Directors are liable for fraudulent acts conducted by companies under their management, regardless of individual agreements for discharge.

O R D E R

The accused Nos.7, 8, 9, 10, 16, 17, 19, 21 & 22 in C.C.No.459/2015 on the files of the Judicial First Class Magistrate Court-I, Mavelikkara, have filed Crl.R.P. No.721/2017, aggrieved by the dismissal of C.M.P.No.3303/2016 filed before the learned Magistrate seeking their discharge from the criminal proceedings in the aforesaid case. Crl.R.P.No.765/2017 is fled by the 12^th accused in the said case aggrieved by the dismissal of C.M.P.No.4515/2016, in respect of the same relief for discharge from the criminal prosecution in C.C.No.459/2015 on the files of the Judicial First Class Magistrate Court-I, Mavelikkara.

2. The final report in the said case was filed by the CBCID, Economic Offences Wing, alleging the commission of offences under Sections 406 & 420 read with Section 3 4 of the Indian Penal Code , 1860, and Sections 58 (b), 4A & 58(c) of the Reserve Bank of India Act , 1934, and Section 3 of the Kerala Chitties Act , 1977. The allegation against the accused is that they collected huge amounts of money extending up to Rs.14,00,73,847/- from various depositors without licence and conducted chitties, and thereafter failed to repay the amount with interest, as assured, to the depositors.

3. In the present petitions, the petitioners would contend that they have not collected any money in the name of ‘Business India Group’, as alleged by the prosecution, and that there is no company under the said name registered with the Registrar of Companies. It is the further contention of the petitioners that this Court, as per the judgment rendered on 21.11.2013 in Company Petition Nos.41/2009, 42/2009 & 52/2009, had held that the criminal prosecution launched against the persons at the helm of affairs of the companies for having accepted deposits from the public unauthorisedly, alone could be continued.

4. Heard the learned counsel for the petitioners and the learned Public Prosecutor representing the State of Kerala.

5. In the order dated 12.05.2017 declining to accept the prayer of discharge of the petitioners, it has been categorically held by the learned Magistrate that the relevant records procured from the Registrar of Companies revealed that accused Nos.4, 5, 6, 7, 9, 10 & 13 were shown as Directors of the company by name ‘M/s.Business India Builders & Developers Ltd.’, accused Nos.11, 12, 13, 15, 16 & 22 were shown as Directors of the company by name ‘M/s Business India Shares & Insurances Pvt. Ltd.’, and accused Nos.8, 14, 17, 19, 20 and 21 were shown as Directors of the company by name ‘M/s.Commercial Hire Purchase India Ltd.’. The learned Magistrate relied on the observations of this Court in the judgment rendered on 21.11.2013 in Company Petition No.41/2009 to hold that all the above three companies formed part of the entity ‘Business India Group’ which was involved in the collection of money from the public and the failure to repay the same. The learned Magistrate further observed that as per the Articles of Association of the aforesaid companies, the Directors are to manage the affairs of those companies. It is in the light of the aforesaid aspects revealed from the records that the learned Magistrate declined to allow the prayer of discharge of the petitioners.

6. It is true that in the judgment rendered by this Court on

21.11.2013 in C.P Nos.41/2009, 42/2009, 52/2009, 42/2012 and

5/2013, there is an observation in paragraph No.11 as follows:

“............... I may however add that any criminal prosecution launched against the persons at the helm of affairs of the companies for having accepted deposits from the public unauthorisedly would continue unhindered. Only the civil and criminal proceedings initiated by the public who have either deposited amounts or booked apartmen