute the truthfulness of Form-32 or annual returns and therefore Supreme Court took into consideration those documents and quashed the proceedings.

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So far as the present case is concerned, the applicant has relied upon certified copy of Form-32, annexed at

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Exhibit-A to the application. This Form-32 shows that applicant has resigned from the Directorship of the said Company with effect from 26/6/2007. It is true that respondent no.1 – Complainant has disputed this document by filing reply. In view of the Division Bench judgment of this Court in Suhas Bhand (supra), the applicant is, therefore, required to prove the truthfulness of the contents of this document in the trial Court and this document cannot be taken into consideration for quashing the criminal proceeding.

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However, the fact remains that the Applicant alongwith his affidavit-in-rejoinder has also produced certified copy of the annual return of accused no.1-Company for the year 2007. There is no dispute that annual returns of the Company, as filed in the office of RoC, is a public document. The reading of sections 159, 163 and 619 of the Companies Act, 1956 makes it clear that there is statutory requirement under section 159 of the Companies Act, 1956 that every Company having a share capital, shall have to file with the RoC an annual return which includes details of the existing Directors. The provisions of the Companies Act require annual return to be made available by a company for inspection

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(Section 163). Section 610 entitles any person to inspect documents kept by the RoC. The Apex Court in Anita Malhotra’s case (supra) has held that certified copy of the annual return of the company is a public document. The applicant has filed rejoinder as long as back on 3/1/2012. However, this document – annual return of the said company – is not disputed or contradicted by respondent no.1 by filing sur-rejoinder. The copy of the annual returns makes it unequivocally clear that the applicant has resigned from the post of Director of the said Company with effect from 26/6/2007. Since this document is not controverted and disputed by respondent no.1, same will have to be taken into consideration. In any case same cannot be ignored. The document clearly shows that the applicant has resigned from the post of Director of accused no.1 – Company long before the issuance of cheques in question by accused no.1 – Company. The above facts leave no manner of doubt that the date on which the offence alleged to have been committed by the Company, the applicant was not the Director; he had nothing to do with the affairs of the Company. In this view of the matter, if the criminal complaint is allowed to proceed against the applicant, it would result in gross injustice to the applicant

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and will tantamount to an abuse of the process of Court.

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All the above Applications are, therefore, allowed in terms of prayer clauses (a) and (b). The proceedings of the Complaints in above applications are quashed qua the Applicant only. Rule is made absolute accordingly.

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At the request of learned counsel for respondent no. 1, the operation and effect of this order is stayed for the period of four weeks from today in order enable respondent no.1 to approach the higher Court.

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(RANJIT MORE, J.)

Naresh Kumar Munjal v. M/S. Global Trade Finance Limited and Anr.

Case brief

What is this about?

What did the court decide?

Naresh Kumar Munjal v. M/S. Global Trade Finance Limited and Anr.

Case brief

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What the court decided

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