OM PRAKASH KHAITAN Vs. KESHARIYA INVESTMENT LIMITED

JUDGEMENT

(1.) 0m Prakash Khaitan, Solicitor, who was a Director of Shree Keshariya Investment Limited during the material period, seeks relief under Section 633 of the Companies Act, 1956 (for short 'the Act'), from liability arising out of a number of defaults and breaches committed by the Company in relation to its obligations under the Employees Provident Fund Act, Sales Tax Act, Employees State Insurance Act, Indian Textiles (Control) Order, Essential Commodities Act, and the Act, on the ground that since November 26, 1974 he ceased to be the Director of the Company ; that he was a Director of the Company by virtue of being its legal adviser and never took any active part in the management and the affairs of the Company; that he was on the Board of a number of Companies as such legal adviser but has not concerned himself with the day to day affairs of the Company or its management; and that he has always acted honestly and reasonably and has given proper advice to the management to act in accordance with law in relation to matters that were brought before the Board.

(2.) The application is opposed by the various authorities, including the Registrar of Companies, primarily on the ground that by virtue of being a Director of the Company the petitioner was liable for the various defaults and breaches of which the Company was guilty and that if the petitioner acted honestly or the breaches and defaults were committed in spite of the efforts of the petitioner to the contrary the petitioner would be discharged from obligation in appropriate proceedings and there was, therefore, no ground to relieve the petitioner of the liability in the present proceedings.

(3.) In his affidavit of February 19, 1977 the petitioner has given details of the defaults and breaches, which have since become subject matter of prosecutions, pending in the Magistrate's court in Baroda and Ahmedabad. In para 8 of the affidavit he has also specified the defaults and breaches in respect of which he apprehends proceedings. Tt was not disputed on behalf of the petitioner that this Court has no jurisdiction with regard to the criminal liability arising out of defaults and breaches which have already become subject matter of prosecution and that for any relief in relation to such defaults etc. the proper remedy of the petitioner would be an application under sub-section (1) of Section 633 to the Court hearing the cases. The only question that, therefore, requires consideration is whether there is a case for the petitioner being excused under sub-section (2) of Section 633 of the Act of liability on account of defaults and breaches of the Company in respect of which proceedings are apprehended.