K. Raghuraman vs Chittima, B.H.R. Engineers (P) Ltd. and K. Balasubramani

Aruna Jagadeesan, J.—There is no representation for the respondents.

The petitioner filed this petition seeking to quash the proceedings relating to C.C. No. 7794 of 2003 on the file of V Metropolitan Magistrate,

Egmore, Chennai. The petitioner is the third accused in the complaint. The first accused is the company, the second and third accused are said to

be the Directors of the said company. It is stated in the complaint that on personal assurance and promise made by the second and third accused,

the first accused company borrowed a sum of Rs. 6,85,500/- and executed two promissory notes for the value of Rs. 5,00,000/- and Rs.

1,85,000/- in favour of the complainant. But as promised, the accused failed to pay the amount and the outstanding in the accused account as on

12.01.2002 was a sum of Rs. 9,12,280/-. When the amount was demanded by the complainant by issuing a notice dated 03.01.2003, the

accused handed over six post-dated cheques to clear the dues. After having waited for a considerable period, the complainant issued another

notice dated 10.02.2003 intimating about the presentation of the cheques to enable the accused to make arrangements for payment of money. On

receipt of notice dated 10.02.2003, the accused informed through their accountant that the amounts are already arranged. Hence, the complainant

had presented the cheques for collection but it was returned with an endorsement ""Funds Insufficient"" dated 19.02.2003. Thereafter, the plaintiff

had issued statutory notice dated 24.02.2003 and the same was served on the accused on 27.02.2003, since the accused failed to make payment,

the complainant filed the complaint.

The learned Counsel for the petitioner submits that the petitioner/third accused was not in charge or responsible as Director of the first accused

company and there is no materials to show that the petitioner was in charge of the company at any point of time. He would further submit that he

had resigned as Director of the first accused company on 31.01.1995 itself and his resignation is registered with the Registrar of Companies as

required under Form No. 32, long prior to the issuance of cheques. Therefore, he cannot be fastened with the criminal liability.

In Mr. Lachhman P. Udhani, Mr. Deepak L. Udhani and Mr. Ashwin L. Udhani Vs. Redington (India) Ltd., . This Court has held as under:

In a case in M.S. Rama Mohan Rao v. Mrs. S. Nagu Bai 2003 Comp Cas 403, where the resignation letter of one of the Directors of the

Company was produced to establish the disassociation of one of the Directors from the Company, A. Packiaraj, J., has observed as follows:

Though the petitioner produced the concerned letter addressed to the complainant in the Court, showing the resignation of the petitioner from the

Company as director, the Court sitting in revisionary jurisdiction could not go into the preliminary issue, since these were matters that could be

decided only by letting in evidence.

In a case in S.V. Muzumdar and Others Vs. Gujarat State Fertilizer Co. Ltd. and Another, , where one of the Directors of the Company

disputed the responsibility fixed on him with respect to the conduct of the business of the Company, the Hon''ble Supreme Court has observed as

follows:

Whether a person is in charge of or is responsible to the Company for the conduct of the business is to be adjudicated on the basis of materials to

be placed by the parties.

Form-32 filed with the Registrar of Companies is a public document as per Section 74 of the Indian Evidence Act, 1872. When the certified

extract of such a public document is filed, the Court shall presume as to the genuineness of such certified copies as per Section 79 of the said Act.

The sanctity attached to such public documents and the presumption the Court is bound to raise as to the genuineness of such documents have

not been brought to my notice at the time when the judgement in Mrs. K. Umadevi Vs. V. Manikandan, Proprietor, Manisha Traders, , was

pronounced by me. In view of the importance of the public document as detailed above, the ratio laid down by me in the aforesaid judgment cries

for reconsideration and restatement. The march of law should be dynamic and it should never be static. If a Judge is afflicted with infallibility

syndrome, the space for growth of law is unfortunately smothered stifled.

In a case where certified copy of Form-32 is filed by the accused Director to show that he had resigned prior to the issuance of the cheque

and the challenge thereto is innocuous inasmuch as no counter credential is projected by the complainant, the Court has to necessarily accept the

same and relieve such a Director from the ordeal of trial. It will be a misuse of process of law if such an accused-Director who had resigned long

prior to the issuance of the cheque and severed his umbilical root in the Company is implicated in a case u/s 138 of the Negotiable Instruments

Act.

It is always safe to take the date of registration of Form-32 to determine the date of disassociation of the accused-Director from the conduct

of the business of the Company as there is chance for antedating the date of resignation in order to save the accused-Director from prosecution.

In this case, the petitioners have resigned on 18.12.2001 from the Company and the same was registered with the Registrar of Companies

through Form-32 as on 27.12.2001 long prior to the issuance of the cheque. Therefore, the petitioners cannot be fastened with criminal liability u/s

138 of the Negotiable Instruments Act.

In this case, the petitioner has resigned on 31.01.1995 from the Company and the same was registered with the Registrar of Companies through

Form-32 as on 01.02.1995 long prior to the issuance of the cheques (last cheque issued on 10.02.2003). Therefore, the petitioner cannot be

fastened with criminal liability u/s 138 of the Negotiable Instruments Act and the criminal prosecution as against the petitioner is liable to be

quashed.

In the result, the criminal proceedings as against the petitioner, who is the third accused in C.C. No. 7794 of 2003 pending on the file of V

Metropolitan Magistrate, Egmore, Chennai, stands quashed. The criminal original petition stands allowed. Consequently, connected miscellaneous

petition is closed.