Full Judgment Text
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY:
NAGPUR BENCH:NAGPUR
CRIMINAL APPLICATION NO.2760 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
000
CRIMINAL APPLICATION NO.2761 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
000
CRIMINAL APPLICATION NO.2762 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
0000
CORAM: S.R. DONGAONKAR, J.
DATE:10/1/2007
COMMON JUDGMENT
Rule.
Rule returnable forthwith. Heard finally with consent of
::: Downloaded on - 31/03/2026 20:11:49 :::
2
parties.
All these applications under section 482 of Criminal
Procedure Code are directed against the common order passed by
th
the 10 Ad-hoc Additional Sessions Judge, Nagpur in Criminal
Revision Application No.408/2006, 409/2006 and 410/2006 filed by
the applicant, to challenge the order of issue of process against
him for the offence punishable under section 138 of Negotiable
Instruments Act [hereinafter referred to as Act for the sake of
convenience], in Criminal Complaint Cases No.676/1997,
677/1997, 679/1997 dated 23.8.2005 by which learned Magistrate
had rejected the application of the applicant for recalling of the
process against him for the offence under section 138 of the Act.
2] Facts which are necessary for the disposal of these
applications can be stated thus. The respondent no.1 had filed
complaints against the present applicant who is accused no.4 in
these complaint cases, for the offence punishable under section
138 of the Act and 420 of the I.P.C. As stated above the
complainant had filed these complaints under section 138 of the
Act and 420 of I.P.C. alleging that this accused [accused no.4]
along with other accused i.e. no. 2, 3 and 5 are the Directors of
accused no.1 company - A.U. Roller Flour Mill Private Limited. They
had business dealings with the complainant's firm i.e. M/s Mamata
Agency. During the business transaction, they had issued cheque.
Three cheques were issued on Allahabad Bank, Nagpur on
28.10.1997 and 21.10.1997. They were dishonoured. After due
compliance of the necessary provisions of issuing notices etc. as
the amount was not paid, the complainant filed relevant complaints
for offence under section138 of the Act read with section 420 I.P.C.
::: Downloaded on - 31/03/2026 20:11:49 :::
3
3] During the said proceedings, the learned Magistrate
passed an order of issue of process against the accused persons
after recording verification statement of the complainant, including
this accused.
4] Learned trial Judge vide his order dated 23.8.2005 heard
the parties and found that the trial court had no powers to recall
the process issued against the accused in view of the observations
of the Apex court in [Subramanian Sethuraman ..vs.. State of
Maharashtra] 2006(1)M.L.J. 626. As such he rejected the
application of applicant for recalling of process.
5] This order was challenged by the applicant before this
Court under section 482 of Cr.P.C. However, in view of the decision
of this Court in [V.K. Jain ..vs.. Pratap C. Padode] reported in
2005(3) Mh.L.J. 778, the liberty was granted to the applicant to
move the Sessions Court in its revisional jurisdiction under section
397 of Cr.P.C. to challenge the said order of issue of process.
Accordingly, the applicant approached the Sessions Court under
section 397 Cr.P.C. bearing Criminal Revision no.408/2006,
409/2006 and 410/2006 to challenge the order of issue of process.
After hearing both the sides, the learned Ad-hoc Additional
Sessions Judge rejected the revision applications of the applicant
i.e. said applications were dismissed vide order dated 10.7.2006.
This order is challenged in these applications.
6] It may be stated that the learned Ad-hoc Additional
Sessions Judge while rejecting the applications of the applicant has
::: Downloaded on - 31/03/2026 20:11:49 :::
4
found that the factum of resignation by the applicant dated
6.10.1997 has to be considered at the time of trial. He has also
found that the judgment referred by the applicant to contend that
the allegations as made out in the complaint are not sufficient to
attract the offence under section 138of the Act as well as section
420 Cr.P.C., does not support him. He also found that this is not a
case of complete absence of allegations in the complaint to
constitute the offences against the applicant. He has also observed
that the form no.32 which is placed on record is a copy and is not
sufficient to hold that the applicant seizes to have any
responsibility in the business of the accused since 6.10.1997. Apart
from this, in the judgment, he has observed that the applicant has
not applied for condonation of delay in filing revision application
and the same was barred by limitation. However, he has observed
that “However these applications are being dismissed on merits
and not merely on limitation.” This order as stated above is
challenged in these applications.
7] Learned counsel for the applicant - Shri Bhatt has
submitted that the delay in preferring the revision application
before the Sessions Court was not because of the fault of the
applicant, but it was because of the change in the principle of law
as regards the maintainability of an application under section 482
of Cr.P.C. to challenge the order of issue of process. On rejecting
the application for recalling the order of issue of process ,
according to him, this application under section 482 of Cr.P.C. was
maintainable as the applicant would be facing the trial though he is
not at all liable for the alleged offences. He has relied on certain
authorities to contend that the offence under section 138 of Cr.P.C.
::: Downloaded on - 31/03/2026 20:11:49 :::
5
is not at all made out when the Director has tendered the
resignation, which he can tender it even unilaterally and it is
necessary for the company to accept the same and form No.32
and its acceptance by the Registrar of Companies is mere a
formality. Therefore, he has contended that when it is prima facie
established that the applicant has resigned from the accused
company w.e.f. 6.10.1997, he is not liable for any transaction
which the company did thereafter including in the present case the
liability of dishonour of the cheques issued by the company under
section 138 of the Act as the same were issued after 6.10.1997.
8] According to him, allegations in the instant complaints
are not sufficient to attract the action against the applicant under
section 138 of the Act and therefore, when there are no sufficient
allegations against applicant to show that at the time of issue of
relevant cheque he was responsible for the business of the
accused - company; he can not be proceeded under section 138 of
the Act or under section 420 of I.P.C. and he should not be
required to face the trial despite this situation; only on the ground
that the said point can be decided at the time of trial, according to
him this would sheer abuse of process of law and therefore,
interference by this court under section 482 of Cr.P.C. to prevent
abuse of process of law and also to secure ends of justice is
warranted.
9] As against this, learned counsel for the respondent - Mr. Shelat
has submitted that the case for alleged offences is made out
against the applicant in the complaints. He was responsible for the
business of the accused - company at the relevant time. Even if it
::: Downloaded on - 31/03/2026 20:11:49 :::
6
is his case that he has resigned from the Directorship of the said
company on 6.10.1997, that fact will have to be established in the
trial and at the threshold at the time of consideration of issue of
process. The same cannot be considered. Further according to him,
this is not a case where this court should interfere under section
482 of Cr.P.C. as the trial has been already delayed. He has also
taken me through the reasons recorded by the Sessions Court and
also other relevant material to contend that as trial is pending
since 1997 and nothing has happened towards the further progress
of the trial, the order under section 482 Cr.P.C. is not at all
warranted. He has pressed into service observations of this court in
2006 ALL MR (Cri.) 438 S. B.& Internatijonal Limited ..vs.. State of
Maharashtra and another] and also observations of the Apex Court
in AIR 1992 SC 604 State of Haryana ..vs.. Bhajanlal in his support.
10] In order to consider the rival contentions of the parties, it
is necessary to bear in mind as to what material is on record
against the applicant (accused no.4) in the complaint. The reading
of the relevant complaint would show that the complainant has
alleged in paragraph 2 of the complaint thus:
“2- That, the accused no.1, is a private limited
company and accused No.2 to 5 being its Directors are
used to purchase goods i.e. wheat on credit from the
complainant firm.”
In paragraph 3 the complaint it is alleged :
“3- - - - - -The accused No.5 on behalf of all accused
had issued two account payee cheques - - - - - - -”
In paragraph 4 the complainant has stated :
“4-...........Thus one thing is very clear then crystal that
::: Downloaded on - 31/03/2026 20:11:49 :::
7
the accused no.5, had issued the above cheques
deliberately knowingly and with malafide intention to
cheat and defraud the complainant.- - - -”
Further in paragraph 5 it is contended:
“5. ...........The accused No.s 1 & 4 have received the
said notice on 3.11.1997, but accused nos. 2,3 4 have
deliberately avoided to receive the same.............”
11] On perusal of these contents of the complaint, it would
be seen that the allegations against the present applicant is that
he was purchasing goods from the complainant as the director of
the said accused company. No where it clearly depicts that the
accused no.4 was in active Directorship of the accused - company
at the time of issuance of cheque. The complaint only says that the
accused no.5 had issued a cheque on behalf of the rest of the
accused. Therefore, unless there is specific material on record to
show that this applicant was active as Director of the Accused
company at the relevant time, he would not be liable for the
offence under section 138 of the Act, in view of provisions of
section 141 of Negotiable Instruments Act which reads thus:
Sec. 141 - Offence by companies . -- (1) If the person
is committing an offece under Section 138 is a
company, every person who, at the time the offence
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, shall be deemed to
be guilty of the offence and shall be liable to be
proceeded against and punished accordingly;
Provided that nothing contained in this sub-
section shall render any person liable to punishment if
he proves that the offence was committed without his
knowledge, or that he had exercised all due diligence
to prevent the commission of such offence;
::: Downloaded on - 31/03/2026 20:11:49 :::
8
[Provided further that where a person is
nominated as a Director of a company by virtue of his
holding any office or employment in the Central
Government or State Government or a financial
corporation owned or controlled by the Central
Government or the State government, as the case may
be, he shall not be liable for prosecution under this
Chapter.]
(2) Notwithstanding anything contained in sub-section
(1), where any offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other
officer of the company, such director, manager,
secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
Explanation. -- For the purposes of this section,--
(a) “company” means any body corporate and
includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a
partner in the firm.
12] It is further necessary to bear in mind that rest of the
accused have not challenged the order of issue of process and they
are facing the trial, which include the accused - company as well as
rest of the Directors.
13] At this stage it is necessary to consider the following
authorities pressed into service by the learned counsel for the
applicant.
In D.P.Jain..vs... 2006 (5) M.L.J. 705, this court has
::: Downloaded on - 31/03/2026 20:11:49 :::
9
observed in paragraph 11 thus:
“11. I have carefully considered the rival submissions.
I have also gone through the case law cited at the bar.
It may be noted that in order to fasten vicarious liability
against the partners of the firm, there must be clear,
specific and unambiguous allegations made in the
complaint. Every partner of the firm cannot
automatically be roped in. The complainant can
proceed only against such persons who at the time the
offence was committed by the firm, were in-charge and
were responsible to the firm for the conduct of its
business. Such persons must be in over all control of
the day-to-day business of the firm. A complainant
based on vague statement that one of the partners
signed the cheque on behalf of the partners and the
cheque was issued towards the amount due and
payable by all the partners is not a complaint in the
eye of law. The accusation against each partner must
be specific and unambiguous. The role played by each
of the accused must be clearly stated in the complaint.
No complainant can be permitted to launch prosecution
against all the partners of a firm without there being a
proper foundation in the complaint itself about the
actual role played by them at the material point of time
when the office is committed by the firm. No
prosecution would lie against a partner on the simple
accusation in the complaint that such person was the
partner of the firm.
It is pertinent to note that in paragraph 9 and 10 of the said
judgment, this court has considered the observations of the Apex
Court in 2001 (10) SCC 218..... and 2002 7 SCC 755, 2005 Cr.L.J.
4249.
9. The learned counsel for the applicants submitted
that under Section 141 of the Negotiable Instruments
Act, if the person committing an offence under Section
138 is a company (which includes a firm), every person
who, at the time the offence was committed, was in
charge of, and was responsible to the company/firm for
::: Downloaded on - 31/03/2026 20:11:49 :::
10
the conduct of the business of the company/firm, as
well as the company/firm, shall be deemed to be guilty
of the offence. The learned counsel for the applicants
submitted that in order to attract the provisions of
section 138of the Negotiable Instruments Act the
complainant must make averment in the complaint
itself that every person, who is named as an accused,
was responsible to the firm for the conduct of the
business of the firm. In the absence of such averment
no vicarious liability can be fastened on the partner of
the firm. The learned counsel for the applicants pointed
out that in para no. 1 of the complaint, it is averred that
the “complainant is a company registered under the
Indian Companies Act, 1956 and accused no. 1 is a
partnership firm of which accused no. 2 to 4 are the
partners”. In para No. 2 of the complaint it is averred
that “accused no. 2 on behalf of all the accused issued
a cheque in favour of the complainant and that the said
cheque was issued towards the amount due and
payable by all the accused to the complainant and in
discharge of preexisting debt and liabilities”. The
learned counsel for the applicants vehemently
submitted that it is nowhere averred in the complaint
that accused nos. 2, 3 and 4 were incharge of and were
responsible to the firm for the conduct of the business
of the firm. In the absence of such an averment, it
cannot be said that they are guilty of the offence
punishable under sectin 138 of the Negotiable
Instruments Act. In support of his submissions, the
learned counsel for the applicants placed his reliance on
the following cases:
(i) In K.,P.G.Nair vs. Jindal Menthol India Ltd., (2001)
10 SCC 218, it is held that :
“In view of section 141 a person other than the
company can be proceeded against under those
provisions only if that person was in charge of
and was responsible to the company for the
conduct of its business. Though words of section
141 (1) need not be incorporated in a complaint
as magic words but substance of the allegations
read as a whole should answer and fulfil the
::: Downloaded on - 31/03/2026 20:11:49 :::
11
requirements of the ingredients of the said
provisions (for being proceeded against for an
offence which he alleged to have committed).
On the above premise, it is clear that the
allegations made in the complaint do not either
in express words or with reference to the
allegations contained therein make out a case
that at the time of commission of the offence the
appellant was in charge of and was responsible
to the Company for the conduct of its business.
Therefore, in this case the High Court has
misdirected itself and committed an error in
coming to the conclusion that the requirements
of Section 141 are prima facie satisfied insofar
as the appellant is concerned. The proceedings
in question for the alleged offence under Section
138 as against the appellant are quashed.”
(ii) In Katta Sujatha (Smt.) vs. Fertilizers and
Chemicals Travancore Ltd. and another,m (2002) 7
SCC 655, it is held that:
In short the partner of a firm is liable to be
convicted for an offence committed by the firm if
he was in charge of and was responsible to the
firm for the conduct of the business of the firm
or it is proved that the offence was committed
with the consent or connivance of, or was
attributable to any neglect on the part of the
partner concerned.”
(iii) In Monaben Ketanbhai Shah and another vs.
State of Gujarat and others, 2004 Cri. L.J. 4249, it is
held that :
Section 141 does not make all partners liable for
the offence. Criminal liability has been fastened
on those who, at the time of commission of
offence, was in-charge of and was responsible to
firm for conduct of business of firm. These may
be sleeping partners. Primary responsibility is
on complainant to make necessary averments in
complaint so as to make accused vicariously
::: Downloaded on - 31/03/2026 20:11:49 :::
12
liable. For fastening criminal liability, there is no
presumption that every partner knows about the
transaction. The obligation of appellants to
prove that at the time the offence was
committed they were not in-charge of and were
not responsible to the firm for conduct of
business of firm, would arise only when
complainant makes necessary averments in
complaint and establishes that fact. The instant
case is of total absence of requisite averments
in complaint. Therefore, order of Magistrate
directing discharge of accused persons, holding
that there are no allegations in complaint
making out offence against them is proper.”
10. The learned counsel for non-applicant no. 1/
complainant, on the other hand, submitted that the
pleadings made by the complainant in the complaint
are sufficient to attract the provisions of section 138 of
the Negotiable Instruments Act. He pointed out that it
has been specifically averred that accused no. 2 issued
cheque in favour of the complainant on behalf of all the
accused and that the same was issued towards the
amount due and payable by all the accused to the
complainant in discharge of their pre-existing debt or
liabilities. He submitted that no more pleading is
necessary. It is for the accused persons to show that
the offence was committed without his knowledge or
that he had exercised all due diligence. The burden in
this regard has to be discharged by the accused
persons during trial. Thus the complaint is not liable to
be quashed as urged on behalf of the applicant. In
support of his submissions, the learned counsel for non-
applicant no.1/ complainant placed his reliance on the
following cases:
(i) Orient Syntex Ltd. and others vs. Besant
Capital Tech. Ltd., 1999(3) Mh.L.J. 413 = 2000
Cri. L.J. 210 (Bombay)
(ii)S.V.Muzumdar and others vs. Gujarat State
Fertilizer Co. Ltd., and another, 2005(3) Mh.L.J.
754 (SC).”
14] In 2005 Cr.L.J. 4140 S.M.S.Pharmaceuticals Ltd.... vs...
::: Downloaded on - 31/03/2026 20:11:49 :::
13
Neeta Bhalla and another, the Apex Court in paragraph 20 has
observed thus;
“20............ (a) It is necessary to specifically aver in a
complaint under Section 141 that at the time the
offence was committed, the person accused was in
charge of and responsible for the conduct of business of
the company. This averment is an essential
requirement of Section 141 and has to be made in a
complaint. Without this averment being made in a
complaint, the requirements of Section 141 cannot be
said to be satisfied.
(b) The answer to question posed in sub-para
(b) has to be in negative. Merely being a director of a
company is not sufficient to make the person liable
under section 141 of the Act. A director in a company
cannot be deemed to be in charge of and responsible to
the company for conduct of its business. The
requirement of Section 141 is that the person sought to
be made liable should be in charge of and responsible
for the conduct of the business of the company at the
relevant time. This has to be averred as a fact as there
is no deemed liability of a director in such
cases..................”
15] Here is case where the applicant says that he has
resigned from the applicant - company on 6.10.1997 i.e. admittedly
prior to the issuance of the cheques by the accused - company, by
the accused no.5.
16] In this behalf, the observations of the Division Bench of
this Court in 2002(2) Mh.L.J. 36 - Saumil Dilip Mehta vs. State of
Maharashtra and others, in paragraph 6 and 7 needs to be seen:
“6. The submissions advanced by the litigating parties
are touching an important point involved in this matter
which make us to express our views on the point
::: Downloaded on - 31/03/2026 20:11:49 :::
14
whether a director of a public or private limited
company can resign unilaterally and that too by writing
a letter to the chairman of the said company or its
secretary. Is it necessary for such a director to fill up
form NO. 32 and is obliged to give a notice or
intimation to that effect to the Registrar of Companies?
The question arises for our adjudication is whether that
particular director is obliged to give such information to
the Registrar of Companies and whether he cannot
retire without complying with the said requirement.
Keeping in view the provisions of the Companies Act,
the relevant articles of the Constitution of India, we
come to the conclusion that a director of the public
limited company or private limited company can tender
his resignation unilaterally and without filling in form 32
and without sending a notice to the Registrar of
Companies. It is clear that the filling in the said form
and giving due intimation and information to the
Registrar of Companies is the duty of the Company
Secretary and not of an individual director. Suffice it
to say that what he has to do is to send in writing a
letter informing either the chairman or the Secretary of
the Company, as the case may be, his intention to
resign from the post of the Director of the said
company. Thereafter the said letter has to be moved in
the meeting of the directors of the company, may be
ordinary meeting or may be extra-ordinary or special
meeting, as the case may be, and the Board of
Directors have to take a decision whether the Board is
accepting his resignation or not. An intimation should
be sent to such director and after such resolution is
passed, the Company Secretary is under the obligation
to comply with the legal formalities for giving a
finishing touch to the resolution which has been passed
in the said meeting of the Board of Directors. It is for
the Company Secretary to fill in the forms as prescribed
and to give due information and intimation to the
Registrar of Companies, as the law requires.
Thereafter, it has to be so mentioned in all prescribed
registers of the Company, accounts and balance sheet
of the company and thereafter the said fact is to be
brought to the notice of the members of the Company
as early as possible and at the latest in annual general
::: Downloaded on - 31/03/2026 20:11:49 :::
15
meeting.
7. When a director has tendered his resignation and
the Board of Directors has accepted it and has acted on
it, such director cannot be held liable for the liability
incurred by the said company after the date of
acceptance of his resignation except the liability which
has been incurred by him for purchase of shares of the
said company and noting more.”
17] It would be clear that if the Director tenders his
resignation prior to issuance of the cheque, he would not be liable
for the said offence if any committed by the company - accused.
Thus tender of resignation and issuance of Form no.32
needs to be proved prior to the commission of the offence.
18] At this stage it is necessary to consider the observations
of this court in 2006 ALL MR (CR) 438 S.B. & T. International Ltd.,
vs. State of Maharashtra and Anr., wherein in paragraph 3 it is
observed thus:
“3. This petition questions the correctness of the
st
decision of the 1 d hoc Additional Sessions Judge,
st
Palghar dated 1 August, 2005, in Crim. Rev.
Application NO. 41 of 2005. By the said order the
Sessions Judge has allowed the revision application
thereby setting aside the order passed by J.M.F.C.
th
Vasai, dated 7 August, 2002 issuing process under
Section 138 of the Negotiable Instruments Act against
respondent no. 2 in CC No. 3582 of 2002. The basis on
which the Sessions Judge has allowed the revision
application in favour of respondent NO. 2 is that
respondent NO. 2 had produced form No. 32 to
substantiate the plea that at the relevant time
respondent no. 2 was not the director of the accused
company. No other aspect has been considered in the
::: Downloaded on - 31/03/2026 20:11:49 :::
16
judgment of the Sessions Judge. In my opinion, the
petitioner /complainant is justified in contending that
the question whether Respondent no. 2 continued to be
the director in the accused company at the relevant
time is a matter for trial. Indeed form No. 32 is a public
document but even then the said document will have to
be proved in evidence in defence by the accused. That
by itself cannot be the basis to hold that no offence is
made out aginst the concerned accused. This aspect
rd
has been considered in the decision dated 23
December, 2004, in the case of (Vijay Mallya vs. State
of Maharashtra and other) Crim. Application NO. 4827
of 2004. Applying the principles stated therein this
petition ought to succeed. I am conscious of the fact
that the Sessions Court adverted to several other
decisions in the impugned judgment buy in the
abovesaid judgment delivered by me I have considered
most of the judgments referred to in the impugned
judgment and taken the view that production of Form
No. 32 by itself is not sufficient. Accordingly, this
petition is allowed. The impugned judgment is set
aside with the directions to the trial Court to proceed
with the trial in accordance with law uninfluenced by
any observations made in the impugned judgment or
for that matter in the present order.”
19] It clearly seems that in this case the basis on which the
Sessions Judge had allowed the revision application of the accused
was because of the form no.32 to substantiate his plea that he was
not Director of the accused - company at the relevant time and no
other aspect was considered in the said judgment by the learned
Sessions Judge.
20] Further in 2001 Bombay 655 [Dushyant D. Anjira vs.
Wall Street Finance Ltd. and Another, it has been held that, when
there was no reason to disbelieve the form no.32, it would liable to
be accepted for the purposes of showing that the said director was
::: Downloaded on - 31/03/2026 20:11:49 :::
17
not responsible for the business of the company after the
resignation.
21] Here is the case where the applicant has produced the
document of form no.32 which was accepted by the Registrar of
the Companies at later date. The said change appears to have
been accepted in December 1997, but it clearly seems to have
been accepted, that the date of resignation is 6.10.1997 vide
certified copy produced on record.
22] In these circumstances, when there is no sufficient
material on record to show that this accused - applicant was
working in the accused - company as Director at the time of
issuance of cheque i.e. after 6.10.1997, he can not be held liable
for the alleged offences as in the complaint there are only general
allegations and in specific against accused no.5 to the effect that
he had issued cheque on behalf of the company as well as other
Directors. There is no contention & ex-facie established fact that
this accused has concocted this form no.32 or his resignation,
dated 6.10.1997 to avoid the liability of the accused arising out of
the complaints filed by the complainant. I have already pointed out
above that the applicant -accused no.4 has filed an application for
recalling of process or to challenge the issue of process order and
therefore, unless there is sufficient material on record to show that
this accused was taking active part in the business or was
responsible as Director even after 6.10.1997 or at least there is
such allegation in the complaint, ex-facie he can not be held liable
for the offence under section 138 of the Act and 420 I.P.C. When
this is obvious, there can be no substance in the contention that
::: Downloaded on - 31/03/2026 20:11:49 :::
18
this matter should be established at the time of trial because when
ex-facie there is no material in the complaint or otherwise to show
that the accused can be proceeded for the offence under section
138 of Cr.P.C. or 420 of I.P.C., asking him to face the trial would
clearly to be an abuse of process of law. In my opinion, even if
there is delay in challenging that order, the delay would not be
fatal and would not put constraints on this court to exercise the
powers under section 482 of Cr.P.C. to quash the order of issuance
of process against the accused - applicant.
23] In Bhajanlal's case [AIR 1992] SC 604 the Apex Court
observed in paragraph 109 thus:
“109. We also give a note of caution to the effect that
the power of quashing a criminal proceeding should be
exercised very sparingly and with circumspection and
that too in the rarest of rate cases; that the Court will
not be justified in embarking upon an enquiry as to the
reliability or genuineness or otherwise of the allegations
made in the F.I.R. or the complaint and that the
extraordinary or inherent powers do not confer an
arbitrary jurisdiction on the Court to act according to its
whim and caprice.”
24] Here is the case where there is no sufficient material in
the complaint or otherwise to show that the accused applicant was
acting in the affairs of the company after 6.10.1997. It is also not
shown that there is reason to believe that he must have concocted
the resignation of 6.10.1997 to avoid liability and responsibility
arising out of the transactions referred in the complaint. This is not
an inquiry as to whether the factum of resignation of the applicant
is established or not. Here is case where applicant says that he has
resigned on 6.10.1997 from the affairs of the company as well as
::: Downloaded on - 31/03/2026 20:11:49 :::
19
Directorship of the accused - company. The complainant himself
says that accused no.5 on behalf of the company issued cheque
and only allegation against accused no.4 is that he was purchasing
articles from the complainant. When there is certified copy of the
form no.32 and its acceptance by Registrar of Companies on
record, it has to be held that the accused no.4 - applicant had no
responsibility in the affairs of the company or issuance of the
relevant cheques at the relevant time so as to attract liability
under section 138 of the Act or 420 of I.P.C. Hence exercise of
power under section 482 Cr.P.C. by this court would not be an
arbitrary exercise of power.
25] Learned counsel for the respondent has contended that
the applicant has been moving courts after the courts and he is
delaying the trial and he has exhausted the remedy under section
482 Cr.P.C. earlier and therefore, this application would not lie. I
am unable to accept this contention for the simple reason that the
applicant had sought liberty to file revision application under
section 397 of Cr.P.C. because of the judgment of this court in V.K.
Jain ..vs.. Pratap 2005(3) Mh.L.J. 778. Therefore, if at the relevant
time this court was of the view that the application under section
482 of Cr.P.C. was not maintainable as remedy under section 397
Cr.P.C. is availablebefore Sessions Court and applicant chooses to
avail that remedy, that would not dis-entitle him from preferring
another application under section 482 of Cr.P.C. particularly in the
circumstances of the case. True that the trial of the accused has
been already delayed and cheque amount is quite a large amount,
but that fact by itself will not be sufficient to reject the application
of the applicant as it is otherwise tenable in law. Merely because
::: Downloaded on - 31/03/2026 20:11:49 :::
20
the said point can be decided at the time of the trial, that fact by
itself will not prevent this court from exercising powers under
section 482 of Cr.P.C. to prevent the abuse of process of law. At the
cost of repetition, I may again point out that there are no sufficient
allegations in the complaint to show that this applicant was dealing
with the business of the company at the time when the cheques
were issued, he has also produced documentary evidence on
record to show that he had resigned from the Directorship of the
company on 6.10.1997 i.e. much prior to the issuance of the
cheque. Complainant himself says that the accused no.5 had
issued cheque on behalf of the company and there is no material
on record to show that the accused has either, cheated the
complainant or any way was responsible for issuance of the false
cheques or was responsible for the affairs of the accused -
company. Therefore, accused no.4 i.e. applicant, can not be asked
to face the trial, in such circumstances. In my opinion, the exercise
of power under section 482 of Cr.P.C. is clearly warranted to quash
and set aside the order of issue of process against this accused no.
4 - applicant, in the relevant complaint case.
26] Therefore, the orders of issue of process against this
applicant in Criminal Complaint Case No. 676/97, 677/97, 679/97
passed by learned Judicial Magistrate, First Class, Special Court
are hereby quashed and set aside, so also the order passed by t he
learned Ad-hoc Additional District Judge in Criminal Revision NO.
408/2006, 409/2006 and 410/2006 is hereby quashed and set
aside.
27] In the circumstances of the case, learned Magistrate is
::: Downloaded on - 31/03/2026 20:11:49 :::
21
directed to expedite the trial of rest of the accused by conducting
the same on day to day basis.
28] It is also made clear that this order shall not prevent the
tial court from taking cognizance of any offence, noticed to
have been committed by this applicant, under section 319 of
Cr.P.C. during the course of trial.
Rule is made absolute in the aforesaid terms.
JUDGE
smp.
::: Downloaded on - 31/03/2026 20:11:49 :::
IN THE HIGH COURT OF JUDICATURE AT BOMBAY:
NAGPUR BENCH:NAGPUR
CRIMINAL APPLICATION NO.2760 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
000
CRIMINAL APPLICATION NO.2761 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
000
CRIMINAL APPLICATION NO.2762 OF 2006
Amit Mohan Inder Mohan Sharma ...Applicant
versus
M/s Mamta Agency & others ...Respondents
Mr. B.P. Bhatt, Advocate for the applicant
Mr. A. Shelat, Advocate for respondent no.1
A.P.P. for respondent no.1
0000
CORAM: S.R. DONGAONKAR, J.
DATE:10/1/2007
COMMON JUDGMENT
Rule.
Rule returnable forthwith. Heard finally with consent of
::: Downloaded on - 31/03/2026 20:11:49 :::
2
parties.
All these applications under section 482 of Criminal
Procedure Code are directed against the common order passed by
th
the 10 Ad-hoc Additional Sessions Judge, Nagpur in Criminal
Revision Application No.408/2006, 409/2006 and 410/2006 filed by
the applicant, to challenge the order of issue of process against
him for the offence punishable under section 138 of Negotiable
Instruments Act [hereinafter referred to as Act for the sake of
convenience], in Criminal Complaint Cases No.676/1997,
677/1997, 679/1997 dated 23.8.2005 by which learned Magistrate
had rejected the application of the applicant for recalling of the
process against him for the offence under section 138 of the Act.
2] Facts which are necessary for the disposal of these
applications can be stated thus. The respondent no.1 had filed
complaints against the present applicant who is accused no.4 in
these complaint cases, for the offence punishable under section
138 of the Act and 420 of the I.P.C. As stated above the
complainant had filed these complaints under section 138 of the
Act and 420 of I.P.C. alleging that this accused [accused no.4]
along with other accused i.e. no. 2, 3 and 5 are the Directors of
accused no.1 company - A.U. Roller Flour Mill Private Limited. They
had business dealings with the complainant's firm i.e. M/s Mamata
Agency. During the business transaction, they had issued cheque.
Three cheques were issued on Allahabad Bank, Nagpur on
28.10.1997 and 21.10.1997. They were dishonoured. After due
compliance of the necessary provisions of issuing notices etc. as
the amount was not paid, the complainant filed relevant complaints
for offence under section138 of the Act read with section 420 I.P.C.
::: Downloaded on - 31/03/2026 20:11:49 :::
3
3] During the said proceedings, the learned Magistrate
passed an order of issue of process against the accused persons
after recording verification statement of the complainant, including
this accused.
4] Learned trial Judge vide his order dated 23.8.2005 heard
the parties and found that the trial court had no powers to recall
the process issued against the accused in view of the observations
of the Apex court in [Subramanian Sethuraman ..vs.. State of
Maharashtra] 2006(1)M.L.J. 626. As such he rejected the
application of applicant for recalling of process.
5] This order was challenged by the applicant before this
Court under section 482 of Cr.P.C. However, in view of the decision
of this Court in [V.K. Jain ..vs.. Pratap C. Padode] reported in
2005(3) Mh.L.J. 778, the liberty was granted to the applicant to
move the Sessions Court in its revisional jurisdiction under section
397 of Cr.P.C. to challenge the said order of issue of process.
Accordingly, the applicant approached the Sessions Court under
section 397 Cr.P.C. bearing Criminal Revision no.408/2006,
409/2006 and 410/2006 to challenge the order of issue of process.
After hearing both the sides, the learned Ad-hoc Additional
Sessions Judge rejected the revision applications of the applicant
i.e. said applications were dismissed vide order dated 10.7.2006.
This order is challenged in these applications.
6] It may be stated that the learned Ad-hoc Additional
Sessions Judge while rejecting the applications of the applicant has
::: Downloaded on - 31/03/2026 20:11:49 :::
4
found that the factum of resignation by the applicant dated
6.10.1997 has to be considered at the time of trial. He has also
found that the judgment referred by the applicant to contend that
the allegations as made out in the complaint are not sufficient to
attract the offence under section 138of the Act as well as section
420 Cr.P.C., does not support him. He also found that this is not a
case of complete absence of allegations in the complaint to
constitute the offences against the applicant. He has also observed
that the form no.32 which is placed on record is a copy and is not
sufficient to hold that the applicant seizes to have any
responsibility in the business of the accused since 6.10.1997. Apart
from this, in the judgment, he has observed that the applicant has
not applied for condonation of delay in filing revision application
and the same was barred by limitation. However, he has observed
that “However these applications are being dismissed on merits
and not merely on limitation.” This order as stated above is
challenged in these applications.
7] Learned counsel for the applicant - Shri Bhatt has
submitted that the delay in preferring the revision application
before the Sessions Court was not because of the fault of the
applicant, but it was because of the change in the principle of law
as regards the maintainability of an application under section 482
of Cr.P.C. to challenge the order of issue of process. On rejecting
the application for recalling the order of issue of process ,
according to him, this application under section 482 of Cr.P.C. was
maintainable as the applicant would be facing the trial though he is
not at all liable for the alleged offences. He has relied on certain
authorities to contend that the offence under section 138 of Cr.P.C.
::: Downloaded on - 31/03/2026 20:11:49 :::
5
is not at all made out when the Director has tendered the
resignation, which he can tender it even unilaterally and it is
necessary for the company to accept the same and form No.32
and its acceptance by the Registrar of Companies is mere a
formality. Therefore, he has contended that when it is prima facie
established that the applicant has resigned from the accused
company w.e.f. 6.10.1997, he is not liable for any transaction
which the company did thereafter including in the present case the
liability of dishonour of the cheques issued by the company under
section 138 of the Act as the same were issued after 6.10.1997.
8] According to him, allegations in the instant complaints
are not sufficient to attract the action against the applicant under
section 138 of the Act and therefore, when there are no sufficient
allegations against applicant to show that at the time of issue of
relevant cheque he was responsible for the business of the
accused - company; he can not be proceeded under section 138 of
the Act or under section 420 of I.P.C. and he should not be
required to face the trial despite this situation; only on the ground
that the said point can be decided at the time of trial, according to
him this would sheer abuse of process of law and therefore,
interference by this court under section 482 of Cr.P.C. to prevent
abuse of process of law and also to secure ends of justice is
warranted.
9] As against this, learned counsel for the respondent - Mr. Shelat
has submitted that the case for alleged offences is made out
against the applicant in the complaints. He was responsible for the
business of the accused - company at the relevant time. Even if it
::: Downloaded on - 31/03/2026 20:11:49 :::
6
is his case that he has resigned from the Directorship of the said
company on 6.10.1997, that fact will have to be established in the
trial and at the threshold at the time of consideration of issue of
process. The same cannot be considered. Further according to him,
this is not a case where this court should interfere under section
482 of Cr.P.C. as the trial has been already delayed. He has also
taken me through the reasons recorded by the Sessions Court and
also other relevant material to contend that as trial is pending
since 1997 and nothing has happened towards the further progress
of the trial, the order under section 482 Cr.P.C. is not at all
warranted. He has pressed into service observations of this court in
2006 ALL MR (Cri.) 438 S. B.& Internatijonal Limited ..vs.. State of
Maharashtra and another] and also observations of the Apex Court
in AIR 1992 SC 604 State of Haryana ..vs.. Bhajanlal in his support.
10] In order to consider the rival contentions of the parties, it
is necessary to bear in mind as to what material is on record
against the applicant (accused no.4) in the complaint. The reading
of the relevant complaint would show that the complainant has
alleged in paragraph 2 of the complaint thus:
“2- That, the accused no.1, is a private limited
company and accused No.2 to 5 being its Directors are
used to purchase goods i.e. wheat on credit from the
complainant firm.”
In paragraph 3 the complaint it is alleged :
“3- - - - - -The accused No.5 on behalf of all accused
had issued two account payee cheques - - - - - - -”
In paragraph 4 the complainant has stated :
“4-...........Thus one thing is very clear then crystal that
::: Downloaded on - 31/03/2026 20:11:49 :::
7
the accused no.5, had issued the above cheques
deliberately knowingly and with malafide intention to
cheat and defraud the complainant.- - - -”
Further in paragraph 5 it is contended:
“5. ...........The accused No.s 1 & 4 have received the
said notice on 3.11.1997, but accused nos. 2,3 4 have
deliberately avoided to receive the same.............”
11] On perusal of these contents of the complaint, it would
be seen that the allegations against the present applicant is that
he was purchasing goods from the complainant as the director of
the said accused company. No where it clearly depicts that the
accused no.4 was in active Directorship of the accused - company
at the time of issuance of cheque. The complaint only says that the
accused no.5 had issued a cheque on behalf of the rest of the
accused. Therefore, unless there is specific material on record to
show that this applicant was active as Director of the Accused
company at the relevant time, he would not be liable for the
offence under section 138 of the Act, in view of provisions of
section 141 of Negotiable Instruments Act which reads thus:
Sec. 141 - Offence by companies . -- (1) If the person
is committing an offece under Section 138 is a
company, every person who, at the time the offence
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, shall be deemed to
be guilty of the offence and shall be liable to be
proceeded against and punished accordingly;
Provided that nothing contained in this sub-
section shall render any person liable to punishment if
he proves that the offence was committed without his
knowledge, or that he had exercised all due diligence
to prevent the commission of such offence;
::: Downloaded on - 31/03/2026 20:11:49 :::
8
[Provided further that where a person is
nominated as a Director of a company by virtue of his
holding any office or employment in the Central
Government or State Government or a financial
corporation owned or controlled by the Central
Government or the State government, as the case may
be, he shall not be liable for prosecution under this
Chapter.]
(2) Notwithstanding anything contained in sub-section
(1), where any offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the
part of, any director, manager, secretary or other
officer of the company, such director, manager,
secretary or other officer shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
Explanation. -- For the purposes of this section,--
(a) “company” means any body corporate and
includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a
partner in the firm.
12] It is further necessary to bear in mind that rest of the
accused have not challenged the order of issue of process and they
are facing the trial, which include the accused - company as well as
rest of the Directors.
13] At this stage it is necessary to consider the following
authorities pressed into service by the learned counsel for the
applicant.
In D.P.Jain..vs... 2006 (5) M.L.J. 705, this court has
::: Downloaded on - 31/03/2026 20:11:49 :::
9
observed in paragraph 11 thus:
“11. I have carefully considered the rival submissions.
I have also gone through the case law cited at the bar.
It may be noted that in order to fasten vicarious liability
against the partners of the firm, there must be clear,
specific and unambiguous allegations made in the
complaint. Every partner of the firm cannot
automatically be roped in. The complainant can
proceed only against such persons who at the time the
offence was committed by the firm, were in-charge and
were responsible to the firm for the conduct of its
business. Such persons must be in over all control of
the day-to-day business of the firm. A complainant
based on vague statement that one of the partners
signed the cheque on behalf of the partners and the
cheque was issued towards the amount due and
payable by all the partners is not a complaint in the
eye of law. The accusation against each partner must
be specific and unambiguous. The role played by each
of the accused must be clearly stated in the complaint.
No complainant can be permitted to launch prosecution
against all the partners of a firm without there being a
proper foundation in the complaint itself about the
actual role played by them at the material point of time
when the office is committed by the firm. No
prosecution would lie against a partner on the simple
accusation in the complaint that such person was the
partner of the firm.
It is pertinent to note that in paragraph 9 and 10 of the said
judgment, this court has considered the observations of the Apex
Court in 2001 (10) SCC 218..... and 2002 7 SCC 755, 2005 Cr.L.J.
4249.
9. The learned counsel for the applicants submitted
that under Section 141 of the Negotiable Instruments
Act, if the person committing an offence under Section
138 is a company (which includes a firm), every person
who, at the time the offence was committed, was in
charge of, and was responsible to the company/firm for
::: Downloaded on - 31/03/2026 20:11:49 :::
10
the conduct of the business of the company/firm, as
well as the company/firm, shall be deemed to be guilty
of the offence. The learned counsel for the applicants
submitted that in order to attract the provisions of
section 138of the Negotiable Instruments Act the
complainant must make averment in the complaint
itself that every person, who is named as an accused,
was responsible to the firm for the conduct of the
business of the firm. In the absence of such averment
no vicarious liability can be fastened on the partner of
the firm. The learned counsel for the applicants pointed
out that in para no. 1 of the complaint, it is averred that
the “complainant is a company registered under the
Indian Companies Act, 1956 and accused no. 1 is a
partnership firm of which accused no. 2 to 4 are the
partners”. In para No. 2 of the complaint it is averred
that “accused no. 2 on behalf of all the accused issued
a cheque in favour of the complainant and that the said
cheque was issued towards the amount due and
payable by all the accused to the complainant and in
discharge of preexisting debt and liabilities”. The
learned counsel for the applicants vehemently
submitted that it is nowhere averred in the complaint
that accused nos. 2, 3 and 4 were incharge of and were
responsible to the firm for the conduct of the business
of the firm. In the absence of such an averment, it
cannot be said that they are guilty of the offence
punishable under sectin 138 of the Negotiable
Instruments Act. In support of his submissions, the
learned counsel for the applicants placed his reliance on
the following cases:
(i) In K.,P.G.Nair vs. Jindal Menthol India Ltd., (2001)
10 SCC 218, it is held that :
“In view of section 141 a person other than the
company can be proceeded against under those
provisions only if that person was in charge of
and was responsible to the company for the
conduct of its business. Though words of section
141 (1) need not be incorporated in a complaint
as magic words but substance of the allegations
read as a whole should answer and fulfil the
::: Downloaded on - 31/03/2026 20:11:49 :::
11
requirements of the ingredients of the said
provisions (for being proceeded against for an
offence which he alleged to have committed).
On the above premise, it is clear that the
allegations made in the complaint do not either
in express words or with reference to the
allegations contained therein make out a case
that at the time of commission of the offence the
appellant was in charge of and was responsible
to the Company for the conduct of its business.
Therefore, in this case the High Court has
misdirected itself and committed an error in
coming to the conclusion that the requirements
of Section 141 are prima facie satisfied insofar
as the appellant is concerned. The proceedings
in question for the alleged offence under Section
138 as against the appellant are quashed.”
(ii) In Katta Sujatha (Smt.) vs. Fertilizers and
Chemicals Travancore Ltd. and another,m (2002) 7
SCC 655, it is held that:
In short the partner of a firm is liable to be
convicted for an offence committed by the firm if
he was in charge of and was responsible to the
firm for the conduct of the business of the firm
or it is proved that the offence was committed
with the consent or connivance of, or was
attributable to any neglect on the part of the
partner concerned.”
(iii) In Monaben Ketanbhai Shah and another vs.
State of Gujarat and others, 2004 Cri. L.J. 4249, it is
held that :
Section 141 does not make all partners liable for
the offence. Criminal liability has been fastened
on those who, at the time of commission of
offence, was in-charge of and was responsible to
firm for conduct of business of firm. These may
be sleeping partners. Primary responsibility is
on complainant to make necessary averments in
complaint so as to make accused vicariously
::: Downloaded on - 31/03/2026 20:11:49 :::
12
liable. For fastening criminal liability, there is no
presumption that every partner knows about the
transaction. The obligation of appellants to
prove that at the time the offence was
committed they were not in-charge of and were
not responsible to the firm for conduct of
business of firm, would arise only when
complainant makes necessary averments in
complaint and establishes that fact. The instant
case is of total absence of requisite averments
in complaint. Therefore, order of Magistrate
directing discharge of accused persons, holding
that there are no allegations in complaint
making out offence against them is proper.”
10. The learned counsel for non-applicant no. 1/
complainant, on the other hand, submitted that the
pleadings made by the complainant in the complaint
are sufficient to attract the provisions of section 138 of
the Negotiable Instruments Act. He pointed out that it
has been specifically averred that accused no. 2 issued
cheque in favour of the complainant on behalf of all the
accused and that the same was issued towards the
amount due and payable by all the accused to the
complainant in discharge of their pre-existing debt or
liabilities. He submitted that no more pleading is
necessary. It is for the accused persons to show that
the offence was committed without his knowledge or
that he had exercised all due diligence. The burden in
this regard has to be discharged by the accused
persons during trial. Thus the complaint is not liable to
be quashed as urged on behalf of the applicant. In
support of his submissions, the learned counsel for non-
applicant no.1/ complainant placed his reliance on the
following cases:
(i) Orient Syntex Ltd. and others vs. Besant
Capital Tech. Ltd., 1999(3) Mh.L.J. 413 = 2000
Cri. L.J. 210 (Bombay)
(ii)S.V.Muzumdar and others vs. Gujarat State
Fertilizer Co. Ltd., and another, 2005(3) Mh.L.J.
754 (SC).”
14] In 2005 Cr.L.J. 4140 S.M.S.Pharmaceuticals Ltd.... vs...
::: Downloaded on - 31/03/2026 20:11:49 :::
13
Neeta Bhalla and another, the Apex Court in paragraph 20 has
observed thus;
“20............ (a) It is necessary to specifically aver in a
complaint under Section 141 that at the time the
offence was committed, the person accused was in
charge of and responsible for the conduct of business of
the company. This averment is an essential
requirement of Section 141 and has to be made in a
complaint. Without this averment being made in a
complaint, the requirements of Section 141 cannot be
said to be satisfied.
(b) The answer to question posed in sub-para
(b) has to be in negative. Merely being a director of a
company is not sufficient to make the person liable
under section 141 of the Act. A director in a company
cannot be deemed to be in charge of and responsible to
the company for conduct of its business. The
requirement of Section 141 is that the person sought to
be made liable should be in charge of and responsible
for the conduct of the business of the company at the
relevant time. This has to be averred as a fact as there
is no deemed liability of a director in such
cases..................”
15] Here is case where the applicant says that he has
resigned from the applicant - company on 6.10.1997 i.e. admittedly
prior to the issuance of the cheques by the accused - company, by
the accused no.5.
16] In this behalf, the observations of the Division Bench of
this Court in 2002(2) Mh.L.J. 36 - Saumil Dilip Mehta vs. State of
Maharashtra and others, in paragraph 6 and 7 needs to be seen:
“6. The submissions advanced by the litigating parties
are touching an important point involved in this matter
which make us to express our views on the point
::: Downloaded on - 31/03/2026 20:11:49 :::
14
whether a director of a public or private limited
company can resign unilaterally and that too by writing
a letter to the chairman of the said company or its
secretary. Is it necessary for such a director to fill up
form NO. 32 and is obliged to give a notice or
intimation to that effect to the Registrar of Companies?
The question arises for our adjudication is whether that
particular director is obliged to give such information to
the Registrar of Companies and whether he cannot
retire without complying with the said requirement.
Keeping in view the provisions of the Companies Act,
the relevant articles of the Constitution of India, we
come to the conclusion that a director of the public
limited company or private limited company can tender
his resignation unilaterally and without filling in form 32
and without sending a notice to the Registrar of
Companies. It is clear that the filling in the said form
and giving due intimation and information to the
Registrar of Companies is the duty of the Company
Secretary and not of an individual director. Suffice it
to say that what he has to do is to send in writing a
letter informing either the chairman or the Secretary of
the Company, as the case may be, his intention to
resign from the post of the Director of the said
company. Thereafter the said letter has to be moved in
the meeting of the directors of the company, may be
ordinary meeting or may be extra-ordinary or special
meeting, as the case may be, and the Board of
Directors have to take a decision whether the Board is
accepting his resignation or not. An intimation should
be sent to such director and after such resolution is
passed, the Company Secretary is under the obligation
to comply with the legal formalities for giving a
finishing touch to the resolution which has been passed
in the said meeting of the Board of Directors. It is for
the Company Secretary to fill in the forms as prescribed
and to give due information and intimation to the
Registrar of Companies, as the law requires.
Thereafter, it has to be so mentioned in all prescribed
registers of the Company, accounts and balance sheet
of the company and thereafter the said fact is to be
brought to the notice of the members of the Company
as early as possible and at the latest in annual general
::: Downloaded on - 31/03/2026 20:11:49 :::
15
meeting.
7. When a director has tendered his resignation and
the Board of Directors has accepted it and has acted on
it, such director cannot be held liable for the liability
incurred by the said company after the date of
acceptance of his resignation except the liability which
has been incurred by him for purchase of shares of the
said company and noting more.”
17] It would be clear that if the Director tenders his
resignation prior to issuance of the cheque, he would not be liable
for the said offence if any committed by the company - accused.
Thus tender of resignation and issuance of Form no.32
needs to be proved prior to the commission of the offence.
18] At this stage it is necessary to consider the observations
of this court in 2006 ALL MR (CR) 438 S.B. & T. International Ltd.,
vs. State of Maharashtra and Anr., wherein in paragraph 3 it is
observed thus:
“3. This petition questions the correctness of the
st
decision of the 1 d hoc Additional Sessions Judge,
st
Palghar dated 1 August, 2005, in Crim. Rev.
Application NO. 41 of 2005. By the said order the
Sessions Judge has allowed the revision application
thereby setting aside the order passed by J.M.F.C.
th
Vasai, dated 7 August, 2002 issuing process under
Section 138 of the Negotiable Instruments Act against
respondent no. 2 in CC No. 3582 of 2002. The basis on
which the Sessions Judge has allowed the revision
application in favour of respondent NO. 2 is that
respondent NO. 2 had produced form No. 32 to
substantiate the plea that at the relevant time
respondent no. 2 was not the director of the accused
company. No other aspect has been considered in the
::: Downloaded on - 31/03/2026 20:11:49 :::
16
judgment of the Sessions Judge. In my opinion, the
petitioner /complainant is justified in contending that
the question whether Respondent no. 2 continued to be
the director in the accused company at the relevant
time is a matter for trial. Indeed form No. 32 is a public
document but even then the said document will have to
be proved in evidence in defence by the accused. That
by itself cannot be the basis to hold that no offence is
made out aginst the concerned accused. This aspect
rd
has been considered in the decision dated 23
December, 2004, in the case of (Vijay Mallya vs. State
of Maharashtra and other) Crim. Application NO. 4827
of 2004. Applying the principles stated therein this
petition ought to succeed. I am conscious of the fact
that the Sessions Court adverted to several other
decisions in the impugned judgment buy in the
abovesaid judgment delivered by me I have considered
most of the judgments referred to in the impugned
judgment and taken the view that production of Form
No. 32 by itself is not sufficient. Accordingly, this
petition is allowed. The impugned judgment is set
aside with the directions to the trial Court to proceed
with the trial in accordance with law uninfluenced by
any observations made in the impugned judgment or
for that matter in the present order.”
19] It clearly seems that in this case the basis on which the
Sessions Judge had allowed the revision application of the accused
was because of the form no.32 to substantiate his plea that he was
not Director of the accused - company at the relevant time and no
other aspect was considered in the said judgment by the learned
Sessions Judge.
20] Further in 2001 Bombay 655 [Dushyant D. Anjira vs.
Wall Street Finance Ltd. and Another, it has been held that, when
there was no reason to disbelieve the form no.32, it would liable to
be accepted for the purposes of showing that the said director was
::: Downloaded on - 31/03/2026 20:11:49 :::
17
not responsible for the business of the company after the
resignation.
21] Here is the case where the applicant has produced the
document of form no.32 which was accepted by the Registrar of
the Companies at later date. The said change appears to have
been accepted in December 1997, but it clearly seems to have
been accepted, that the date of resignation is 6.10.1997 vide
certified copy produced on record.
22] In these circumstances, when there is no sufficient
material on record to show that this accused - applicant was
working in the accused - company as Director at the time of
issuance of cheque i.e. after 6.10.1997, he can not be held liable
for the alleged offences as in the complaint there are only general
allegations and in specific against accused no.5 to the effect that
he had issued cheque on behalf of the company as well as other
Directors. There is no contention & ex-facie established fact that
this accused has concocted this form no.32 or his resignation,
dated 6.10.1997 to avoid the liability of the accused arising out of
the complaints filed by the complainant. I have already pointed out
above that the applicant -accused no.4 has filed an application for
recalling of process or to challenge the issue of process order and
therefore, unless there is sufficient material on record to show that
this accused was taking active part in the business or was
responsible as Director even after 6.10.1997 or at least there is
such allegation in the complaint, ex-facie he can not be held liable
for the offence under section 138 of the Act and 420 I.P.C. When
this is obvious, there can be no substance in the contention that
::: Downloaded on - 31/03/2026 20:11:49 :::
18
this matter should be established at the time of trial because when
ex-facie there is no material in the complaint or otherwise to show
that the accused can be proceeded for the offence under section
138 of Cr.P.C. or 420 of I.P.C., asking him to face the trial would
clearly to be an abuse of process of law. In my opinion, even if
there is delay in challenging that order, the delay would not be
fatal and would not put constraints on this court to exercise the
powers under section 482 of Cr.P.C. to quash the order of issuance
of process against the accused - applicant.
23] In Bhajanlal's case [AIR 1992] SC 604 the Apex Court
observed in paragraph 109 thus:
“109. We also give a note of caution to the effect that
the power of quashing a criminal proceeding should be
exercised very sparingly and with circumspection and
that too in the rarest of rate cases; that the Court will
not be justified in embarking upon an enquiry as to the
reliability or genuineness or otherwise of the allegations
made in the F.I.R. or the complaint and that the
extraordinary or inherent powers do not confer an
arbitrary jurisdiction on the Court to act according to its
whim and caprice.”
24] Here is the case where there is no sufficient material in
the complaint or otherwise to show that the accused applicant was
acting in the affairs of the company after 6.10.1997. It is also not
shown that there is reason to believe that he must have concocted
the resignation of 6.10.1997 to avoid liability and responsibility
arising out of the transactions referred in the complaint. This is not
an inquiry as to whether the factum of resignation of the applicant
is established or not. Here is case where applicant says that he has
resigned on 6.10.1997 from the affairs of the company as well as
::: Downloaded on - 31/03/2026 20:11:49 :::
19
Directorship of the accused - company. The complainant himself
says that accused no.5 on behalf of the company issued cheque
and only allegation against accused no.4 is that he was purchasing
articles from the complainant. When there is certified copy of the
form no.32 and its acceptance by Registrar of Companies on
record, it has to be held that the accused no.4 - applicant had no
responsibility in the affairs of the company or issuance of the
relevant cheques at the relevant time so as to attract liability
under section 138 of the Act or 420 of I.P.C. Hence exercise of
power under section 482 Cr.P.C. by this court would not be an
arbitrary exercise of power.
25] Learned counsel for the respondent has contended that
the applicant has been moving courts after the courts and he is
delaying the trial and he has exhausted the remedy under section
482 Cr.P.C. earlier and therefore, this application would not lie. I
am unable to accept this contention for the simple reason that the
applicant had sought liberty to file revision application under
section 397 of Cr.P.C. because of the judgment of this court in V.K.
Jain ..vs.. Pratap 2005(3) Mh.L.J. 778. Therefore, if at the relevant
time this court was of the view that the application under section
482 of Cr.P.C. was not maintainable as remedy under section 397
Cr.P.C. is availablebefore Sessions Court and applicant chooses to
avail that remedy, that would not dis-entitle him from preferring
another application under section 482 of Cr.P.C. particularly in the
circumstances of the case. True that the trial of the accused has
been already delayed and cheque amount is quite a large amount,
but that fact by itself will not be sufficient to reject the application
of the applicant as it is otherwise tenable in law. Merely because
::: Downloaded on - 31/03/2026 20:11:49 :::
20
the said point can be decided at the time of the trial, that fact by
itself will not prevent this court from exercising powers under
section 482 of Cr.P.C. to prevent the abuse of process of law. At the
cost of repetition, I may again point out that there are no sufficient
allegations in the complaint to show that this applicant was dealing
with the business of the company at the time when the cheques
were issued, he has also produced documentary evidence on
record to show that he had resigned from the Directorship of the
company on 6.10.1997 i.e. much prior to the issuance of the
cheque. Complainant himself says that the accused no.5 had
issued cheque on behalf of the company and there is no material
on record to show that the accused has either, cheated the
complainant or any way was responsible for issuance of the false
cheques or was responsible for the affairs of the accused -
company. Therefore, accused no.4 i.e. applicant, can not be asked
to face the trial, in such circumstances. In my opinion, the exercise
of power under section 482 of Cr.P.C. is clearly warranted to quash
and set aside the order of issue of process against this accused no.
4 - applicant, in the relevant complaint case.
26] Therefore, the orders of issue of process against this
applicant in Criminal Complaint Case No. 676/97, 677/97, 679/97
passed by learned Judicial Magistrate, First Class, Special Court
are hereby quashed and set aside, so also the order passed by t he
learned Ad-hoc Additional District Judge in Criminal Revision NO.
408/2006, 409/2006 and 410/2006 is hereby quashed and set
aside.
27] In the circumstances of the case, learned Magistrate is
::: Downloaded on - 31/03/2026 20:11:49 :::
21
directed to expedite the trial of rest of the accused by conducting
the same on day to day basis.
28] It is also made clear that this order shall not prevent the
tial court from taking cognizance of any offence, noticed to
have been committed by this applicant, under section 319 of
Cr.P.C. during the course of trial.
Rule is made absolute in the aforesaid terms.
JUDGE
smp.
::: Downloaded on - 31/03/2026 20:11:49 :::