Moodbidri Nagavarma Gunasheela Vs Registrar of Companies (Karnataka High Court)
The Karnataka High Court allowed both the criminal petition and writ petition filed by a Chartered Accountant, quashing the criminal proceedings initiated against him under Sections 447 and 448 of the Companies Act, 2013, as well as the Look Out Circular (LOC) issued against him.
The petitioner had become a director of a company on 10.10.2011 as a temporary arrangement because the proposed directors had not yet obtained their Director Identification Numbers (DINs). He resigned on 29.02.2012 after the proposed directors obtained their DINs. The Court noted that the company had not commenced commercial operations during the petitioner’s tenure and that business activities began only in the financial year 2013-14, after his resignation.
Subsequently, investigations were conducted by the Economic Offences Wing (EOW), Mumbai, and the Crime Investigation Department (CID), Bengaluru, concerning allegations against the company. The petitioner appeared before both agencies, furnished documents, and cooperated with the investigations. In both proceedings, charge sheets were ultimately filed without arraying the petitioner as an accused.
However, the Registrar of Companies later filed a private complaint under Sections 447 and 448 of the Companies Act, 2013, alleging fraud and false statements by the company and its directors. The petitioner was named as accused No.10 solely on the basis that he had been a former director of the company.
