Director's Criminal Liability Post-Resignation under Companies Act

The High Court of Madras dismissed a criminal original petition where the petitioner sought to quash prosecution records for non-compliance with appointing a woman director in a company. The petitioner's defense based on resignation from directorship was rejected. The court held that under Section 168 of the Companies Act, a director remains liable for offenses post-resignation if resignation formalities are not followed, emphasizing the importance of compliance with statutory requirements to avoid criminal liability.

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Issues:
1. Prosecution initiated against the petitioner for non-compliance with statutory requirements.
2. Petitioner's defense based on resignation from directorship.
3. Interpretation of provisions under Section 168 of the Companies Act regarding liability post-resignation.

Analysis:
The judgment by the High Court of Madras pertains to a criminal original petition filed by a petitioner seeking to quash the records in a prosecution case (E.O.C.C.No.299 of 2015) initiated by the Deputy Registrar of Companies, Tamil Nadu. The primary issue at hand was the non-compliance of a company with the requirement to appoint a woman director on its board as per the Companies (Appointment and Qualification of Directors) Rules, 2014. The petitioner, as the third accused, argued that he had resigned from his directorship in the company in question, Eduexel Infotainment Limited (A1 company), and therefore should not be held criminally liable.

The court examined the provisions of Section 168 of the Companies Act, which mandate that a director must forward a copy of his resignation along with detailed reasons to the Registrar within thirty days of resignation. The petitioner had failed to comply with this requirement, as he sent his resignation to the Registrar only after receiving a notice from the Registrar. The court highlighted the proviso under Section 168, which specifies that even after resignation, a director remains liable for offenses committed during their tenure. Thus, the court dismissed the petitioner's argument based on the legal position established by the Companies Act.

In conclusion, the High Court of Madras rejected the petitioner's defense and dismissed the criminal original petition, upholding the legal principle that a director can be held liable for offenses committed during their tenure even after resignation if the statutory requirements are not met. The judgment underscores the importance of compliance with company laws and regulations to avoid potential criminal liability, even post-resignation.

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