Baboo K.C vs State Of Kerala

G. Girish, J

The petitioner is the accused in C.C.No.827/2019 on the files of the Judicial First Class Magistrate Court-VIII, Ernakulam, a case instituted on complaint alleging the commission of offence under Section 167(2) of the Companies Act, 2013(in short, ‘Act'), and under Section 420 of the Indian Penal Code, 1860,(in short, ‘IPC').

The aforesaid complaint was filed by the second respondent who, along with the petitioner, claims to be the promoter of the company by name ‘M/s Vijaya Hospitality and Resorts Limited’. The allegation against the petitioner is that during the period from 01.11.2017 to 31.10.2022, while he was disqualified by the Registrar of Companies under Section 164(2) of the Act from acting as Director, he convened the Director Board Meeting of the said company on 21.01.2019 causing a loss to the tune of Rs.1,20,000/- to the said company.

The learned Magistrate, after going through the sworn statement of the second respondent (complainant) and witnesses, took cognizance of the offence under Section 167 of the Act and Section 420 IPC and issued summons to the petitioner. Aggrieved by the aforesaid proceedings, the petitioner is here before this Court with the present petition filed under Section 482 of the Code of Criminal Procedure, 1973.

Heard the learned counsel for the petitioner, the learned counsel for the second respondent and the learned Public Prosecutor representing the first respondent.

The learned counsel for the petitioner would contend that none of the offence alleged in this complaint are attracted in the facts and circumstances of the case, and hence the proceedings pending before the Judicial First Class Magistrate Court-VIII, Ernakulam, against him in C.C.No.827/2019, are nothing but abuse of process of Court.

Per contra, the learned counsel for the second respondent contended that the act of the petitioner convening Director Board Meeting of M/s Vijaya Hospitality and Resorts Limited on 21.01.2019, at a time when he was disqualified to act as Director, is clearly brought out from the records, and hence the petitioner is answerable for the charge levelled against him.

It is submitted by the learned counsel for the petitioner that the disqualification incurred by the petitioner was due to a mistake on the part of the Registrar of Companies in taking note of the resignations of the petitioner from the companies by name ‘Vijaya Finance Limited’ and ‘Vijaya Luxury Housing Projects Private Limited’ on 07.06.2017 and 18.08.2016, respectively, which were duly intimated in the prescribed format to the authorities concerned. It is further submitted that the petitioner was wrongly disqualified for his failure to file statements and returns in respect of those companies at a time when he no more remained as the Director of those companies. According to the learned counsel for the petitioner, the Registrar of Companies, after realising the above mistake, had passed the necessary orders removing his disqualification and approving his status of the Director Identification Number. In support of the above contention, the learned counsel for the petitioner has produced Annexure-A6 judgment of this Court in W.P.(C)No.5360/2019 instituted by the petitioner seeking the relief of writ of mandamus to remove the disqualification of the petitioner as Director and to reactivate his Director Identification Number.

A perusal of Annexure-A6 judgment would reveal that the Registrar of Companies had acknowledged the resignation of the petitioner from Vijaya Finance Limited and Vijaya Luxury Housing Project Private Limited on 07.06.2017 and 18.08.2016, respectively, and took the necessary steps on 20.02.2019 to remove the disqualification incurred by the petitioner and to reactive his Director Identification Number. It is also seen from Annexure-6 judgment that the Registrar of Companies has not disputed the contention of the petitioner that his resignation from the aforesaid companies were duly intimated to the authorities concerned in the prescribed format. Thus, it is apparent from the stand taken by the Union of India and the Registrar of Companies in Annexure-A6 writ petition, that the disqualification of the petitioner was the offshoot of a mistake on the part of the Registrar of Companies in taking note of the fact that the petitioner was not the Director of the companies which committed default in filing the returns and statements, during the relevant period.

The learned counsel for the second respondent submitted that the removal of the disqualification of the petitioner on 20.02.2019 will not justify the act of convening Director Board Meeting of M/s Vijaya Hospitality and Resorts Limited on 21.01.2019, and hence the offence alleged against the petitioner is still attracted.

The argument advanced by the learned counsel for the second respondent in the above regard cannot be accepted. It is true that the removal of the disqualification of the petitioner was done by the Registrar of Companies after about one month from the date when the petitioner convened the Director Board Meeting. But, once it is shown that it was due to a mistake on the part of the authorities concerned that the petitioner suffered disqualification, the subsequent remedial measures taken by those authorities would operate with retrospective effect to validate and justify the acts done by the petitioner in good faith during the relevant period, prior to the date when the authorities concerned realized the mistakes and passed remedial orders. Otherwise, it would amount to travesty of justice to put the petitioner to suffer for no fault of his own. Therefore, it has to be concluded that the petitioner should be deemed to have remained as Director on 21.01.2019 when he convened the Director Board Meeting of M/s Vijaya Hospitality and Resorts Limited. Needless to say that the complaint preferred against the petitioner by the second respondent is devoid of merit, and hence the proceedings initiated thereunder are liable to be quashed.

In the result, the petition stands allowed. The proceedings pending against the petitioner in C.C.No.827/2019 before the Judicial First Class Magistrate Court-VIII, Ernakulam, are hereby quashed.