IN THE HIGH COURT OF JUDICATURE OF ANDHRAPRADESH AT HYDERABAD HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION Nos.6382, 6384 & 6385 of 2009 DATE:11.04.2011 CRIMINAL PETITION No.6382 of 2009 Between: J.R.Joshi …… Petitioner And The Reserve Bank of India and another …..Respondents CRIMINAL PETITION No.6384 of 2009 Between: J.R.Joshi …… Petitioner And The Reserve Bank of India and another …..Respondents CRIMINAL PETITION No.6385 of 2009 Between: J.R.Joshi …… Petitioner And The Reserve Bank of India and another …..Respondents HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION Nos.6382, 6384 & 6385 of 2009 COMMON ORDER: These three criminal petitions are filed by A-9 in three different cases C.C. Nos.547 of 2002, 548 of 2002 and 549 of 2002 on the file of XI Additional Chief Metropolitan Magistrate, Secunderabad questioning orders dated 22.07.2009 passed therein dismissing his applications filed under Section 245 Cr.P.C refusing to discharge A-9 from those cases. 2) A-1 company is a non-banking financial institution in which A-2 was Chairman and A-3 to A-14 were directors. It is alleged that the accused were receiving financial deposits without permission from Reserve Bank of India. When some of the depositors approached the Company Law Board with applications under Sections 45(Q)(A)(2) of the Reserve Bank of India Act, 1934 (in short, the Act), the Company Law Board passed orders directing the Company to refund the said deposits within the prescribed time. The Company Law Board in the said orders not only directed the company but also directed the directors and officers concerned of the Company to ensure compliance of the said order within the stipulated period. As the said orders passed by the Company Law Board were not complied with, Reserve Bank of India filed the complaints in the lower Court for prosecuting the Company as well as its directors for the offence under Section 58(B)4(AAA) of the Act. Though the cases were filed in the year 2002, the petitioner/A-9 approached the lower Court with the petitions under Section 245 Cr.P.C in the year 2009 after 7 years, when evidence of the complainant/Reserve Bank of India before charge was in progress in the lower Court, on the ground that A-9 resigned from directorship of A-1 company in the year 1995 itself. The lower Court did not find favour with the contention put forward by the petitioner. 3) Sheet anchor of the petitioners’ case is order dated 10.04.2002 of this Court in Company Application No.107 of 2002 in C.A. No.476 of 2001 in Company Petition No.7 of 1996 wherein this Court discharged the petitioner from the prosecution proceedings in C.A. No.476 of 2001 basing on Form No.32 produced by the petitioner which was not disputed by the Official Liquidator therein. Further, it is stated that the Special Judge for Economic Offences, Hyderabad in S.T.C. No.13 of 1996 also acted upon the said Form No.32 and passed order dated 25.09.1998 recording acquittal of the petitioner. It is further contended by the petitioners’ counsel placing reliance on M.A.A.Annamalai V. State of Karnataka[1] of the Supreme Court that in the absence of the petitioner in the Board of Directors when the order of the Company Law Board under implementation was passed, he cannot be allowed to be prosecuted. 4) In M.A.A.Annamalai(1 supra) the Supreme Court was considering offence punishable under Section 420 I.P.C and Sections 3,4,5,6 of the Prize, Chits and Money Circulation schemes (Banning) Act. It is pointed out by the respondents’ counsel that prosecution of the offenders for I.P.C offences cannot be equated with the prosecution under the Reserve Bank of India Act wherein there is a special provision under Section 58(C) which enables the complaint being preferred in the case of a Company, against the every person who at the time of contravention for default was committed, was in-charge of and was responsible to the Company for the conduct of the business of the Company as well as the company. In the complaints it was specifically averred in para-2 in the complaints that A-2 is Chairman and Managing Director of A-1 company and that A-3 to A-14 are the directors of A-1 company and that A-2 to A-14 were also in-charge of and were responsible to A-1 company for conduct of its business at the time of default and as such are also guilty and liable to be proceeded against and punishable jointly and severally under Section 58(C) of the Act. In view of the said specific allegations in the complaints, it cannot be said that there is no statutory compliance of Section 58(C) in these cases. 5) The complainant viz., Reserve Bank of India specifically disputed in the complaints about resignation of A-2, A-10 and A- 12 from A-1 company. In so far as A-9 is concerned, it is contended by the petitioners’ counsel that A-9 did not come forward with the plea of resignation from A-1 company before the complainant as no notice was given to A-9 prior to filing of these cases. Giving of notice prior to filing of complaints under Section 58(B) of the Act is not a condition precedent prescribed by law. The petitioner filed copy of Form No.32 lodged with the Registrar of Companies together with acknowledgement of the Registrar of Companies of receipt of the same on 07.04.1997. The respondent disputes correctness of the said Form No.32. Column No.5 of Form No.32 relating to date of appointment or change gives 31.10.1995 as against the name of A-9/petitioner. In column No.6 thereof relating to brief particulars of changes, it is noted as “resigned as director w.e.f. 31.10.1995” as against the petitioner’s name. The acknowledgement which is on a different sheet shows that it was given on 07.04.1997 in relation to Form 32 of A-1 company. If A-9 had resigned with effect from 31.10.1995 it is not known why form No.32 was not lodged with the Registrar of Companies till 07.04.2007. There is no material placed before the Court to show that the resignation with effect from 31.10.1995 was accepted by the Board. One of the directors is stated to have lodged the said form No.32 with the Registrar of Companies. It is not known what was his authority to lodge the same before the Registrar of Companies on behalf of A-1 company. It becomes a question of fact as to on what date the petitioner/A-9 resigned from the Company and on what date his alleged resignation was accepted by the Board and whether the Registrar of Companies effected necessary changes in the register of companies basing on Form No.32 filed by one of the Directors of A-1 company. All these disputed questions of fact have to be judged and decided by the trial Court having regard to the pleas and evidence to be taken and let in by both the parties in the lower Court. 6) At this stage it may be noted that A-2 and A-12 filed Crl.P.Nos.1361, 1362 and 1364 of 2007 before this Court under Section 482 Cr.P.C for quashing the proceedings in the lower Court on the ground that they have resigned from the Board of Directors of A-1 Company. This Court by the order dated 26.11.2007 held that it is a matter to be gone into by the trial Court and that the accused are at liberty to participate in the trial being conducted in the lower Court under Section 244 Cr.P.C before charge by cross-examining the prosecution witnesses and file necessary petitions for discharge under Section 245 Cr.P.C. It is contended by the respondent’s counsel that even without completion of enquiry under Section 244 Cr.P.C, the petitioner/A-9 filed the present petitions in the lower Court. According to the respondent, Reserve Bank of India has got right to lead further evidence before charges and file documents in proof of the allegations in the complaint and to seek the lower Court to frame necessary charges against the accused; and without the complainant completing the said exercise before the lower Court, entertaining of the petition under Section 245 Cr.P.C for discharge by the lower Court or entertaining of a petition to quash the proceedings under Section 482 Cr.P.C before the this Court may not arise. Admittedly the petitioner/A-9 did not cross- examine P.W-1 who was examined by the complainant before charge. The petitioner/A-9 though filed documents like Form No.32 and the acknowledgement of the Registrar of Companies along with the discharge petition, did not confront the same to P.W-1 in cross-examination and did not lead any evidence in support of those documents. Without necessary proof on the disputed questions of fact basing on Form No.32 filed by the petitioner/A-9, it would be premature for this Court to quash the proceedings in the lower Court in so far as the petitioner/A-9 is concerned. The previous order dated 10.04.2002 of this Court in Company Application No.107 of 2002 may not be taken for granted because the said order was passed by this Court on the concession made by the Official Liquidator on Form No.32. The said order can be taken only as a piece of evidence while considering the petitioner’s plea based on Form No.32. Thus, there are no grounds in law for quashing the proceedings in the lower Court as well as setting aside the impugned orders passed by the lower Court. 7) In the result, all the criminal petitions are dismissed. _______________________________ SAMUDRALA GOVINDARAJULU, J April 11, 2011 ksh [1] III (2010) CCR 468 (SC)