Ashok C. Gandhi vs State of Gujarat and Another

Ravi R. Tripathi, J.—The present application is filed u/s 482 of the Code of Criminal Procedure, 1973 for quashing of the complaint being Criminal Case No. 3475 of 2002 registered in the Court of learned Judicial Magistrate, Ankleshwar. A copy of the complaint is produced at Annexure-A to this petition. The complaint is filed for the offences punishable under Sections 63, 68 and 628 of the Companies Act, 1956. The complaint is filed on 11.7.2002 prior thereto show cause notice was issued to the petitioner on 28.5.2002 which was replied by the petitioner vide reply dated 11th June, 2002.

The learned Advocate Mr. K.B. Anandjiwala for the petitioner submitted that the Registrar of Companies Act (''ROC'', for short),- the complainant has filed the complaint without there being mindful of the important documents i.e. Annual Report for the year 1994-95 wherein it was specifically mentioned at item No. 6 that the company proposes to carry on the business of financial services, setting up of hospitals, schools etc. The alternation in object clause of the Memorandum of Association as set out in the resolution to facilitate financial diversification. This will enlarge the area of the Company. It is mentioned thereafter that the proposed alternation is subject to confirmation from the Company Law Board.

The learned Advocate for the petitioner also invited attention of the Court to item No. 8 which reads as under:

In view of unfavourable conditions due to the ''Plague'' disease in Surat your Board has decided to keep the proposed set up of food processing unit in abeyance. Many authorities in Company''s likely buying Countries (particularly the United States) have expressed apprehensions or put restrictions on importing food produces from Surat and surrounding region. The Company''s proposed 100% Export Oriented food processing project was to be set up in Surat District, Gujarat.

In view of the restrictions/embargo as mentioned above the viability of the food processing unit is adversely affected. The Board of Directors therefore, though it prudent to keep the project in abeyance or cancel it and also not to avail corresponding Term Loans/Foreign Currency loans. Total Cost of proposed imported plant & machinery for this project was Rs. 218 Lacs and the amount of proposed Foreign Currency loan to be obtained was Rs. 218 lacs. Approval of members is sought for varying the terms of contracts and other related aspects of the food processing project, as required u/s 61 of the Companies Act. Approval of members is also sought under the said section to deploy a part of the proceeds of the Company''s Public Issue in acquisition of 1 old or imported Texturising machine and 1 old or imported Draw Twisting machine instead of both new machines. Subsequent to Company''s Project estimates, many old or imported Texturising and Draw Twisting machines have been found to be available which compare favourably in cost and performance vis-a-vis new machines. Your Board of Directors have decided, subject to your approval and availability of machines to buy these machines. A saving of 50% of the cost of new machineries is likely to be generated due to this which is proposed to be utilised for normal working capital needs....

The learned Advocate for the petitioner also invited attention of the Court to the other part of the Directors'' report under the heading of ''Operations'' and ''Future Plans'', relevant part of which reads as under:

OPERATIONS

...The Food Processing Project is kept under abeyance, as USFDA has banned food products from Surat due to Plague.

FUTURE PLANS

Due to sluggish market condition, the proposed expansion of Texturising Plant was postponed for the time being. We have identified second-hand plant overseas, which can be relocated in very short time. The second hand plants in U.S.A. and Europe are in excellent working condition. Our Government has reduced duties substantially on such import. Such plants can be certified by the Chartered Engineer and Chamber of Commerce of local authority of Country of origin.

We have identified one running Cotton Spinning Plant having capacity of 20,000 Spindles, near Delhi and negotiations are under way for take-over/purchase of the company....

The learned Advocate submitted that if this annual report of the year 1994-95 was taken into consideration by the Registrar of Companies (ROC) then possibly he would not have issued notice dated 27th May, 2002. The learned Advocate for the petitioner submitted that as the petitioner had resigned from the directorship on 12th June, 1997, he was not in know of the annual report of 1994-95, and, therefore, while replying to show cause notice dated 11th June, 2009, he could not point out the same.

The learned Advocate for the petitioner submitted that the complaint is filed after almost a decade as the prospectus was issued somewhere in the year 1993, while complaint is filed in the year 2002. Hence there is no justification in filing the complaint.

In view of the above, the application is rejected. Rule is discharged.

It will be open for the petitioner to apply for the exemption and the same will be considered by the learned Judge in accordance with law.