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TaxTMI 
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2026 (4) TMI 1841
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....dananda Urs B.G., learned counsel appearing for the petitioner and Sri M.N. Kumar, learned Central Government Senior Panel Counsel appearing for the respondents. 3. Facts in brief, as obtaining in Criminal Petition No.12441 of 2022 would be narrated for the purpose of convenience. 3.1. The petitioner is a Chartered Accountant in practice for close to 30 years and claims to be providing service in the field of audit, accounting and tax consulting at Bengaluru. In the year 2011, the averment in the petition is that, he was introduced to one Mr. Malcom N. Desai and Mr. Micheal Ferreira who expressed interest to incorporate a Company for the purpose of starting business in India. Those two then requested the petitioner to advise them on incorporation of the Company on financial and tax aspects and to be its auditor. During the process of incorporation, the two inform the petitioner that one Vanka Srinivasa Rao and another Guhan Ramachandran would be the first Directors of the Company to be incorporated. After the aforesaid interaction, in the year 2011 the process of obtaining Director Identification Number ('DIN', for short), took some time and persons who had contacted the peti....
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....g) Act, 1978 ('PCMCB Act' for short) r/w Section 3 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 ('MPID Act' for short) r/w Sections 5 and 7 of Drugs and Magic Remedies Act, 1954. In response to the said communication, the petitioner appears before the Competent Officer, Economic Offences Wing, produces all the documents that were sought for and submitted a detailed explanation thereon. After a detailed investigation, a charge sheet is filed in the case and the name of the petitioner is dropped from the array of accused in the Economic Offences Case No.78 of 2013. 3.4. The petitioner receives another notice from the Crime Investigation Department, Bengaluru to appear before the Deputy Superintendent of Police for the purpose of investigation. The petitioner again appears and submits all the documents and completely assisted in the investigation so conducted against the Company. Despite the petitioner submitting everything, it appears a look out circular was issued against him, which stopped him from undertaking travel beyond the shores of the nation. It is this look out circular which forms the challenge in the companion petition....
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....aka and then a private complaint is filed in which the petitioner is drawn as accused No.10, all for offences under Sections 447 and 448 of the Companies Act. 4.2. The learned counsel submits that, as on the date on which the petitioner was a Director and resigned, Sections 447 and 448 were not in the statute book. They are brought in as offences under the new Act, the Companies Act, 2013. He would, therefore, submit that the petitioner cannot be permitted to be prosecuted for reasons more than one. Insofar as challenge to the look out circular is concerned, the learned counsel would submit that if these proceedings are obliterated, the corollary would be the look out circular getting quashed. Though it is earlier in time, the fulcrum is impending crime against the Company. He would seek quashment of proceedings on the aforesaid score. 5. Per contra, the learned Central Government Senior Panel Counsel Sri M.N. Kumar would seek to contend that the petitioner though resigned, was still the face of the Company. All the communications are by the petitioner for the Company. He has only resigned on paper, but was managing the affairs of the Company as its Auditor. Therefore, it is ....
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....anglore 560 003. Sub:- Attend this office along with Information and Documents Ref:- EOW C. R. No. 78/2013 U/s. 409, 420, 465, 468, 471, 120(B), 201 of IPC r/w 3, 5, 6 PCMCB Act r/w 2(c), 3 MPID Act 1999 r/w 5, 7 Drug and Magic Remedies Act 1954. (Oshiwara Police Station, C. R. No. 316/2013) This is to inform you that, the above mentioned case has been registered against the directors and officials of M/s. Vihaan Direct Selling (India) Pvt Ltd, M/s. QNet Ltd, Hongkong, M/s. Transview Enterprise India Pvt Ltd, M/s. Vanmala Hotels, Travel and Tourism Services Pvt. Ltd. and others and being investigated by Economic Offences Wing, Crime Branch, Mumbai. During the course of investigation, it has revealed that you were the director as well as accountant/auditor of one of the accused company M/s. Vihaan Direct Selling India Pvt. Ltd., Banglore. In this regard the following information and documents are required for the purpose of further investigation. 1) How and When you came in contact with officials of M/s. QNet Limited, Hongkong, M/s. QI/Group of Companies, Malaysia and Hongkong, M/s. Questnet Enterprises India Pvt. Ltd., Chennai a....
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.... Police Commissioner's Office Compound, New Building, 3rd Floor, Mumbai-400001. Dear Sir, Sub: Information & documents requested by your goodself Ref: EOW C.R.No.78/2013 U/s 409, 420, 465, 468, 471, 120(B), 201 of IPC r/w 3,5,6 PCMCB Act r/w 2(c), 3 MPID Act 1999 r/w 5, 7 Drug and Magic Remedies Act 1954. (Oshiwara Police Station, C.R.No.316/2013) With reference to above, your requested us to appear before your goodself with the following information. 1. During Financial year 2011-12, three officials of Qnet Ltd/Honglong, Malasiya approached me to provide my services regarding setting up of a Franchise Company in Bangalore/India. Two main persons whose name I recall are Mrs. Veni who was a project manager & Mrs. Joanna who was a legal advisor. Basically they wanted to know what kind of company to be formed, what should be the capital structure, if FDI was allowed & what are the various taxes to be paid for their line of business in India. I advised them on the various taxes to be paid in India & in State of Karnataka. I also advised them to seek opinion from experts on FEMA & FDI & practicing Company Secretary rega....
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....te I have also consulted the Company in Income Tax & other Tax matters. I will glad to furnish any further details you may require in this regard." (sic) Owing to the reply, the petitioner comes to be dropped from the array of accused in the Economic Offences Case No.78 of 2013. There are 31 accused named, but the name of the petitioner is not found. This could be gathered from the names of the accused as appended to the petition. The list reads as follows: "Sections - 409, 420, 465, 468, 471, 120(b), 201, IPC a/w Section 3, 5, 6, P.C.M.C.B. Act, a/w. no.2C, 3 M.P.I.D. Act a/w 5, 7 Drugs & Magic Remedies Act Claimant: - Shri. Gurupreet Singh Inderjeet Singh Anand Name of the Accused 9. Two years passed by, another notice comes to be issued by the Criminal Investigation Department, Bengaluru on 04-09-2018. The notice reads as follows: "NOTICE Whereas, it appears that there are been transfer of founds form M/s Vihaan Direct Selling (India) Pvt. Ltd. in to your accounts. In this regarded it appear that you are acquainted with the facts & circumstances of the case noted below, which I am investigating under the Code of Criminal Procedure Code. ....
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....e paid Income Tax, TDS dues, Service Tax dues & VAT & GST dues. 5. We have enclosed our ledger account giving details of receipts & payments of Taxes. We are also enclosing copies of all the challans of month May 2017 as sample for your verification & if required we are ready to produce before your good self copies of all the Tax challans paid by us on behalf of Vihaan. Hence, as can be seen from above we are only rendering professional services to Vihaan as Chartered Accountants. This matter was also investigated by Enforcement Directorate, Bangalore & EOW Mumbai Police. We will be glad to furnish any further details you may require in this regard." ..... ..... ..... 19.09.2018 To, Deputy Superintendent of Police Cyber Crime Police Station, C.I.D, Head Quarters, No.1, Carlton House, Palace Road, Bangalore-560001. Dear Sir, Sub: Investigation in the case of M/s Vihaan Direct Selling India Pvt Ltd Ref: Your notice No.Cr-24/HalasoorPS/CID-Inv-18 In continuation to our personal hearing on 07.9.2018, we furnish the following as requested by your good-self: 1.....
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.... It is presumably that the petitioner was dropped for the reason that nothing was found against him and his reply was found satisfactory. 10. Then begins the third proceeding. Three years later, the Registrar of Companies/the respondent in Crl.P.No.12441 of 2022 files a private complaint before the learned Magistrate under Section 200 of the Cr.P.C., now for the offences under Sections 447 and 448 of the Companies Act, 2013. In the said complaint, in P.C.R.No.35 of 2022 the petitioner is arrayed as accused No.10. In the entire complaint the allegations/role of the petitioner are found at paragraphs 3, 20(vi), 26 and 32. They read as follows: ".... .... .... 3. The accused No.1 i.e. the company had only two directors from 28/09/2016 i.e. accused Nos. 2 and 3, respectively. However, they have been disqualified under section 164(2) of the Companies Act, 2013 with effect from 16/05/2019 by the Complainant Accused Nos.4 to 10 are Former Directors and Accused Nos. 11 and 12 are Promoters and Shareholders of Accused No.1 Company and are liable for punishment under section 447 read with section 448 of the Companies Act, 2013. The accused Nos.2 and 3 have deliberately provide....
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....y have not acted in utmost good faith and their action is not for proper purpose as is evident from the fact that numerous people have lost their hard-earned money by investing in the said company. Thus, they are liable for action under section 447 of the Companies Act, 2013 and a show-cause notice was sent to them to show cause as to why penal action should not be initiated against them." On a blend of the aforesaid paragraphs, there is nothing that can be said against the petitioner. It is the case of the complainant itself that accused No.1/Company began its business operations in the year 2013-14, before which the petitioner had resigned. The complaint itself narrates that the petitioner was a Director for four months, but he was a former Director and, therefore, he should be prosecuted. The complaint is absolutely bald insofar as the petitioner is concerned. Yet, against other Directors/accused, a plethora of narrations of particular transactions are found. The concerned Court upon complaint, takes cognizance by the following order: "Date: 30-07-2022 The Central Government Senior Panel Counsel for complainant and complainant have filed the complaint U/sec.....
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....nion petition W.P.No.27046 of 2019, which challenges the look out circular, also deserves to succeed, for the reason that the look out circular was obtained on a statement of oath. The Economic Offences Wing on whose proceedings LOC had been generated against the petitioner, has filed charge sheet in C.C.No.9 of 2023 detailing every act and every accused for several offences. The name of the petitioner is not found as an accused. 13. For the aforesaid reasons, the following: ORDER (i) Criminal Petition and Writ Petition are allowed. (ii) Proceedings in Special C. No.2001 of 2022 pending before the LIX Additional City Civil and Sessions Judge, Bengaluru stands quashed. (iii) Look Out Circular issued against the petitioner by the respondents stands quashed. (iv) It is made clear that the observations made in the course of the order only relate to the petitioner/ accused No.10 and would not be applicable to any other accused in the impugned proceedings. ============= Document 1 FORM 32 Particulars of appassbest of Managing Director, directors, manager and secretary and the changes ansong them or consent of candidate to act ana Managing....
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....irth 13/11/1965 IN Change in designation Cessation Appointment Date of appointment or change in designation Designation Director (DD/MM/YYYY) Category Whether chairman, executive director, non-executive director Chairman Executive director Non-executive director DIN of the director to whom the appointee is alternate Pro-fill Name of the director to whom the apportée is alternate Name of the company or institution whose nominee the appointee is e-mail ID of director [email protected] In case of cessation Hereby confirmed that the above mentioned ) Managing Director is not associated with the company Director (DD/MM/YYYY) due to with effect from 29/02/2012 Resignation Document 2 SR No Accused Name Arrest Date Release date Sr. No. Accused Name Arrest Date Release date Messers. Vihaan Direct Selling [India] Pvt. Ltd 2 Michael Joseph Ferreira 01.10.16 Still in the Judicial Custody Malcolm Nozer Desal 01/10/16 Still In the Judicial Custody 4 Srinivasa Rao Vanka 01.10.10 5 Magaral V. Balaji 01/10/16 Still In the Judicial Custody Chinar Surendrarao Shinda Dt. 13.1.....