Case: Anil Anand & Others Vs. State of Haryana & Others

Leave granted. 2. Heard the learned counsels for the parties and perused the relevant material. 3. The challenge in this appeal is against the order dated 22.12.2011 of the High Court of Punjab and Haryana by which the criminal proceedings registered against the accused-appellants have been directed to be continued and prayer for quashing thereof have been refused by the High Court. 4. The special leave petition was kept pending by this Court to await the orders of the Delhi High Court in the appeal filed by the Respondent No.2 under Section 10(f) of the Companies Act, 1956 against the order of the Company Law Board dismissing the petition filed by the said Respondent No.2 alleging oppression and mismanagement. The aforesaid proceedings have culminated in order adverse to the complainant-respondent No.2 leaving him with the option of exiting the company by shedding off his share holding at a valuation to be made. The aforesaid order of the High Court upholding the order of Company Law Board has since attained finality in law as the challenge thereto in a Special Leave Petition has not yielded any result. 5. We have taken note of the order of the Company Law Board and of the High Court, referred to above, not for the purpose of judging the tenability of the allegations made in the complaint which inter alia on the strength of the Constitution Bench judgment in M.S. Sheriff and Another v. State of Madras reported in AIR 1954 SC 397 , has to be decided on its own merits. However, certain admitted and relevant facts as found by the Company Law Board and the High Court, in the orders referred to above, would in our considered view have relevance to judging the bonafides of the complainant in instituting the complaint-petition and the reasonable chances of the prosecution being successful so as to permit continuance thereof. The gravamen of the allegations in the complaint are in respect of the removal of the respondents from the Board of Directors of the Company on the basis of forged/fraudulent document. 6. In this regard we may take note of the fact that in paragraph 29 of the High Court judgment in Co.A.(SB)40/2013 dated 27.01.2016, it has been recorded that at no point of time any complaint was made by the respondents with regard to their alleged illegal/fraudulent removal from the Board of Directors of the Company and the grievances expressed were only with regard to non-receipt of audited statement of accounts and regarding the holding of the Annual General Meetings. 7. The High Court in paragraph 29 of its order, on consideration of the cases of the rival parties, thought it proper to hold that the present appears to be a case where the respondent(s) had indicated a clear desire to resign from the company and dis-associate themselves with the other members of the Company. Coupled with the aforesaid fact is the fact that the proceedings before the Company Law Board were initiated in the year 2008 whereas the alleged illegal removal from the directorship had occurred in the year 2004. If the respondent(s) in their perspective continued to be the directors, we do not see how they could have remained silent with regard to their alleged illegal removal inasmuch as in the event they continued to be directors they were entitled to receive notice of Board meetings and participate therein. The long silence of respondent(s) to raise any protest in this regard raises doubt on the acceptability of the allegations made in the complaint petition. That apart it may be noticed that even before Company Law Board the respondent(s) had not alleged any forgery etc. of the Board resolutions which came to be made only in the year 2009 in the complaint filed.8. All these would lead us to irresistibly conclude that the allegations made in the complaint petition are after thoughts and having regard to the admitted facts of the case evident from the orders of the Company Law Board and the High Court the prosecution against the accused-appellants is bound to become sham/lame prosecution which must be brought to an end at the threshold by an order quashing the same. Continuance of any such prosecution would constitute an act of oppression on the petitioners.

Decision:
1[ds]7. The High Court in paragraph 29 of its order, on consideration of the cases of the rival parties, thought it proper to hold that the present appears to be a case where the respondent(s) had indicated a clear desire to resign from the company andthemselves with the other members of the Company. Coupled with the aforesaid fact is the fact that the proceedings before the Company Law Board were initiated in the year 2008 whereas the alleged illegal removal from the directorship had occurred in the year 2004. If the respondent(s) in their perspective continued to be the directors, we do not see how they could have remained silent with regard to their alleged illegal removal inasmuch as in the event they continued to be directors they were entitled to receive notice of Board meetings and participate therein. The long silence of respondent(s) to raise any protest in this regard raises doubt on the acceptability of the allegations made in the complaint petition. That apart it may be noticed that even before Company Law Board the respondent(s) had not alleged any forgery etc. of the Board resolutions which came to be made only in the year 2009 in the complaint filed.8. All these would lead us to irresistibly conclude that the allegations made in the complaint petition are after thoughts and having regard to the admitted facts of the case evident from the orders of the Company Law Board and the High Court the prosecution against theis bound to become sham/lame prosecution which must be brought to an end at the threshold by an order quashing the same. Continuance of any such prosecution would constitute an act of oppression on the petitioners.