Crl.Misc.No.M-31052 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Crl.Misc.No.M-31052 of 2010 Date of Decision:- 22.12.2011 Anil Anand and others ....Petitioner(s) vs. State of Haryana and another ....Respondent(s) *** CORAM:- HON'BLE MR.JUSTICE AUGUSTINE GEORGE MASIH *** Present:- Mr.Sumeet Goel, Advocate, for the petitioners. Mr.Kartar Singh, DAG, Haryana. Mr.I.K.Mehta, Sr.Advocate with Mr.R.K.Dogra, Advocate, for respondent No.2-complainant. *** AUGUSTINE GEORGE MASIH, J. (Oral) Petitioners, who are Directors of AV-Light Automotives Ltd., have approached this Court under Section 482 Cr.P.C. praying for quashing of FIR No.40 dated 21.1.2009 (Annexure P-14) registered at Police Station, Sector 55, Faridabad under Section 420/465/468/471 IPC and all other proceedings arising therefrom. It is the contention of the petitioners that this FIR has been lodged against them with the purpose of harassing and humiliating them and for ulterior motives for wreaking vengeance. They submit that the FIR is unfounded, baseless and in fact is a civil dispute which has been given a Crl.Misc.No.M-31052 of 2010 -2- criminal colour based on imaginary and fictitious reasons and therefore, cannot withstand the test laid down by the Supreme Court in its various judgments and, thus, deserves to be quashed. FIR is also challenged on the basis of delay of more than 5 years in its lodging from the alleged date of commission of the offence which is unexplained and has culminated into exaggerations and afterthought denying the advantage of spontaneity. It is an outcome of the deliberations and consultations which cast serious doubts upon the veracity and tenability of the allegations made therein. Jurisdiction of the police station Faridabad has also been challenged on the ground that the registered office of the company is located in New Delhi and the alleged form 32 which is subject-matter of the FIR was executed and filed with the Registrar of Companies in New Delhi. It is primarily on these grounds that the petitioners have approached this Court with the prayer to quash the FIR registered against them. According to the facts as stated in the petition, petitioner No.1 Anil Anand and petitioner No.3 Rajan Sharma along with respondent No.2 Raj Kumar Bhatia (hereinafter referred to as the complainant) and his wife Kavita Bhatia incorporated/enacted the AV Light Automotives Limited (hereinafter referred to as 'Company'). They were appointed as Directors from the inception of the Company. Savita Anand petitioner No.2 and Renu Sharma, petitioner No.4 were appointed as Directors in the Company on 1.9.1996 and they are wives of petitioners No.1 and 3 respectively. In the year 2003, the Board of Directors planned to expand and enhance its production and manufacturing facilities. For the said purpose, company sought to raise loans from banks/financial institutions. Amongst others, Crl.Misc.No.M-31052 of 2010 -3- Citibank New Delhi, vide its letter dated 9.7.2003, sanctioned a loan of ` 150 lacs in favour of the Company. As per terms and conditions of the letter of sanction, for disbursement of loan, a specific requirement was that the borrower or its associates were not defaulters in repayment of loan, if any, availed of from the Bank. It revealed that the complainant was a defaulter in tendering his credit card bills. In the light of the prevailing circumstances, it was decided and resolved between the then Directors of the Company that the complainant and his wife Smt.Kavita Bhatia would resign as Directors in order to facilitate the disbursement of the loan which was to be forwarded by Citibank and a resolution to this effect was passed by the Board on 5.1.2004. Subsequently, another resolution was passed on 1.4.2004 confirming the resignation of the complainant and his wife Smt.Kavita Bhatia w.e.f. 1.4.2004. Form 32 in accordance with the Companies Act was filed with the Registrar of Companies, New Delhi on 5.5.2004 intimating such cessation/resignation from their Directorship of the above said persons. The complainant did not put-forth any objection with regard to the expansion and enhancement of the business of the company. The Company vide its resolution dated 5.2.2005 increased its equity shares by pronouncing a “ rights offer” of 3,30,000 equity shares. As the complainant and his wife were shareholders, they were also given notice. No objection was raised by the respondents all through and had never expressed any interest whatsoever in functioning of the Company after their resignation. Relying upon some bogus, fabricated and absurd letters dated 20.6.2007, 25.10.2007, 27.11.2007 and 15.12.2007, complainant along with Crl.Misc.No.M-31052 of 2010 -4- some others filed a petition invoking Sections 397 and 398 of the Companies Act, 1956 before the Company Law Board, Principal Bench, New Delhi on 11.1.2008. Petitioners filed reply thereto refuting the facts as alleged in the petition. It was also informed by the petitioners that the complainant and his wife had already resigned as Directors as early as in the year 2004. The matter is still pending before the Company Law Board. During the proceedings, a settlement was entered into between the parties and on the basis of the said settlement on 6.4.2010, Company Law Board appointed a valuer for evaluation of the shares of the Company in an effort to amicably resolve the pending dispute by offering the parties to buy out the shares of the other party. During the pendency of these proceedings, complainant got registered FIR No.40 dated 21.1.2009 at Police Station Sector 55, Faridabad under Sections 420, 465, 468, 471 IPC. This FIR has been lodged after a period of more than five years of the alleged event mentioned in the FIR taking place i.e. the passing of the resolutions dated 5.1.2004 and 1.4.2004 which, according to the complainant, are forged documents and passed with an intention to cause wrongful loss to the complainant and wrongful gains to the petitioners. Investigation into the FIR was conducted and thereafter a report dated 11.5.2009 was prepared by the Investigating Officer wherein finding was returned that the petitioners have not indulged in any act of forgery, cheating or of any other criminal offence and the complaint is a dispute of civil nature, which is pending before the Company Law Board. Recommendations for closure of the investigation was made in this behalf. Despite there being a virtual agreement between the parties to buy out the Crl.Misc.No.M-31052 of 2010 -5- shares of the other party before the Company Law Board and the report dated 11.5.2009 of the Investigating Officer, petitioners were again summoned for investigation on 15.5.2010. They appeared in the Police Station/Economic Offences Wing at Sector 12, Faridabad and were directed again to come present on 17.5.2010. Thereafter, on 2.7.2010, petitioners were subjected to another process of investigation and it is at this stage that the petitioners approached High Court of Delhi by filing writ petition (Criminal) 1008 of 2010 on the premise that the said Court was also conferred with the territorial jurisdiction. Vide order dated 3.8.2010, High Court of Delhi opined that it did not have the jurisdiction and directed the petitioners to approach the Punjab and Haryana High Court. Petitioners preferred Special Leave Petition (Criminal) 7445 of 2010 before the Supreme Court which the petitioners withdrew with liberty to approach this Court, leading to the filing of the present petition seeking quashing of the FIR in question. Notice was issued to the respondents and replies have been filed by them. As per respondent No.1, the offences as alleged to have been committed by the petitioners and are clearly made out from the FIR itself. It is submitted that resolution dated 5.1.2004 was passed in the absence of the complainant and his wife wherein it was resolved that the resignation of the complainant and his wife as Directors of the Company is accepted. Language of the resolution suggested as if complainant and his wife had volunteered to resign from the Board of Directors. There is another resolution dated 1.4.2004 passed by the Board of Directors in which it has been resolved that resignations of the complainant and his wife as Directors Crl.Misc.No.M-31052 of 2010 -6- have been received and were accepted with effect from 1.4.2004. However, there is no such resignation letters on record. When already resignations have been accepted vide resolution dated 5.1.2004, another resolution to the same effect was not required to be passed. In the absence of the resignation letter, the resolution was forged one and on the basis of a forged resolution, Form 32 was submitted by petitioner No.1 to the Registrar of Companies on 5.5.2004 which again is a forged document. As per the FIR, no such offer of resignation was made by the complainant or his wife and neither any resignation letters were submitted by them. It has further been contended that although a report dated 11.5.2009 was prepared by the Investigating Officer but the same was never submitted to the Court and, therefore, there is no legal bar for further investigation of the case. Complainant-respondent No.2 has also filed a separate reply wherein the delay in filing the FIR has been explained by him by submitting that he and his wife had full faith on the petitioners and relied on them for the work and running of the Company. He came to know of this forgery only when despite various efforts made by him to seek information from the petitioner failed, as no such specific reply was given to the queries put by him even in writing and evasive responses were sent to him. Faced with this situation, complainant inspected the records of the Registrar of Companies on 20.12.2007 and 24.12.2007 and then came to know about the fraud played on the complainant and his wife. He was shocked to know that he and his wife had resigned as Directors from the Company and further that Form 32 mentioned that the letter of resignation have been received whereas they had never submitted any resignation. It is Crl.Misc.No.M-31052 of 2010 -7- thereafter that the complainant on further inquiring into the matter had filed the present FIR No.40 dated 21.1.2009. On merits, it has been stated that even if the assertions made by the petitioners are accepted qua the complainant with regard to the reason for him to resign from the Company, but there was no question of his wife Mrs.Kavita Bhatia resigning from the Directorship of the Company as she was not a defaulter. As regards the default of the complainant, it has been stated that the credit facility of ` 4000/- only of Citibank was availed of by the complainant but the Bank proceeded to raise a demand of ` 65 lacs which the complainant obviously disputed. This demand was raised on 29.10.2003 and ultimately the matter was settled on 6.2.2009 with the Bank for an amount of ` 15000/- and the amount was deposited on the same day (Annexures R-2/2 and R-2/3 respectively). It has been contended that the cause of action did not arise when the resolutions were passed but on the day when the forgery and cheating committed on the complainant and his wife came to their knowledge. Proceedings pending before the Company Law Board are admitted. However, it has been stated that both these proceedings are different in nature and, therefore, mere pendency of proceedings before the Company Law Board would not bar the initiation of criminal proceedings against the petitioners. The dispute is not purely civil in nature and the facts clearly discloses commission of the criminal offence by the petitioners and, therefore, registration of the FIR and investigation in the matter by the police is in accordance with law which does not call for any interference by Crl.Misc.No.M-31052 of 2010 -8- this Court. The matter was taken up for hearing before this Court on 21.12.2011 when Mr.Mrigank Dutta, Advocate, had put in appearance and addressed arguments on behalf of the petitioners. He had primarily pleaded for quashing of the case on the question of delay, the matter being civil in nature, re-investigation could not be done after the recommendation of the cancellation report by the Investigating Officer and that no offence from the reading of the FIR is made out. The present proceedings have been initiated against the petitioners with a mala fide intention to wreak vengeance and to harass and humiliate them and that offences from the reading of the FIR is not made out. Counsel had relied upon the judgments of the Supreme Court in the case of Manoj Mahavir Prasad Khaitan vs. Ram Gopal Poddar and another, (2010) 10 SCC 673, Superintendent and Remembrancer of Legal Affairs, West Bengal vs. Mohan Singh and others, (1975) 3 SCC 706, Mahindra & Mahindra Financial Services Ltd. and another vs. Rajiv Dubey, (2009) 1 SCC 706, Madhavrao Jiwajirao Scindia and others vs. Sambhajirao Chandrojirao Angre and others, (1998) 1 SCC 692, Uma Shankar Gopalika vs. State of Bihar and another, (2005) 10 SCC 336, Suneet Gupta vs. Anil Triloknath Sharma and others, (2008) 11 SCC 670, V.Y.Jose and another vs. State of Gujarat and another, (2009) 3 SCC 78, Krishan Lal vs.Dharmendra Bafna and another, (2009) 7 SCC 685 and State of Andhra Pradesh vs. M.Madhusudhan Rao, (2008) 15 SCC 582. After hearing the counsel for the petitioners and with his Crl.Misc.No.M-31052 of 2010 -9- assistance had gone through the records of the case and when the Court was not inclined to grant the relief as claimed in the present petition, Mr.Mrigank Dutta, Advocate prayed for an adjournment to seek instructions in the matter and accordingly the case was adjourned to today. Today, Mr.Sumeet Goel, Advocate, had informed the Court that the petitioners do not want to withdraw the petition. Accordingly, I now proceed to decide the case on merits. There can be no dispute with regard to the propositions as laid down by the various judgments on which the reliance has been placed by the counsel for the petitioners. Undoubtedly, where an FIR has been lodged on unfounded, baseless facts and the allegations have been made with an ulterior motive or to wreak vengeance with the purpose of harassing and humiliating a person, the Court can proceed to quash such an FIR. Gross and unexplained delay on the part of registration of an FIR, apart from the case being of purely civil nature can also be a good ground for exercising jurisdiction under Section 482 Cr.P.C. to quash such proceedings as it would amount to abuse of process of law but in the given facts and circumstances of the present case, I am not inclined to accept any of the contentions which have been raised by the counsel for the petitioners. The dispute primarily is encompassed within a small radius and revolves around two resolutions passed by the Board of Directors i.e. 5.1.2004 and 1.4.2004 followed by the submission of Form 32 to the Registrar of Companies. Facts primarily are not in dispute. As is apparent from the pleadings, petitioners No.1 and 3 and complainant and his wife Kavita Crl.Misc.No.M-31052 of 2010 -10- Bhatia were the founding Directors of the Company which was incorporated on 7.3.1996. Thereafter, wives of petitioners No.1 and 3 also joined Company as Directors from 1.9.1996. It is not in dispute that petitioner No.1 is the Managing Director of the Company. The Company was running smoothly when it was planned to expand and enhance its production and manufacturing facilities for which the Company sought to raise loans from Banks/Financial institutions. Amongst others, Citibank, New Delhi sanctioned a loan of ` 150 lacs vide letter dated 9.7.2003 wherein a condition was incorporated that the Borrower or its associates should not have defaulted under any financial obligation to any bank/funding agency in the past apart from other conditions. The name of the complainant existed/surfaced in the list of defaulters for some default in tendering the credit card bills. It is at this stage that a resolution was passed by the Board of Directors accepting the resignation of the complainant and his wife Smt.Kavita Bhatia as Directors of the Company. This resolution is dated 5.1.2004. It would not be out of way to mention here that the said resolution was passed in the absence of the complainant and his wife. Minutes of the Board meeting dated 5.1.2004 would show that the acceptance of the resignations of the complainant and his wife was not in consonance with the suggestion as recorded on behalf of the complainant. Item No.3 of the Agenda of the Meeting reads as follows:- “3. Resignation as Directorship Pursuant to Citibank not accepting the personal guarantee of Mr.Raj Kumar Bhatia in view of certain dues being in default on the certain credit card owned by Crl.Misc.No.M-31052 of 2010 -11- Mr.Raj Kumar Bhatia. It was suggested byMr.Raj Kumar Bhatia that he and his wife Mrs. Kavita Bhatia would resign from the board of directors so that Citibank will then not need the personal guarantee of Mr.Raj Kumar Bhatia and Mrs. Kavita Bhatia. “Resolved that the resignation of Mr.Raj Kumar Bhatia as Director of the Company be and is hereby accepted.” “Resolved that the resignation of Mrs. Kavita Bhatia as Director of the Company be and is hereby accepted.” Further Resolved that Mr. Anil Anand be and is hereby authorized to file the intimation of the cessation of the directors with Registrar of Companies NCT & Haryana.” After passing of the said resolution, another resolution was passed by the Company on 1.4.2004 which appears to have been passed with an effort to cover up the lapse in the Minutes of the Board Meeting dated 5.1.2004. Item No.3 of the Minutes of the Board Meeting of the Company dated 1.4.2004 read as follows:- “3. Acceptance of Directors Resignation The Board has received the resignation of Mr.Raj Kumar Bhatia and Mrs.Kavita Bhatia from the Board of the Company with effect from 1st April, 2004. “Resolved that the resignation of Mr.Raj Kumar Bhatia as director be and is hereby accepted with effect from 1st April 2004.” “Resolved that the resignation of Mrs. Kavita Bhatia as Crl.Misc.No.M-31052 of 2010 -12- director be and is hereby accepted with effect from 1st April 2004.” According to this resolution, resignations of the complainant and his wife Mrs.Kavita Bhatia from the Board of the Company w.e.f. 1.4.2004 had been received which is denied by the complainant to have been ever submitted by him or his wife. In the reply filed by him and in the rejoinder filed by the petitioners, no such resignation letters had been produced before this Court. On a specific question put by this Court, the counsel was unable to respond to the same in clear terms as to whether the said resignations were available on record of the Company or not. The allegations against the petitioners are that there is no letter of resignation of the complainant and his wife and, therefore, the resolutions dated 5.1.2004 and 1.4.2004 are forged and fabricated documents. In any case, the stand of the complainant that there was no occasion for his wife Mrs.Kavita Bhatia to have offered or resigned from Directorship of the Company when she was not a defaulter and the only reason why the complainant is sought to have put forth his resignation is the default in tendering the credit card bills issued by the Citibank. The stand taken by the respondents is quite logical, reasonable and just. That apart, once a resolution dated 5.1.2004 has already been passed accepting the resignation of the complainant and his wife, there was no occasion for passing another resolution dated 1.4.2004 for the same purpose. This casts doubt with regard to the conduct of the petitioners which requires probe on the part of the investigating agency. Crl.Misc.No.M-31052 of 2010 -13- Thus, it cannot be said that the allegations made by the complainant in the FIR is baseless, unfounded or merely to harass or humiliate or wreak vengeance or with an ulterior motive as has been alleged by the petitioners. Delay which has been pressed into service by the petitioners to contend that the same is an afterthought which would cast serious doubts about the veracity and tenability of the allegations and an outcome of deliberations and consultations would also not be correct in the facts and circumstances of the present case as the offence alleged to have been committed by the petitioners. FIR has been registered against the petitioners under Sections 420, 465, 468, 471 IPC. For these offences, date of occurrence of offence would not be relevant and it is the date of knowledge of commission of such an offence which would be relevant for determining the delay in lodging the FIR. The explanation put-forth by the complainant in his reply clearly demonstrates that he had sought information from the petitioners with regard to their status in the Company but no clear response was received from the petitioners, rather information which was supplied to him was incomplete or was with an intention to hide the truth. According to the complainant, he had complete faith and trust in the petitioners and he could not think of such a mischief having been committed by them on him and his wife. As the things started deteriorating, complainant started making efforts for finding the truth on his own and for that purpose, he inspected the records before the Registrar of Companies, when it was revealed to him that Form 32 signed by petitioner No.1, who is the Managing Director of the Company, had been submitted Crl.Misc.No.M-31052 of 2010 -14- wherein it had been mentioned that resignation letters have been received from the complainant and his wife whereas no such resignation letters were ever submitted by them nor were such letters on the records of the Registrar of Companies. This inspection was done by the complainant on 20.12.2007 and 24.12.2007. It is thereafter that an earnest effort was made by the complainant to find out the truth. On that basis, he first proceeded to file a petition with the Company Law Board, Principal Bench, New Delhi, by invoking the provisions of Sections 397/398 read with Sections 402 and 403 of the Companies Act, 1956. Relief sought therein was primarily and strictly under the Companies Act. Thereafter, a complaint/application was filed by the complainant on 15.11.2008 bearing No.5338-P which was received in the office of the Superintendent of Police, Faridabad which was marked to the SHO, Police Station, Sector 55, Faridabad leading to the registration of the FIR which was numbered as 40 dated 21.1.2009. Reading of the FIR discloses that the complainant has been making efforts to know about the status of the Company, its functioning and performance but he was kept in the dark about its affairs. The relevant contents of the FIR reads as follows:- “3. I had several telephonic conversation with the accused No.1 & 2 who kept on assuring me that the company is functioning and performing well and I need not worry about my investment, in the company which will grow along with the company's net worth. I was kept in the dark about the affairs of the company and whenever raised issues of the performance of the Crl.Misc.No.M-31052 of 2010 -15- company, the accused diverted the topic and tried giving vague replies to me. 4. That on inspection of statutory records being maintained by the ROC New Delhi, I was shocked to learn about the development carried out by them about removal of both of us from the directorship of the company w.e.f.01.04.2004 stating “resignation letter received” and increased the subscribed share capital to themselves on 02.05.2005 in wrongful and illegal manner in violation of the Companies Act. Photocopies of all three resolutions passed by the board of directors on 1.4.2004, 5.2.2005 and 2.3.2005 held at their earlier works 23/7 Mathura Road, Ballabgarh are being submitted. It is submitted that the accused no.1 & 2 have illegally removed us as a director of the company by forging our signatures and (form 32) (photocopy attached for your information and records) filled with the registrar of companies Delhi on 05.05.2004. It is apparent that the accused have filled the alleged form 32 on the basis of a forged resignation letter by forging my signatures. Perusal of form 32 reveals