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MADRAS HIGH COURT
C. NAGAPPAN, J.
Cr.O.P. Nos. 25173 to 25178 of 2000
Decided on 8.11.2001
S.B. SHANKAR
versus
M/S. AMMAN STEEL CORPORATION
For the Petitioner:Mr. N. Mohideen Basha for Mr. C.R. Malarvannan, Advocates.
For the Respondent:Mr. A. Sarvanan, Advocate.
Resignation of a director takes effect from the date of resignation, and evidence such as Form No. 32 can be considered in court.
Headnote:
Resignation - Criminal Proceedings - Indian Evidence Act, Negotiable Instruments Act - Section 138 - Form No. 32, Director's Resignation, Public Document - Quashing of Proceedings
Fact of the Case:
The petitioner seeks to quash criminal proceedings against him as accused No. 2 in multiple cases related to non-payment of cheque amounts by a company of which he was the Chairman and Director. The petitioner resigned from the company before the transactions in question took place.
Finding of the Court:
The Court found that the petitioner had resigned from the company before the cheque transactions and was not in charge of the company when the cause of action arose for non-payment of the cheque amounts.
Issues: The main issue was whether the petitioner's resignation from the company absolved him from liability under Section 138 of the Negotiable Instruments Act.
Ratio Decidendi: The Court relied on the Indian Evidence Act and precedent cases to establish that the resignation of a director takes effect from the date of resignation. It also considered Form No. 32, a public document, as evidence of the petitioner's resignation.
Final Decision: The Court quashed the proceedings against the petitioner, holding that he was not liable for the cheque amounts as he had resigned from the company before the transactions and was not in charge of the company when the cause of action arose.
1. The petitioner in all these petitions is one and the same person and he is accused No. 2 in C.C. Nos. 449, 486, 576, 584, 589 and 464 of 2000 respectively, on the file of Judicial Magistrate No. II, Trichirappalli and he seeks to quash the proceedings in the cases insofar as he is concerned.
2. The point for determination in all the petitions is one and the same and hence they are disposed of by common order.
3. The averments in all the petitions are similar and they are summarised. The respondent in all the petitions is one and the same person and it is proprietary concern. The petitioner, who is accused No. 2 in all the cases, is mentioned as Chairman of first accused company in all the petitions, viz., M/s. Sree ravindh Steels Limited. Accused Nos. 3 to 5 are all same in all the petitions and they are Managing Director. General manager and Authorised Officer of the first accused company, respectively.
4. The first accused company is a Steel Rolling Company which used to purchase heavy Melting Scraps from the respondent/complainant for many years. The allegation is that the first accused company from 5.12.1999 till 17.1.2000 had purchased heavy Melting Scraps under 28 invoices for a total value of Rs. 19,60,525.50. After deduction of Excise charges, the first accused owes the complainant a sum of Rs. 17,50,051.50. Towards the said purchase, the first accused company issued a total of 16 cheques, for a total sum of Rs. 12,05,588/- on various dates, dated between 3.2.2000 which are the subject matter in C.C. Nos. 449, 486, 576, 584, 589 and 464 of 2000. All the cheques were presented for encasement on the date of the cheques and they were all returned on 16.2.2000 for the reason "insufficient funds".
5. The petitioner herein has resigned from the Chairmanship of the first accused company on 4.10.1999 even before the credit purchase transaction between the first accused company and the respondent/complainant. The Company Law Board has issued Form-32, on 4.10.1999. The said document is a public document as defined under Section 74 of the Indian Evidence Act and per se admissible in the Court of law. The allegation in the complaints, that the petitioner is responsible for the day-to-day affairs of the company is false, frivolous and vexatious. Hence the continuation of the proceedings in all the cases against the petitioner amounts to abuse of the process of law and the same are liable to be quashed.
6. The learned Counsel appearing for the petitioner contended that the petitioner in all the petitions was Chairman and Director of the first accused company and he tendered his resignation from the Directorship of the Company on 4.10.1999 and his resignation was placed before the meeting of the Board of Directors of the Company held on 4.10.1999 and it was resolved to accept the resignation of the petitioner herein as Director of the company and it was further resolved to authorize G.S. Venkataraman, Director of the Company, to file Form No. 32 with Registrar of Companies in this regard and, accordingly, Form No. 32 also was filed, the learned Counsel for the petitioner placed before the Court certified copy of Form No. 32 issued by the Registrar of companies, true copies of the resignation letter, dated 4.10.1999 and the minutes of the proceedings of the meeting of Board of Directors of the first accused company held on 4.10.1999 and the 25th Annual Report of the Company for the year 1999-2000, in which, it is mentioned that the petitioner herein resigned as a Director of the Company with effect from 4.10.1999.
7. The learned Counsel for the petitioner contended that the petitioner herein resigned on 4.10.1999 itself as evidenced by the public documents produced and the resignation took effect from the date of resignation letter and in this regard, he relied on the judgments of this Court in V.K. Lakshmana Mudaliar and Another v. Emperor, AIR 1932 Madras 497 P.R.M. Abdul Huq v. Katpadi Industries Ltd. and Another, AIR 1960
