S.K. SHARMA Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) BY this order, I shall dispose of two petitions i.e. Crl. Misc. No. 42261-M of 2001 and Cr. Misc. No. 43048-M of 2001 filed by S.K. Sharma and A.K. Mahajan who were nominated as Directors on the Board of M/s. Cepham Agencies Private Limited (hereinafter referred to as 'accused Company') on behalf of the Punjab State Industrial Development Corporation (hereinafter referred to as 'the Corporation') by virtue of an agreement entered into between the accused Company and the Corporation. For the sake of reference, the facts are being noticed from Crl. Misc. No. 42261-M of 2001.

(2.) THE Registrar of Companies filed a complaint under Section 58-A(x) of the Companies Act, 1956 against the accused company and its Directors including the petitioners on the allegation that the accused-Company had failed to make repayment of deposits accepted by it. The depositors approached the Company Law Board (hereinafter referred to as 'the Board') to seek order for getting payment of their deposits. Thereafter, the Board directed the accused-Company to furnish information regarding outstanding deposits. When the matter was heard by the Board, the Managing Director of the accused Company was personally present and he submitted a repayment schedule before the Board. The repayment Schedule was accepted by the Board. Subsequently, when the accused- Company did not own the undertaking given before the Board and failed to submit affidavit regarding compliance of the undertaking, the Board directed to file a complaint against the accused Company. On the said complaint dated 17.9.1999, Annexure P-3, all the Directors including the petitioners were summoned vide order dated 25.10.2000, Annexure P-4. The petitioners have challenged the aforesaid complaint as well as the summoning order, on the ground that the petitioners are only nominated Directors in the accused- Company on behalf of the Corporation. They have no concern with the day to day business of the accused-Company nor they have any control over any authority who issued FDRs to the parties regarding the business transactions. The nominated directors are appointed by the Corporation and such like financial institutions with an object to protect their interests in the Company to whom financial assistance is given by them. It has been further stated that in view of Section 41-A of the State Financial Corporation Act, 1951 (hereinafter referred to as 'the Act'), no suit or prosecution or other proceedings shall lie against any person appointed as Director Administrator, Managing Agent or Manager by the Financial Corporation under Section 27 or Section 32-A of the Act.

(3.) LEARNED counsel for the petitioners referred to notification dated 13.5.1988, Annexure P-5 issued by the Ministry of Finance, Department of Economic Affairs, Government of India. This notification was issued in exercise of powers conferred by sub-section (1) of Section 46 of the Act to the effect that provisions of Sections 29, 30, 31, 32, 32-A to 32-F of the Act shall be applicable to the Corporation. Subsequently, another notification was issued on 5.10.1989 by the Central Government which provides that in exercise of powers conferred by sub-section (1) of Section 46 of the Act, the provisions of Sections 27, 41, 41-A and 44 of the Act shall apply to the Corporation. Learned counsel for the respondent has denied the factum of issuance of these notifications in his reply.