Court affirms Director's acquittal, resignation severs liability. Section 220(3) Companies Act.

The court upheld the respondent's acquittal under Section 220(3) of the Companies Act, 1956, emphasizing that the resignation clause in the company's articles of association operated independently of acceptance. The State Government's appeal was dismissed, affirming that the respondent, who had resigned as Director before the offense date, was not liable for failing to file required financial documents. The court ruled that the respondent's Director status ceased upon resignation, regardless of subsequent acceptance by the Board of Directors, leading to the affirmation of acquittal.

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Issues:
Acquittal of respondent under Section 220(3) of the Companies Act, 1956 due to resignation as Director before the offense date.

Analysis:
The State Government appealed against the respondent's acquittal for an offense under Section 220(3) of the Companies Act, 1956. The prosecution alleged that the respondent, a Director of a company, failed to file balance-sheets and profit/loss accounts as required by law. The respondent claimed to have resigned before the offense date, supported by a post card as evidence. The magistrate referred to the company's articles of association, specifically Clause 96, which stated that a Director's office is vacated upon written resignation to the company. The magistrate concluded that the respondent was not a Director at the time of the offense, thus not liable under Section 220(3).

The State argued that the respondent's resignation was accepted later by the Board of Directors, making him liable for the offense. The State relied on meeting proceedings as evidence, but the respondent objected as these were not presented during the trial. The court agreed with the respondent, stating that the case should be decided based on existing trial evidence. Even if the meeting proceedings were considered, the resignation clause in the articles of association operated automatically upon notice, regardless of acceptance. Therefore, the respondent's attendance at meetings post-resignation did not affect his Director status.

The court upheld the respondent's acquittal, emphasizing that the resignation clause operated independently of acceptance. The appeal by the State Government was dismissed, affirming the respondent's justification for acquittal under Section 220(3) of the Companies Act, 1956.

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