VIJAY HIMATLAL MODI Vs. STATE OF GUJARAT

JUDGEMENT

(1.) Since common question of law and facts arise in these group of applications, on an identical complaint filed by respondent no.2 herein against the present applicant, who is arraigned as an accused, by this common judgment and order, these applications are heard and decided together.

(2.) RULE in each of the application. Shri Rakesh Patel, learned Additional Public Prosecutor waives service of notice of rule on behalf of respondent no.1 - State and Shri Rajesh Dewal, learned advocate waives service of notice of rule on behalf of respondent no.2 in each of the applications.

(3.) Shri Deep D. Vyas, learned advocate for the applicant in each of the applications submitted that there is no specific averments made in the complaint so as to proceed against the applicant for an offence punishable under Section 138 of the Act. He has further submitted that in absence of specific averments in the complaint, except bald statement, that all the Directors were responsible for the day-to-day affairs of the Company, the applicant could not have been prosecuted for an offence punishable under Section 138 of the Act as the principal offender is the Company. He has further submitted that though there is an averment that the applicant is a Director and he is looking after the day-to-day business of the Company and is responsible for the business of the Company, it is not at all supported by any other averment in the complaint nor by any document. He further submitted that, as such, the applicant was appointed as Additional Director of the Company under Section 260 of the Companies Act, 1956. He further asserted that as Additional Director of the Company he had not attended any meetings of the Board of Directors of Home Trade Link ('HTL' for short) or received any remuneration from it. He has further asserted that he is not, as an Additional Director, involved in the decision making process or the day to day affairs or the administration of the Company. On the contrary, the applicant, as an Additional Director, ceased to be the Director by operation of law under Section 283(g) of the Companies Act, 1956 even prior to issuance of any cheque in question. He drew attention of the Court to an order passed by the Securities and Exchange Board of India dated 16.02.2006 under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 in the matter of HTL against its Directors, including the present applicant. His above said assertion with regard to non-participation in the day-to-day affairs, is supported by an order passed by Securities and Exchange Board of India, a statutory authority, under the statutory provisions, more particularly, at paragraph 5.4 of the order passed by it, which is annexed with the petition at page 19, and therefore, he has prayed to quash the process issued against him as Director of HTL where there is no averment in the complaint and not supported by any other material evidencing the participation of the applicant in the day-to-day affairs of the Company whereas the statutory order passed by Securities and Exchange Board of India under the statute clearly establishes that the applicant is not the Director, who looks after the day to day affairs of the Company. Over and above that, being an Additional Director, he ceases to be so by operation of law under Section 283(g) of the Companies Act, 1956 , prior to issuance of cheque in question.