Quashing of criminal proceedings for resigned directors where documents showed they had left before the alleged forged declaration forms were used.

Criminal proceedings based on alleged forged sales tax declaration forms were quashed against directors who had resigned from the company well before the relevant assessment year and before the impugned forms were prepared and used, because the documents on record supported their exit and no effective dispute was raised. The Court held that continuation of prosecution against them was not justified. As to the remaining petitioner, no equally reliable material excluded his involvement at the threshold, so a prima facie case could not be ruled out and the proceedings continued against him.

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Issues: Whether the criminal proceedings arising from alleged forged sales tax declaration forms could be quashed for petitioners who had resigned as directors before the alleged fraud, and whether the material disclosed a prima facie case against each petitioner.

Analysis: The record showed that petitioner no. 1 and petitioner no. 3 had resigned from the company long before the relevant assessment year and before the alleged preparation and use of the impugned declaration forms. Their resignations were supported by documents on record and were not effectively disputed. On those facts, their continuation in the prosecution was not justified. In contrast, no equally reliable material was produced to conclusively exclude petitioner no. 2 from responsibility, and his involvement could not be ruled out at the threshold. The Court therefore distinguished between the petitioners on the basis of their respective connection with the company at the relevant time.

Conclusion: The proceedings were quashed for petitioner no. 1 and petitioner no. 3, while they continued against petitioner no. 2.

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