Citation Codes

Equivalent Citations

citation codes

Case Number

Cri. W.P No. 1238 of 2010 with Cri. Appln. Nos. 1229 to 1239 of 2010

Attorney(S)

A.P Mundargi, Senior Counsel with Niranjan Mundargi with Ms. Renuka R. Laxmeshwar instructed by Prashant Gawali
Anand Poojari instructed by Mrs. S.I Joshi instructed by S.I Joshi and Co.
For State: D.R More, APP

Judges

V.M Kanade, J.

Acts

SECTION 141 NEGOTIABLE INSTRUMENTS ACT
SECTION 202 CRIMINAL PROCEDURE CODE
section 313 sub-clause (5) of the Criminal Procedure Code,
SECTION 138 NEGOTIABLE INSTRUMENTS ACT
SECTION 313 CRIMINAL PROCEDURE CODE
SECTION 200 CRIMINAL PROCEDURE CODE

See more information ...

Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The applicants/petitioners challenged the learned Metropolitan Magistrate, 12th Court, Bandra's order issuing process in complaints filed by Respondent No.1 (L. and T. Finance Limited) under section 138 of the Negotiable Instruments Act. Separate complaints were filed because multiple cheques issued for repayment of a loan were dishonoured. The complaints relate to a loan-cum-hypothecation agreement dated 24-1-2008 between IDEB Projects Pvt. Ltd. (accused No.1) and L. and T. Finance Limited (complainant). The complainant alleges that cheques issued towards repayment were presented and dishonoured, a demand notice dated 30-3-2009 was served, and on non-payment, complaints under section 138 were filed. Because the subject-matter and grounds for challenging issuance of process were the same across matters, they were heard together and the court disposed of all matters by a common judgment.

Legal Issues Presented

Whether the Bandra Metropolitan Magistrate's Court had jurisdiction to try the complaints, given facts that the cheques were issued and bank of the borrower was situated at Bangalore and clause 3.2 of the loan agreement;
Whether the complaint made sufficient averments against the applicants under the deeming fiction of section 141 of the Negotiable Instruments Act (i.e., whether specific roles of the applicants/petitioners were pleaded);
Whether the learned Magistrate was obliged to postpone issuance of process and hold an inquiry under section 202 of the Criminal Procedure Code because applicants resided outside the Mumbai jurisdiction;
Whether the verification under section 200 of the Criminal Procedure Code was improperly recorded in a cyclostyled format such that issuance of process was vitiated;
Whether alternate directors and non-executive directors (including resignations said to have been filed as Form No. 32) could be prosecuted simultaneously or whether resignation/alternate status barred prosecution at this stage;
Relief as to appearance: whether applicants should be exempted from personal appearance at trial and permitted to have their statements under section 313 Cr.P.C. recorded through counsel under section 313(5).

Arguments of the Parties

Applicants' Arguments

The Bandra Court lacked jurisdiction because the cause of action arose in Bangalore: cheques were issued there and the borrower's bank was situated there; clause 3.2 and the schedule to the loan agreement supported Bangalore as the place of payment.
The complainant mechanically reproduced ingredients of section 141 and failed to specify the applicants' specific roles; reliance was placed on National Small Industries Corporation Ltd. v. Harmeet Singh Paintal to contend that no case was made out against the applicants.
Non-compliance with section 202 Cr.P.C.: since applicants reside outside Mumbai (in Bangalore), the Magistrate ought to have postponed issuance of process and held an inquiry under section 202; the applicants had informed the complainant that they were non-executive directors and not responsible for cheque dishonour.
The verification under section 200 was recorded in a cyclostyled form; reliance on Amarnath Baijnath Gupta v. Mohini Organics Pvt. Ltd. to assert that issuance of process was vitiated.
Alternate directors and non-executive directors should not be prosecuted simultaneously; an alternate director serves only during absence of the original director and must vacate when original returns.
Some applicants had resigned and filed Form No. 32 with the Registrar of Companies; therefore they could not be prosecuted.

Respondent No.1 (Complainant)'s Arguments

Respondent No.1 has its registered office and a Corporate Office in Mumbai (Bandra-Kurla Complex). The demand notice dated 30-3-2009 was issued from the Corporate Office and served on the applicants there through their advocate.
Clause 3.2 of the loan agreement designates the Corporate Office as the place for payment and there was no specific schedule entry designating Bangalore as an alternate payment place; thus payments were payable at the Corporate Office in Mumbai.
Because the notice was issued from the Corporate Office in Mumbai and the complainant carries on business/has its registered office in Mumbai, the Bandra Court has jurisdiction to entertain the complaint; reliance placed on Mrs. Preetha S. Babu v. Voltas.
Specific averments in paragraphs 2 and 7 of the complaint alleged that the applicants were in charge and responsible for the conduct and business of IDEB Projects Pvt. Ltd., and other contested issues were factual and to be decided at trial.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Harman Electronics (P) Ltd v. National Panasonic (India) Ltd.	Proposition that merely because a notice was issued from Mumbai would not by itself confer jurisdiction on a Mumbai Court.	The applicants relied on this case to challenge jurisdiction; the Court considered this authority along with others but concluded jurisdiction existed in Bandra on the basis that the notice was issued from the complainant's Corporate Office and other supporting precedents.
National Small Industries Corporation Limited v. Harmeet Singh Paintal	Standards regarding sufficiency of averments against accused under the deeming fiction in section 141 of the Negotiable Instruments Act.	Applicants relied on this decision to argue insufficiency of averments. The Court held that sufficient averments had been made in paras 2 and 7 of the complaints to invoke section 141 and therefore rejected applicants' reliance on this authority.
Anu Ahluwalia v. Bennett Coleman Company Limited (Order of Delhi High Court)	Applied/referred to para 5 of National Small Industries Corporation Ltd. v. Harmeet Singh Paintal for distinguishing sufficiency of averments.	The applicants sought to distinguish the Delhi High Court order; the Court's reasoning did not adopt this order as a basis to set aside issuance of process and instead found sufficient averments for section 141.
Mrs. Preetha S. Babu v. Voltas	Authority discussing jurisdiction where the complainant carries on business or has registered office and where notice is issued from such place conferring jurisdiction on that Court.	The Court relied on this Division Bench decision (particularly paras 4 and 34) to support the view that Bandra Court had jurisdiction because the complainant's Corporate Office and registered office were in Mumbai and the notice was issued from the Corporate Office.
K. Bhaskaran v. Sankaran Vaidhyan Balan	Principle that a complainant may file complaint at any of the five places where the cause of action has arisen (relating to jurisdiction under section 138).	The Court cited K. Bhaskaran to support the proposition that the complainant could file at a place where the cause of action arose, and used this as part of the basis to hold that Bandra Court had jurisdiction.
Ahuja Nandkishore Dongre v. State of Maharashtra	Referenced in relation to jurisdictional principles concerning where a complainant carries on business or where its registered office is situated.	The Court referred to this authority among others in concluding that jurisdiction lay with the Bandra Court when notice was issued from the complainant's Corporate Office in Mumbai.
Shamsahd Begum v. B. Mohammed	Authority bearing on the jurisdictional rule cited by the Court (place where complainant carries on business/registered office and issuing of notice).	Considered alongside other authorities to conclude that issuance of notice from the complainant's Corporate Office conferred jurisdiction on Bandra Court.
Bansilal Kabra v. Global Trade Finance Ltd	Held by this Court that the provisions of section 202 Cr.P.C. are directory and not mandatory.	The Court relied on its earlier order in Bansilal Kabra to reject the applicants' contention that non-compliance with section 202 Cr.P.C. vitiated the issuance of process.
Amarnath Baijnath Gupta v. Mohini Organics Pvt. Ltd.	Addressed adequacy/form of verification under section 200 Cr.P.C.; applicants relied on it to urge that cyclostyled verification vitiated process.	The Court observed that the Amarnath Baijnath Gupta decision had been overruled by the Full Bench in Rajesh Bhalchandra Chalke, and therefore rejected the applicants' reliance on Amarnath Baijnath Gupta.
Rajesh Bhalchandra Chalke v. State of Maharashtra (Full Bench)	Full Bench judgment overruling Amarnath Baijnath Gupta regarding the form/recording of verification under section 200 Cr.P.C.; reported in 2011 (1) Mh.L.J (F.B) 244.	The Court applied the Full Bench ratio to hold that the applicants' objection about cyclostyled verification under section 200 could not be accepted.
Suhas Bhand v. State of Maharashtra	Legal propositions concerning resignation of a Director, production of certified Form No. 32 and proof required to claim discharge from prosecution under section 138 read with section 141.	The Court relied on the quoted propositions from Suhas Bhand to conclude that issues of resignation, alternate or non-executive status raised disputed factual questions which could not be decided at this stage and required trial evidence; accordingly such matters could not lead to discharge at this stage.
Keya Mukherjee v. Magma Leasing Limited	Guidelines of the Apex Court regarding recording of statements under section 313(5) Cr.P.C.	The Court directed that statements under section 313(5) be recorded through advocates in accordance with the procedure and guidelines laid down in Keya Mukherjee when applicants/petitioners are exempted from personal appearance.

Court's Reasoning and Analysis

The Court addressed each primary contention raised by the applicants in sequence and applied statutory provisions and judicial precedents as follows:

Jurisdiction: The Court examined clause 3.2 of the loan-cum-hypothecation agreement which stipulated that payments were payable at the complainant's Corporate Office or any other address specified in the schedule. The Court found no schedule entry designating an alternate payment place; therefore the clause pointed to the Corporate Office at Bandra-Kurla Complex as the place for payment. Relying on precedent (including K. Bhaskaran and the Division Bench decision in Mrs. Preetha S. Babu v. Voltas, and other Apex Court decisions cited therein), the Court concluded that where a notice demanding payment is issued from the place where the complainant carries on business or where its registered office is situated, the Court at that place would have jurisdiction. Given that the notice was sent from the complainant's Corporate Office in Mumbai and the complainant carried on business and had its registered office in Mumbai, the Bandra Court had jurisdiction. The applicants' reliance on Harman Electronics was considered but the Court held jurisdiction existed on the facts and contractual clause interpretation.
Sufficiency of averments under section 141: The Court examined the complaints and noted specific averments (paras 2 and 7) that the applicants were in charge and responsible for IDEB Projects Pvt. Ltd.'s conduct and business. The Court held that sufficient averments were made to invoke section 141 and rejected the contention that the complaint merely reproduced ingredients mechanically. Accordingly, the applicants' challenge on this ground failed.
Section 202 Cr.P.C.: The Court relied on its earlier order in Bansilal Kabra v. Global Trade Finance Ltd (which itself relied on Apex Court judgments) to hold that section 202 Cr.P.C. is directory and not mandatory; non-compliance would not vitiate issuance of process. Thus, absence of a section 202 inquiry did not require setting aside the issuance of process.
Verification under section 200 Cr.P.C.: The applicants' contention that the verification was cyclostyled and invalid relied on Amarnath Baijnath Gupta. The Court observed that Amarnath Baijnath Gupta had been overruled by the Full Bench in Rajesh Bhalchandra Chalke. On that basis, the objection to the form of verification was not accepted.
Resignation / alternate / non-executive director issues: The Court considered the legal propositions as set out in Suhas Bhand regarding production of certified Form No. 32 and the evidentiary burden to prove resignation. The Court held these to be disputed factual matters which could not be resolved at the pre-trial stage; if the complainant disputes resignation or produces evidence of continued directorship, the accused cannot be discharged simply by producing Form No. 32. Thus, the Court declined to decide those questions at this stage and noted they should be gone into at trial.
Relief as to appearance and recording of statement under section 313: Acknowledging the applicants' grievance about hardship of attending trial in Mumbai, the Court provided a procedural accommodation: applicants were exempted from personal appearance and their statements under section 313 Cr.P.C. may be recorded through their advocates as per section 313(5), provided the applicants give an undertaking not to dispute their identity or correctness of answers recorded. The trial court was directed to follow section 313(5) procedure and the Apex Court guidelines in Keya Mukherjee. The court warned that if applicants' counsel remain absent on two dates, the Magistrate may cancel exemption.

Holding and Implications

Holding:

All Criminal Writ Petitions and Criminal Applications are dismissed.

Direct consequences and practical implications:

The interim order earlier granted is vacated.
Hearing of the trial is to be expedited by the trial court.
Applicants/petitioners are exempted from personal appearance at the trial; their statements under section 313 Cr.P.C. may be recorded through their advocates in accordance with section 313(5) and the guidelines in Keya Mukherjee, subject to the applicants giving an undertaking regarding identity and correctness of answers.
The trial court may cancel the exemption if the applicants' counsel remain absent on two dates by passing an appropriate order.
On disputed factual issues (e.g., resignation, alternate/non-executive directorship), the Court did not decide the questions at the pre-trial stage; such matters are to be addressed at trial with evidence as per the guidance in Suhas Bhand.

The opinion applies existing precedents to the facts and does not purport to lay down any new legal precedent beyond its application of authorities to the matters before it.

Disposition: Petitions dismissed.

Show full summary ...

To access the original judgment, please Sign In or Subscribe.

Rajiv Banga v. L And T Finance Company Ltd. And Another

1. Heard.

2. Applicants/petitioners are challenging the order of issuance of process passed by the learned Metropolitan Magistrate's 12th Court, Bandra, Mumbai in complaints filed by Respondent No. 1 under section 138 of the Negotiable Instruments Act. Since the number of cheques were dishonoured, separate complaints were filed. The subject-matter of complaints and grounds on which the order of process is challenged being the same, all these applications along with the two Writ Petitions can be disposed off by a common judgment.

3. Brief facts are as under:—

4. A loan-cum-hypothecation agreement dated 24-1-2008 was executed between IDEB Projects Pvt. Ltd, which is arrayed as accused No. 1, and L. and T. Finance Limited, Respondent No. 1 herein. In the complaint, it is alleged that the cheques which were issued for repayment of the said loan were dishonoured after they were presented by the complainant in their bank and upon non-payment of the said amount which was due and payable under the agreement, after service of notice, complaint was filed under section 138 of the Negotiable Instruments Act. Applicants/Petitioners have challenged the order of issuance of process on the following grounds.

(i) It was submitted that the 12th Metropolitan Magistrate's Court, Bandra did not have jurisdiction to try and decide the said complaint since the entire cause of action had arisen at Bangalore, the cheques were issued at Bangalore and the Bank of the borrower is situated at Bangalore. Clause 3.2 of the loan-cum-hypothecation agreement clearly stipulated that the payment of loan installments and other charges due under the said agreement were payable by the borrower to the lender at the Corporate Office or such other address specified in the schedule to the agreement. It was, therefore, submitted that the entire cause of action had arisen at Bangalore. It was submitted that merely because the notice dated 30-3-2009 was issued from Bandra, jurisdiction was sought to be imparted on the Court at Bandra. It was submitted that in view of the judgment of the Supreme Court in Harman Electronics (P) Ltd v. National Panasonic (India) Ltd., 2009 (3) Mh.L.J (SC) 792 : 2009 (1) ALL MR 479 merely because notice was issued from Mumbai that would not confer jurisdiction on Mumbai Court.

(ii) It was then submitted that the complainant mechanically reproduced ingredients of section 141. It was submitted that specific role of the applicants/petitioners was not mentioned in the complaint and, therefore, in view of the decision of the Apex Court in National Small Industries Corporation Limited v. Harmeet Singh Paintal, 2010 (4) Mh.L.J (SC) 269 : 2010 (2) Mh.L.J (Cri.) (SC) 627 : (2010) SLT 593 : (2010) 3 SCC 330, no case was made out against the applicants/petitioners and on that ground the order of issuance of process was liable to be set aside qua the applicants/petitioners. A distinction was also sought to be made in respect of the judgment of the Delhi High Court in Anu Ahluwalia v. Bennett Coleman Company Limited, Order of Delhi High Court in Cri. M.C 1286/2010 dated 23-4-2010. and it was argued that the Delhi High Court had relied on para 5 of the decision of the Supreme Court in National Small Industries Corporation Limited v. Harmeet Singh Paintal, 2010 (4) Mh.L.J (SC) 269 : 2010 (2) Mh.L.J (Cri.) (SC) 627 : (2010) SLT 593 : (2010) 3 SCC 330, as a distinguishing factor for the purpose of ascertaining sufficiency of averments for the purpose of sustaining a prosecution under the deeming fiction arising under section 141 of the Negotiable Instruments Act.

(iii) It was then submitted that there was non-compliance of the mandate of the Criminal Procedure Code. It was submitted that in view of the provisions of section 202 of the Criminal Procedure Code, since the applicants/petitioners were residing outside the jurisdiction of Mumbai Court i.e at Bangalore, the learned Magistrate ought to have postponed the issuance of process and should have held an inquiry under section 202. It was submitted that the mandatory provisions of section 202 of the Criminal Procedure Code not being followed, the order of issuance of process was vitiated and was liable to be set aside. It was also submitted that the applicants/petitioners had informed the complainant that the applicants/petitioners were non-executive Directors of IDEB Projects Pvt. Ltd. and were not responsible for dishonour of cheques. It was submitted that in view of this reply which was given by the applicants/petitioners-company, the learned Magistrate was duty bound to hold an inquiry under section 202.

(iv) It was then submitted that order of issuance of process was also vitiated since the verification statement of the complainant was recorded under section 200 of the Criminal Procedure Code in a cyclostyled format and in view of the legislative intent of section 200 as well as the decision of the High Court in Amarnath Baijnath Gupta v. Mohini Organics Pvt. Ltd, 2009 (1) Mh.L.J (Cri.) 465 : 2009 ALL MR (Cri) 184 the said order of issuance of process was liable to be set aside.

(v) It was submitted that the applicant No. 4 was appointed as alternate Director to applicant No. 1 and applicant No. 5 was appointed as alternate Director to applicant No. 1, It was submitted that the alternate Director was appointed during absence of the original Director and is required to vacate his office when the original Director returns and, therefore, both the original Director and alternate Director should not be simultaneously prosecuted.

(vi) Lastly, it was submitted that pursuant to the investment made by Samsara India IDEB Investments, applicants/petitioners were appointed with IDEB Projects Pvt. Ltd. as non-executive Directors and subsequently resigned as Directors of the Company. It was submitted that the company complied with the procedural requirements under the Companies Act and submitted Form No. 32 to the Registrar of Companies and, therefore, they could not have been prosecuted.

5. On the other hand, the learned Counsel appearing on behalf of Respondent No. 1.complainant submitted that Respondent No. 1 has its registered office at L. and T. House, Ballard Estate, Mumbai and its Corporate Office is situated at 3B, Laxmi Towers, C-25, G-BIock, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051. It was submitted that the demand notice dated 30-3-2009 was issued to the accused through their advocate at their Corporate Office. It was submitted that in view of clause 3.2 of the loan-cum-hypothecation agreement, the loan installment and other charges and monies due under the agreement were payable to the lender at the Corporate Office. It was submitted that in view of the specific agreement, the applicants/petitioners had agreed to make payment at the Corporate Office at Mumbai. Secondly, it was submitted that the statutory notice was issued from time to time and, thirdly, it was submitted that Respondent No. 1 had its registered office at Mumbai and, therefore, Mumbai Court had jurisdiction to try and entertain the complaint. Reliance was placed on the judgment of the Division Bench of this Court in Mrs. Preetha S. Babu v. Voltas, 2010 (3) Mh.L.J 234 : 2010 (1) Mh.L.J (Cri.) 482 : 2010 ALL MR (Cri.) 1025 and more particularly paragraphs 4 and 34,

6. So far as the averments in the complaints are concerned, it was submitted that specific averments were made in paras 2 and 7 of the complaints in regard to the applicants/petitioners being in-charge and responsible for the conduct and business of IDEB Projects Pvt. Ltd. It was submitted that other grounds were pertaining to disputed questions of fact which could be decided only in the trial after recording of evidence was over.

7. After having given the thoughtful consideration to the submissions made by the learned Counsel for the applicants/petitioners and the learned Counsel for the Respondent No. 1.complainant, in my view, submissions made by the learned Counsel for the applicants/petitioners cannot be accepted for the following reasons.

8. The complainant is a company registered under the Companies Act and is carrying on business of providing on lease various vehicles, plants, machinery, providing long term/short term loans against security and also for providing loans for the purchase of Tractors etc. In the complaint, it is alleged by the complainant that the accused No. 1 approached the complainant for loan and the complainant agreed to the said request of the accused. The accused in their capacity as borrowers had entered into loan-cum-hypothecation agreement and also executed certain loan documents with the complainant on various terms and conditions contained in the said documents. It is submitted that towards partial discharge of aforesaid liability, three cheques were issued for a total amount of Rs. 12,65,883.00. The said cheques, however, were dishonoured after they were presented by the complainant in their bank. The demand notice was issued dated 30-3-2009 through their advocate from their Corporate Office at Mumbai which was duly served on the applicants/petitioners. However, on non-payment of the amount due within 15 days from the date of service of notice, complaints were filed.

9. So far as the first ground regarding jurisdiction of the Bandra Court is concerned, it is an admitted position that the complainant has its registered office at Mumbai and its Corporate Office at Bandra-Kurla Complex. Clause 3.2 of the loan-cum-hypothecation agreement reads as under:—

“3.2 All payments of the loan installments and other charges and moneys due under this Agreement shall be payable by the Borrower to the Lender at the Corporate Office, or at such other addresses as may be specified in the Schedule shall deemed to have been paid on the date on which the amounts thereunder are realized.”

Both the learned Counsel for the applicants/petitioners as well as Respondent No. 1-complainant relied on this clause.

10. Mr. Mundargi, the learned Counsel appearing on behalf of the applicants/petitioners submitted that in view of the said clause, it was necessary to look at the schedule of the said loan-cum-hypothecation agreement. It was submitted that the scheduled being signed at Bangalore, it was clear that payments could also be made at Bangalore and, therefore, the Bangalore Court alone had jurisdiction to decide the case.

11. On the other hand, the learned Counsel appearing on behalf of the complainant submitted that there was no specific clause in the said schedule as contemplated under clause 3.2 “any other address where the amount due was payable” and, therefore, merely because it was signed at Bangalore, it could not be presumed that the amounts due were payable at Bangalore. It was submitted that therefore the amounts were payable at Corporate Office.

12. There is much substance in the submissions made by the learned Counsel for Respondent No. 1.complainant. The said clause clearly stipulates that the payments of the amounts due are to be made at the Corporate Office. There is no specific clause in the schedule referring to any other place where payment could be made and, therefore, from the averments made in the said clause, it is clear that the payments were supposed to be made only at the Corporate Office which is situated admittedly at Bandra-Kurla Complex. The Apex Court in K. Bhaskaran v. Sankaran Vaidhyan Balan, 2000 (1) Mh.L.J (SC) 193 : 1999 (4) ALL MR 452 (SC) has clearly laid down that the complainant can file complaint at any of the five places where the cause of action has arisen. Similarly, Division Bench of this Court in Mrs. Preetha S. Babu v. Voltas, 2010 (3) Mh.L.J 234 : 2010 (1) Mh.L.J (Cri.) 482 : 2010 ALL MR (Cri.) 1025 has also, after going through the judgments of the Apex Court in K. Bhaskaran v. Sankaran Vaidhyan Balan, 2000 (1) Mh.L.J (SC) 193 : 1999 (4) ALL MR 452 (SC), Harman Electronics (P) Ltd v. National Panasonic (India) Ltd., 2009 (3) Mh.L.J (SC) 792 : 2009 (1) ALL MR 479, Ahuja Nandkishore Dongre v. State of Maharashtra, 2006 ALL MR (Cri) 3357 and in Shamsahd Begum v. B. Mohammed, 2008 (6) Bom.C.R 722 (SC) has held that the place where the complainant is carrying on his business or is ordinarily residing or if it is a company where its registered office is situated, if a notice demanding payment is issued from such place the Court at such place would have jurisdiction to entertain the complaint. In the present case, amount due under the agreement was payable at the Corporate Office at Bandra-Kurla Complex. The notice was sent from the Corporate office situated at Bandra-Kurla Complex. The Company has its registered office in Mumbai. The complainant is carrying on business in Mumbai and, therefore, Bandra Court clearly has jurisdiction to try and decide this case. The submission made by the learned Counsel for the applicants/petitioners cannot be accepted.

13. So far as the argument regarding averments in the complaint is concerned, the complainant has made necessary averments that the applicants/petitioners were in charge and were responsible for the conduct and business of IDEB Projects Private Ltd. and the requisite averments were also made regarding jurisdiction in para 10 of the complaint. In my view, sufficient averments have been made in the complaint for the purpose of invoking provisions of section 141 of the Negotiable Instruments Act. Therefore, there is no substance in the submissions made by the learned Counsel appearing on behalf of the applicants/petitioners.

14. So far as the submission regarding non-compliance of provisions of section 202 of the Criminal Procedure Code is concerned, this Court in Bansilal Kabra v. Global Trade Finance Ltd, Cr. Application No. 1344/2010 order dated 9-7-2010 has, after relying on the judgments of the Apex Court, held that the provisions of section 202 of the Criminal Procedure Code are directory and not mandatory and, therefore, non-compliance, if any, of the said provisions would not vitiate the order of issuance of process.

15. So far as the submission regarding improper recording of verification is concerned, the judgment on which reliance is placed by the applicants/petitioners in Amarnath Baijnath Gupta v. Mohini Organics Pvt. Ltd., 2009 (1) Mh.L.J (Cri.) 465 : 2009 ALL MR (Cri) 184 has been overruled by the Full Bench of this Court vide its judgment dated 7-12-2010 in Mr. Rajesh Bhalchandra Chalke v. State of Maharashtra, Full Bench Judgment of this Court dated 7-12-2010 in W.P No. 2523/10 along with W.P No. 3478/2010 [since reported in, 2011 (1) Mh.L.J (F.B) 244 : 2010 (4) Mh.L.J (Cri.) (F.B) 486]. In view of the ratio of the said judgment of the Full Bench of this Court, submission made by the learned Senior Counsel appearing on behalf of the applicants/petitioners cannot be accepted.

16. So far as the submission regarding resignation of certain Directors is concerned and the submissions that some Directors are non-executive Directors and some are alternate Directors are concerned, all these submissions being disputed by the complainant, at this stage this Court cannot go into the question of correctness or otherwise of the said submissions of the applicants/petitioners. The Division Bench of this Court in Suhas Bhand v. State of Maharashtra, 2009 ALL MR (Cri) 2614 para 33 has observed as under:—

“33. A reading of these judgments makes for the following legal propositions with regard to the resignation of a Director of a registered Company:—

(i) If the accused in a criminal prosecution under section 138 of the Negotiable Instruments Act produces a certified copy of Form No. 32 certified by the ROC and there is no dispute of the factum of his resignation, the accused is entitled to be discharged from the prosecution.

(ii) If his resignation is not accepted or admitted by the complainant upon production of the certified copy of Form No. 32, the accused would have to prove the truth of the contents of the said certified copy i.e the factum of his resignation. Such accused cannot be discharged simplicitor upon production of a certified copy of Form No. 32.

(iii) If the complainant produces any evidence showing the continuance of the accused as Director of the Company after the date of the resignation claimed by him as per the certified copy of Form No. 32, produced by him, such accused cannot be discharged simplicitor upon production of such certified copy of Form No. 32, He would have to lead evidence to prove the factum of his resignation. Similarly the complainant would be entitled to prove the factum of his continuing as Director. The trial under section 138 read with section 141 of the Negotiable Instruments Act would, therefore, proceed.”

In view of the ratio of the said judgment, at this stage, it will not be possible to decide the questions of fact regarding resignation of the applicants/petitioners or they being alternate or non-executive Directors. It was also vehemently urged that great hardship would be caused to the applicants/petitioners since the applicants/petitioners are residing at Bangalore and they would be required to attend the Bandra Court at Mumbai which would cause harassment to them. In my view, this grievance can be taken care of by granting exemption to the applicants/petitioners from appearing in the Trial Court. Hence, there is no substance in the submissions made by the learned Counsel appearing on behalf of the applicants/petitioners.

17. The Criminal Writ Petitions and the Criminal Applications are dismissed. Interim order is vacated. Hearing of the Trial, however, is expedited.

18. Applicants/Petitioners are exempted from appearing in the Trial Court. Their statement under section 313 of the Criminal Procedure Code may be recorded through their advocate as per the procedure laid down under section 313 sub-clause (5) of the Criminal Procedure Code, provided that they give an undertaking that they will not dispute their identity and correctness of the answers recorded in their statement under section 313 of Criminal Procedure Code. The Trial Court shall follow the procedure laid down under section 313(5) while recording the statement under section 313 and shall follow the guidelines laid down by the Apex Court in Keya Mukherjee v. Magma Leasing Limited, 2009 (2) Mh.L.J (SC) 439 : 2009 (1) Mh.L.J (Cri.) (SC) 409 : (2008) 8 SCC 447. If the applicants'/petitioners' counsel remain absent on two dates, exemption granted by this Court may be cancelled by the learned Magistrate by passing appropriate order.

19. Criminal Writ Petitions and Criminal Applications are accordingly disposed off.

Petitions dismissed.

Rajiv Banga v. L And T Finance Company Ltd. And Another

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Applicants' Arguments

Respondent No.1 (Complainant)'s Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Rajiv Banga v. L And T Finance Company Ltd. And Another

Comments