Director liability under the SEBI Act cannot continue where undisputed records show resignation before the offence and no personal role is made out.

Section 27 of the SEBI Act fastens liability only on persons who were in charge of, and responsible for, the company when the offence was committed. On the admitted record, the accused director had resigned before the company's non-compliance matured into an offence, and the complainant's own materials, including Form 32, supported that fact. In those circumstances, the High Court held that continuance of the criminal complaint would be an abuse of process and that inherent jurisdiction under Section 482 CrPC could be used to prevent a prosecution where no offence was made out against the petitioner. The complaint and the order refusing discharge were therefore quashed as against the petitioner.

---

---

Issues: Whether criminal proceedings under the SEBI Act could be quashed under the inherent jurisdiction of the High Court when the accused director had ceased to hold office before the alleged default and the complainant's own record admitted that fact.

Analysis: Liability under Section 27 of the SEBI Act fastens only on persons who were in charge of and responsible for the company at the time the offence was committed. The complaint alleged responsibility only by reason of directorship, but the record contained certified Form 32 showing resignation from directorship prior to the date when the company's non-compliance matured into an offence, and the complainant itself admitted the resignation. In these circumstances, continuation of the prosecution would serve no useful purpose. The High Court's inherent power under Section 482 of the Code of Criminal Procedure may be exercised to prevent abuse of process and secure the ends of justice, including where the uncontroverted material shows that no offence is made out against the accused.

Conclusion: The criminal complaint and the order refusing discharge, insofar as they related to the petitioner, were quashed; the issue was decided in favour of the petitioner.

Final Conclusion: The proceedings against the petitioner could not be sustained because the statutory basis for fastening personal liability on a director was absent on the admitted facts.

Ratio Decidendi: Where the undisputed record shows that an accused ceased to be a director before the offence was committed, prosecution based solely on directorial responsibility cannot continue and may be quashed in exercise of inherent jurisdiction to prevent abuse of process.

---