Case Law Details
Mrs. Anita Malhotra Vs. Apparel Export Promotion Council & ANR. (Supreme Court of India)- In case of a Director, complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused Company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. [Vide National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330].
In the case on hand, particularly, in para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day to day affairs of the Company. We have verified the averments as regard to the same and we agree with the contention of Mr. Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day to day affairs of the Company. On this ground also, the appellant is entitled to succeed.
16. In the light of the above discussion and of the fact that the appellant has established that she had resigned from the Company as a Director in 1998, well before the relevant date, namely, in the year 2004, when the cheques were issued, the High Court, in the light of the acceptable materials such as certified copy of annual return dated 30.09.1999 and Form 32 ought to have exercised its jurisdiction under Section 482 and quashed the criminal proceedings.
We are unable to accept the reasoning of the High Court and we are satisfied that the appellant has made out a case for quashing the criminal proceedings. Consequently, the criminal complaint No. 993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein (A3) is quashed and the appeal is allowed.
RE-PORTABLE
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Weakness of the case- It is not clear under what circumstances Apparel Export Promotion Council considered Mrs. Anita Malhotra as director of company or a person responsible in companys day to day affairs, and made her one of accused – treating her as director.
Whether, the cheque was signed by her as a director? If so it should have been pointed out.
If the cheque was signed by her as an authorized signatory, then also it should be specified?
If the cheque was not signed by her at all and in any capacity, then why she was made an accused. Particularly when, she informed that she had resigned long ago, then why she was continued as an accused, her name as accused should have been omitted by proper application and with leave of court.
Respondent being Apparel Export Promotion Council, normally supposed to have regular communication etc. with the concerned exporter company – namely M/s Lapareil Exports (P) Ltd. must have some information about appellant being a director or otherwise in charge of affairs of company. Why that was not mentioned?
Normally in case of a cheque issued by company, the proper course is to accuse the company, and the person who has signed the cheque, other directors and other managerial persons can also be added as accused as having managerial functions but it must be stated as to how they are in management etc. of company.
there is long time gap between date of resignation 20.11.1998, and the issue of cheque. A person can again become a director. One can become director again and therefore, exact position was to be ascertained.
If the cheque was signed by her as a director or Authorised Signatory, and Export Promotion Council was aware of her role in company, then she could have been described as a deemed director or managing director – director de-facto etc.But that was not done.
How annual return of company was not considered as a public document by the counsels of the respondent is again a surprising aspect of the case.
On overall basis it is clear that the case was not well prepared by the holder of cheque -Apparel Export Promotion Council & ANR, the respondents before the Supreme Court and and their counsels who appeared before lower courts and the Supreme Court.Had the case been presented properly the Supreme Court could have remitted the matter to lower court for proper examination.
We must learn from such judgment as to why one party wins and other loose the case.
Their is also learning as to avoid un-necessary litigation- the moot question in this case is why the appellant was accused as a person responsible for bouncing of cheque?