TaxTMI 
TaxTMI 
TaxTMI 
2008 (2) TMI 615
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....arge sheet on April 20, 2000. The specific averments in the charge sheet relevant for the present petitions, filed by three of the persons who are stated to have been directors of the company, read as under: "During the course of investigation, the complaints of the investors of K.M. Capital Ltd., continued to pour in the Economic Offences Wing of Crime Branch. From the scrutiny of 39 complaints received so far, it has been revealed that the company has collected Rs. 79,78,000 from them. The investigation of the case has revealed that the accused Kuldeep Mansukhani, chairman-cum-managing director, accused mentioned in Col. No. 3, as well as other directors, viz., 1. Zile Singh, s/o. Shri Sadhu Ram, r/o 1669, National Highway No. 4, Farida-bad, permanent address village Sheikhpura, district Kamal, Haryana; 2. Anup Kumar, s/o. Shri Dharma Nand, r/o B-402, Meera Bagh, New Delhi; 3. Ashok Sikka, s/o. Shri R.D. Sikka, r/o F-16, Mansarovar Garden, Kirn Nagar, New Delhi; 4. Amrit Lal Anand, s/o. Dianat Rai Malik, r/o H-11, Lajpat Nagar-III, New Delhi; 5. Sunita Mansukhani, w/o. Kuldeep Mansukhani, r/o H. No. D-2999, Nirman Vihar, Preet Vihar, New Delhi-92; and 6. V. Pandya s/o. Shri Hari....
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....etings of the board of directors of accused company K.M. Capital Ltd., in the capacity of directors and by passing resolutions, they participated in taking major policy decisions of the accused company. They were the decision makers and were aware of the day-to-day functioning of the company. They were equally responsible for the affairs of the company along with the chairman-cum-managing director Kuldeep Mansukhani, accused, mentioned in Col. No. 3." The present petitions are by Shri Ashok Sikka, Shri V.H. Pandya and Shri Bhaskar Joshi seeking the quashing of the criminal proceedings on more or less similar grounds. The principal ground is that these the petitioners ceased to be directors of the company even before the dishonour of the cheques issued on behalf of the company. It is contended that the offence with which the petitioners have been charged are the Indian Penal Code offences and that, in such circumstances, as held by the Supreme Court in Maksud Saiyed v. State of Gujarat [2007] 140 Comp. Cas. 590 ; [2007] 11 Scale 318, there is no question of a vicarious liability attaching to the director of a company where the company is a principal accused. There is no provision i....
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....n the publicity material seized during the arrest of CMD Shri Mansukhani that the company had highlighted the experience and quality of all the directors, including the petitioner Ashok Sikka, by mentioning their past experience with other institutions and thereby attracting investors who were forced to believe the bona fide of the company. VI. In view of the above facts, the petition of the petitioner be dismissed by this hon'ble court." In respect of Shri V.H. Pandya, the Investigating Officer states in his affidavit as under: "Role of Shri V. H. Pandya, director/petitioner herein: I. That, as stated earlier, during the investigation, record of the Registrar of Companies office relating to M/s. K.M. Capitals Ltd., was obtained and seized and it is revealed that the present petitioner was also one of the directors of M/s. K. M. Capitals Ltd. He joined M/s. K.M. Capitals Ltd., in the year 1994 and resigned on June 25, 1997. It may be mentioned that during this period, the company had already started collecting money from the depositors under its various schemes, showing them rosy picture and assuring them of high rate of interest. II. That the office of the company was closed ....
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.... Shri Joshi resigned on the same' day as Shri Pandya and copies of the respective Form No. 32 filed in terms of the requirements under the Companies Act, 1956, have been placed on record. These remain uncontroverted. In Maksud Saiyed v. State of Gujarat [2007] 140 Comp. Cas. 590 ; [2007] 11 Scale 318, the law pertaining to the liability of the individual director under the Indian Penal Code for the offences committed by a company has been explained by the Supreme Court in the following manner (page 597): "13. Where a jurisdiction is exercised on a complaint petition filed in terms of section 156(3) or section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Indian Penal Code does not contain any provision for attaching vicarious liability on the part of the managing director or the directors of the company when the accused is the company. The learned Magistrate failed to pose unto himself the correct question, viz., as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The bank is a body corporat....