Court quashes proceedings, finds petitioner's resignation valid, no evidence for trial

The court quashed the proceedings against the petitioner in Special Case No. SEBI/27/2017, including related orders, as there was no evidence to proceed to trial. The petitioner's resignation was found valid and communicated properly, relieving him of liability for the issuance of Non-Convertible Debentures (NCD) before his directorial tenure. The court emphasized the lack of material showing the petitioner's involvement in the company post-resignation, leading to the decision to end the proceedings in the petitioner's favor.

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Issues Involved:
1. Quashing of the proceeding under various sections of the Companies Act, SEBI Regulations, and SEBI Act.
2. Petitioner's involvement and liability concerning the issuance of Non-Convertible Debentures (NCD).
3. Whether the petitioner's resignation was valid and effectively communicated.
4. Continuing liability of the petitioner as a director post-resignation.

Summary:

Quashing of Proceedings:
The petitioner sought quashing of the proceedings in Special Case No. SEBI/27/2017 under Sections 56, 60, and 70 read with Sections 2(36), 73 of the Companies Act, 1956, Section 465 of the Companies Act, 2013, SEBI (ICDR Regulations) 2009, SEBI (ILDS Regulations) 2008, and Section 12(1) of the SEBI Act, 1992, pending before the 5th Special Court, Kolkata, including the order dated 29th July 2019.

Petitioner's Involvement and Liability:
The petitioner argued that he joined the company in November 2012 as an advisor and later as an Additional Director on 3rd July 2013, resigning on 28th November 2013. The SEBI order dated 20th April 2016 recorded that the allotment of NCDs took place during the financial year 2012-2013, before the petitioner's tenure as a director. The petitioner contended that he was not responsible for the issuance of NCDs and thus not liable under Section 27 of the SEBI Act, 1992.

Validity and Communication of Resignation:
The petitioner claimed that his resignation was submitted and recorded by SEBI. The court noted that the petitioner's resignation was in accordance with Section 168 of the Companies Act, which requires the company to inform the Registrar of Companies (ROC). The petitioner also informed SEBI about his resignation.

Continuing Liability:
The court examined the concept of "continuing liability" under Section 73(2) of the Companies Act and Section 27 of the SEBI Act, which holds directors liable until all repayments are made. However, the court found no material evidence showing the petitioner's involvement in the day-to-day affairs of the company during his tenure.

Court's Decision:
The court concluded that there was no material on record against the petitioner to proceed towards trial. Therefore, in the interest of justice, the proceedings against the petitioner were quashed. The court allowed CRR 773 of 2021, quashing the proceedings in Special Case No. SEBI/27/2017 and all orders passed therein, including the order dated 29th July 2019, as they pertain to the petitioner.

Additional Orders:
- No order as to costs.
- All connected applications disposed of.
- Interim order, if any, stands vacated.
- Copy of the judgment to be sent to the learned Trial Court for compliance.
- Urgent certified website copy of the judgment to be supplied expeditiously upon compliance with necessary legal formalities.

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