TaxTMI 
TaxTMI 
2009 (11) TMI 1036
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....trate, Esplanade, Mumbai. 3. The petitioner joined Moneshi Agro Foods Ltd. (hereinafter referred to as 'the Company') as a non executive Director sometime in February 1994 and continued to be so till he resigned on 21st June 1997. The Company came out with a public issue of shares in April 1994. Prior to the issue, the Company had issued a prospectus dated 30th March 1994. The issue of the prospectus was authorised and consented to by the petitioner and other Directors of the company. The company collected from institutional investors and public are at large a sum of Rs. 8,17,50,000/ or thereabout in the public issue. On account of several complaints received from investors investigation was carried out by CBI and/or Economic Off....
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...., it is stated that the facility of the company would be located at 12 acres of land bearing Survey No.657, Timayyapalam, Vinukonda, Guntur Dist. A.P. The prospectus further states that the company had acquired land admeasuring 12 acres from P. Dilip Kumar on outright basis for Rs. 12 lakhs and that the formalities for transfer of the land in the name of the company in the revenue records would be completed on 31.3.1994. The prospectus also states that the company had taken possession of the land and permission for use of land for industrial purpose was awaited. The complaint states that these statements were untrue and false. Mr. Dilip Kumar from whom the company is alleged to have purchased the land did not himself own 12 acres of land an....
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....ima facie material in support of the aforesaid averments made in the complaint. 6. Mr. Soni, learned counsel for the petitioner however submitted that the petitioner became a Director of the Company in February 1994 only a few months prior to the issue of the prospectus. He had relied upon a certificate of due diligence issued by M/s. Master Trust Ltd who had carried out the due diligence before issuance of the prospectus and relying upon the said due diligence certificate and bonafidely believing that the statements made by prospectus including those extracted above were true he had authorised and consented to the issue of the prospectus. In fact, he had given a power of attorney to Sunil Pawaskar, Company Secretary, to record his conse....
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....urden of proving the second part viz, that the person who had authorised the issue of prospectus had reasonable ground to believe that the statement was true lies on the person who claims so. This is also in consonance of section 105 of the Indian Evidence Act which says that where a person is accused of any offence, the burden of proving that the case falls within any of the general exceptions in the IPC, or within any special exception, or proviso contained in any part of the IPC, or any law defining the offence, is upon him. In my view, the burden of proving that the petitioner reasonably believed the statement to be true whether on the basis of a due diligence report of the Master Trust Ltd or otherwise lies on the petitioner. The prose....