Quashing prosecution against nominee-director refused where conspiracy allegations and good-faith statutory protection required evidence at trial.
Prima facie allegations of conspiracy, wilful abetment and responsibility for the company's business were held sufficient to require a nominee-director to face trial, because his asserted limited role could not be decided at the threshold without evidence. The Court also held that protection under section 30A of the Industrial Development Bank of India Act depended on whether the alleged acts were done in good faith in discharge of duties, which likewise required trial evidence and could not justify quashing. The petition for quashing was therefore not sustainable at the initial stage.
Issues: (i) Whether the pending prosecution against a nominee-director accused could be quashed at the threshold on the basis of his alleged limited role in the company. (ii) Whether the protection under section 30A of the Industrial Development Bank of India Act, 1964 barred the prosecution at the stage of quashing.
Issue (i): Whether the pending prosecution against a nominee-director accused could be quashed at the threshold on the basis of his alleged limited role in the company.
Analysis: The complaint contained allegations that the petitioner had joined the conspiracy, wilfully abetted the offences alleged, and was responsible for the conduct of the company's business. The plea that he was only a nominee-director required evidence and could not be decided in exercise of inherent jurisdiction at the threshold. The existence of prima facie allegations was sufficient to require the accused to face trial.
Conclusion: The prosecution could not be quashed on this ground and the petitioner remained liable to face trial.
Issue (ii): Whether the protection under section 30A of the Industrial Development Bank of India Act, 1964 barred the prosecution at the stage of quashing.
Analysis: The statutory protection turns on whether the acts complained of were done or omitted in good faith in the discharge of the director's duties. That question depended upon evidence and could not be conclusively determined before trial.
Conclusion: The statutory protection did not furnish a ground for quashing at this stage.
Final Conclusion: The petition for quashing was not sustainable at the threshold because the allegations disclosed matters requiring evidence and trial.
Ratio Decidendi: Where the complaint discloses prima facie allegations of conspiracy and abetment, questions concerning a director's status, role, and statutory protection based on good faith are matters for evidence and do not justify quashing the prosecution in inherent jurisdiction.
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