Quashing of criminal prosecution for former director where resignation predated alleged defaults and records showed no prima facie liability.

Criminal prosecution for alleged Companies Act non-compliance was quashed against a former director where the record showed he had resigned long before the alleged defaults. Prior regulatory material under the SEBI framework had already recorded that he was no longer a director and no action was directed against him, supporting the conclusion that the complaint proceeded on a mistaken assumption of his status. As the allegations did not disclose any prima facie liability against him, continuation of the prosecution was treated as harassment and serving no useful purpose. The proceedings were therefore quashed insofar as they related to him.

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Issues: Whether criminal proceedings for alleged non-compliance under the Companies Act could be quashed against a former director who had resigned long before the alleged defaults and whose non-liability was supported by prior regulatory findings.

Analysis: The petitioner had resigned as director in 1995, whereas the alleged defaults related to the years 2008-2009 and 2009-2010. The materials placed before the Court included earlier regulatory proceedings under the SEBI framework, in which the petitioner had been specifically found to be no longer a director and no action was directed against him. The Court treated this material as reliable and sufficient to show that the complaint proceeded against the petitioner under a mistaken assumption. In such circumstances, continuation of the prosecution was held to serve no useful purpose and to amount to harassment, particularly where the allegations, on their face and in light of the undisputed resignation, did not establish any prima facie liability against the petitioner.

Conclusion: The proceedings were quashed insofar as they related to the petitioner, and the challenge was accepted in his favour.

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