M.R. KARMACHANDRAN, EXECUTIVE DIRECTOR, KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. Vs. MUTHOOT LEASING & FINANCE LTD. AND STATE OF KERALA

JUDGEMENT

(1.) SOLITARY legal question arising for decision in this proceedings under Section 482 of the Code of Criminal Procedure (for short, "Cr.P.C.") is the following:

(2.) THE fate of the case is dependant on the resolution of the legal question posed above. Petitioner contended that he is the Executive Director of Kerala State Industrial Development Corporation (in short, "KSIDC"). It is a Government company in which the entire shares are held by the State. It is also contended that the Central Government, by virtue of powers under Section 46 of the State Financial Corporations Act, 1951 (in short, "Act of 1951"), have directed that the provisions of the said Act shall apply to KSIDC. Accordingly, KSIDC has become a financial corporation controlled by the State Government under the Act of 1951.

(3.) PETITIONER was in full time employment in KSIDC. It had granted a loan of Rs.90,00,000/ - to the 1st accused company. In accordance with the provisions of Section 27 of Act of 1951, KSIDC appointed the petitioner as nominee Director on the Board of Directors of the 1st accused company. Annexure -A is the certified copy of Form No. 32 issued by the Registrar of Companies showing the petitioner as a nominee Director of the 1st accused company. In fact, the 1st accused company committed default in repayment of loan advanced by the KSIDC. Therefore, KSIDC withdrew the petitioner as its nominee from the Board of Directors of the 1st accused company by Annexure -B, letter. That is dated 16.12.1996. Allegation in the complaint is that the 1st accused company, after availing a loan from the complainant/1st respondent, committed default in repayment. Hence the prosecution against the company and its Directors. However, petitioner (5th accused) is not liable to be proceeded in this case under Section 138 of the NI Act for the abovesaid reasons as well as for the reason that Section 141 of the NI Act dealing with offences committed by companies gives protection to a nominated Director. The relevant proviso of Section 141(1) of the NI Act reads as follows: