Former director prosecution under Companies Act quashed for lack of specific allegations, and related travel restraint fell away.

A former director could not be prosecuted under the Companies Act, 2013 where the complaint contained no specific allegation of his role in the alleged fraud or false statement, and merely relied on his past office. The court noted that he had ceased to be a director before commercial operations began and that two investigating agencies had already found no incriminating material against him. On that basis, the criminal proceedings under Sections 447 and 448 were quashed. As the look out circular rested entirely on those proceedings, it also lost its foundation and was quashed as a consequential measure.

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Issues: (i) Whether criminal proceedings for offences under the Companies Act, 2013 could be sustained against a former director when the complaint disclosed no specific role against him and he had already been dropped by two investigating agencies; (ii) Whether the look out circular issued against him could survive once the criminal proceedings were quashed.

Issue (i): Whether criminal proceedings for offences under the Companies Act, 2013 could be sustained against a former director when the complaint disclosed no specific role against him and he had already been dropped by two investigating agencies.

Analysis: The petitioner had ceased to be a director long before the company commenced commercial operations. The record showed that two investigating agencies had examined his explanation, found no incriminating material, and dropped him from the array of accused. The complaint under Sections 447 and 448 of the Companies Act, 2013 contained no concrete allegation attributing any fraudulent act or false statement to him and relied only on his past association as a former director. Criminal prosecution requires a clearly spelt out role, and a bald assertion that a person was a former director is insufficient to justify prosecution.

Conclusion: The criminal proceedings could not be sustained and were liable to be quashed in favour of the petitioner.

Issue (ii): Whether the look out circular issued against him could survive once the criminal proceedings were quashed.

Analysis: The look out circular was founded on the very proceedings that were challenged. Once the criminal case lacked a sustainable basis and stood quashed, the foundation for the look out circular disappeared. The consequential administrative restraint therefore could not continue.

Conclusion: The look out circular was liable to be quashed in favour of the petitioner.

Final Conclusion: The challenge succeeded in full, the criminal case and the connected travel restraint were set aside, and the observations were confined to the petitioner alone.

Ratio Decidendi: A former director cannot be subjected to criminal prosecution under the Companies Act on the basis of a bare reference to past office without specific allegations showing a prima facie role in the alleged offences, and any consequential restraint founded solely on such unsustainable proceedings must fall.

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