Resigned director liability ends when resignation is duly communicated; later non-filing defaults cannot sustain criminal proceedings.

A resigned director cannot be arrayed as an accused for later non-filing defaults when his resignation had been effective and communicated to the Registrar long before the alleged offences. The Madras HC noted that the complaint under sections 159, 162 and 220 of the Companies Act, 1956 proceeded on the assumption that he remained an officer in default, but the record showed resignation with effect from 13-3-1998 and no basis to attribute liability for defaults in 2006. The Court also found non-application of mind in ignoring repeated communications about the resignation. The criminal proceedings against him were quashed.

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Issues: Whether a director who had resigned from the company long before the alleged defaults could be arrayed as an accused for offences relating to non-filing of statutory returns and accounts, and whether the criminal proceedings were liable to be quashed.

Analysis: The complaint was founded on alleged defaults under sections 159, 162 and 220 of the Companies Act, 1956, with the prosecution proceeding on the basis that the petitioner continued to be an officer in default. The material placed before the Court showed that the petitioner had resigned as director with effect from 13-3-1998, and that the resignation had been communicated to the Registrar of Companies long before the alleged defaults in 2006. In those circumstances, the petitioner could not be fastened with liability for later acts of the company. The Court also found that the respondent had failed to consider the petitioner's resignation despite repeated communications, reflecting non-application of mind in arraying him as an accused.

Conclusion: The petitioner could not be proceeded against for the alleged offences after his resignation, and the criminal proceedings against him were quashed.

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