Gujarat High Court
Manish R Bhatt vs Registrar Of Companies on 31 August, 2021
Author: Nikhil S. Kariel
Bench: Nikhil S. Kariel
R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 5984 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIKHIL S. KARIEL Sd/-
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1 Whether Reporters of Local Papers may be allowed to see the Yes
judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the judgment No
?
4 Whether this case involves a substantial question of law as to the No
interpretation of the Constitution of India or any order made
thereunder ?
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MANISH R BHATT
Versus
REGISTRAR OF COMPANIES & 1 other(s)
========================================================
Appearance:
MR BB NAIK SENIOR ADVOCATE WITH MR VIJAY H PATEL(7361) for the
Applicant(s) No. 1
. for the Respondent(s) No. 1
MR DEVANG VYAS(2794) ADDITIONAL SOLICITOR GENERAL for the
Respondent(s) No. 1
MS MAITHILI D MEHTA ADDITIONAL PUBLIC PROSECUTOR(2) for the
Respondent(s) No. 2
========================================================
CORAM:HONOURABLE MR. JUSTICE NIKHIL S. KARIEL
Date : 31/08/2021
ORAL JUDGMENT
1. Heard learned Senior Advocate Shri B.B. Naik with learned Advocate Shri Vijay Patel on behalf of the applicant, learned Page 1 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 Additional Solicitor General Shri Devang Vyas on behalf of respondent no.1 and learned Additional Public Prosecutor Ms. Maithili D. Mehta on behalf of the respondent no.2-State.
2. By way of this application, the applicant prays for following relief:
"8. (A) That this Hon'ble Court may be pleased to quash and set aside the order dated 30.01.2013 passed by the learned Additional Chief Metropolitan Magistrate, Ahmedabad in the order below Exh. 4 in Criminal Case No. 325 of 2002 and be further pleased to allow application at Exh. 4 praying for discharge filed by the petitioner.
(B) That pending hearing and final disposal of this petition, this Hon'ble Court may be pleased to stay further proceedings of Criminal Case No. 325 of 2002 insofar as it concerns the petitioner.
3. Facts in brief leading to filing of the present application are stated as hereunder:
A company named Shri Makalaxmi Agricultural Developments Ltd. ( hereinafter referred to as the "company") was incorporated under the provisions of the Companies Act, 1956 on 25.02.1993 and whereas the present applicant had been appointed as a Director with the company. According to the applicant he had been appointed as a Director in his capacity as an Advocate to assist the company on legal issues. The company had come out with public issue of equity shares vide prospectus dated 25.06.1996 for an amount of Rs. 370 lacs. It is stated by the applicant that soon thereafter i.e. on 20.03.1997 the Page 2 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 applicant had submitted his resignation which was accepted by the company and Form No. 32 in the said regard had been filed with the office of the Registrar of the Companies, Gujarat. That the Assistant Registrar of Companies vide notice dated 11.07.2002 had issued a notice for default of Sections 63, 68 and 628 of the Companies Act, 1956 against the company and its Directors including the present applicant more particularly with regard to the public issue of equity shares for Rs. 370 lacs vide prospectus dated 25.06.1996. It is stated in the notice that while the prospectus mentioned that the main object of the public issue was to part finance the cost of project for producing agriculture product like fruits, cash-crops, coarse grains etc. and the commercial production was to be commenced by October, 1996 from the Balance sheet of 31.03.1997, 31.03.2000 and 31.03.2001 it could be seen that the purpose for which the public issue had been made was not implemented by the company and the entire amount received through the public issue had been deployed in loans and advances etc. Thus the Directors including the applicant were called upon to explain why the penalty action under Sections 63, 68 and 628 of the Companies Act,1956 should not be taken against the Directors for making false deceptive, misleading and dishonest statement/promise. The applicant vide communication dated 15.07.2002 had replied to the said notice inter alia submitting that he Page 3 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 was never actively involved in day to day management and affairs of the company and furthermore he did not have any knowledge of the alleged contravention. It was further submitted that in any case the applicant had tendered his resignation as Director vide letter dated 20.03.1997 which had been received and accepted by the company and Form No. 32 has already been filled up at the office of Assistant Registrar at Ahmedabad. It was further stated that the applicant was not an officer of the Company within the meaning of Section 5 of Companies Act and that procurement of finance and its utilizations were never entrusted to the applicant. The applicant thus requested that the proceedings qua the applicant may be dropped. It appears that the reply of the applicant had not been accepted and criminal case being criminal case No. 325 of 2002 came to be filed before the learned Additional Chief Metropolitan Magistrate, Ahmedabad against the Directors of the company including the present applicant.
The applicant upon such criminal case being filed had preferred Discharge Application on 16.07.2003. The applicant had also given further submission in the Discharge Application on 04.08.2003 more particularly submitting that the discharge application was invoking provisions of Section 633(1) of the Companies Act, 1956 and whereas the applicant had reiterated the submissions made by him in reply to the show cause notice. The applicant had also annexed Page 4 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 affidavit of one Shailesh Chandranra whole time Director of the Company inter alia stating that the applicant was never in-charge of procurement of finance and its utilization nor was the applicant actively involved in the day to day management and affairs of the company. The application had been opposed by the Registrar of Companies by filing reply and whereas vide order below Exh. 4 dated 30.01.2013 the Additional Chief Metropolitan Magistrate, Ahmedabad in Criminal Case No. 325 of 2002 had been pleased to reject the application preferred by the applicant for discharge. By of present application, the applicant seeks to assail the said order passed by the learned Magistrate.
4. It appears that initially this Court vide order dated 17.04.2013 while issuing notice had permitted the applicant to seek an exemption from personal appearance and whereas it was further directed that such application shall be considered and granted by the Court below in view of the fact that the High Court was seized of the matter. It further appears that vide an order dated 19.12.2018 this Court had stayed the proceedings of Criminal Case No. 325 of 2002 qua the applicant till the pendency of the present application.
5. Learned Senior Advocate Shri B.B. Naik appears with learned Page 5 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 Advocate Shri Vijay Patel for the applicant and submits that the applicant had been appointed as a Director in his capacity as an Advocate in the year 1993 and whereas while it is true that the applicant was the Director at the time of the company coming out with public issue for Rs. 37,00.000/- at the same time the applicant was not involved in the day to day affairs of the company. That the applicant had given his resignation on 22.03.1997 and whereas the balance sheets of the company referred to in complaint were after date when the applicant had resigned. It is stated by the learned Senior Advocate Shri Naik that while the applicant was undoubtedly a Director on the date when the company had come out with the public issue through the prospectus dated 25.06.1996 but soon thereafter i.e. on 20.03.1997 within less than year of the public issue the applicant had resigned and therefore he could not have been made liable for offence punishable under Sections 63, 68 and 628 of the Companies Act, 1956. Learned Senior Advocate Shri Naik has further submitted that while the allegation is that the amount subscribed through the public issue had been utilized for the purpose other than for which it had been raised but at the same time there had not been any complaint by any subscriber. Moreover it is submitted by learned Advocate Shri Naik that the company was not vanishing company. It is further submitted that the company is existing as on today. Page 6 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021
6. Learned Senior Advocate Shri Naik has attempted to submit that purport of Section 68 of the Companies Act was with regard to person knowingly or recklessly making a statement or promise which is false, deceptive or misleading. In this regard it is submitted that there is nothing on record to show that there was any knowing and/or reckless act on the part of the applicant whereby there had been any inducement to another person. It is submitted that merely by holding the post of Director of Company more particularly in absence of any material to show any deliberate or reckless act whereby some one else had been induced, the impugned proceedings may not be permitted to go on by this Court and the same may be quashed by this Court. As far as Section 63 of the Companies Act is concerned, the said section states about the prospectus containing misstatement and every person who had authorized the issue of the prospectus shall punishable with imprisonment and/or fine. It is submitted by learned Senior Advocate Shri Naik that while the applicant was a Director when the prospectus was issued, but since the applicant was not actively involved in day to day affairs of the company, the applicant was not aware about any untrue statement made in the prospectus and furthermore it is submitted that at the relevant point of time the applicant had all the reason to believe that the statement made in the prospectus was true. Page 7 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 6.1 Insofar as Sections 68 and 628 of the Companies Act, 1956, it is submitted that the submissions as regards Section 63 inasmuch as neither the applicant had made any statement which was false in any material particular or the applicant knowing to be false would apply with equal vigour. Thus submitting learned Senior Advocate Shri Naik has further submitted that the learned Magistrate has committed grave error of law and fact by not discharging the present applicant.
7. Learned Senior Advocate had submitted in this regard that application had been preferred by the applicant invoking the provisions of Section 633(1) of the Companies Act, 1956 which aspect had not been appreciated by the learned Magistrate in its proper perspective. It is submitted that since there is nothing on record to show that the applicant had not acted honestly and reasonably at the time of issuance of prospectus and since the applicant had resigned in March 1997 within a period of less than a year after the public issue, and furthermore since none of the subscribers to the public issue has raised any grievance and more particularly since the show cause notice is issued approximately five years after the applicant had resigned the applicant ought to have excused by the learned Magistrate and having not done so, therefore this Court may interfere in the said order and Page 8 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 discharge the present applicant.
8. As against the same learned Additional Solicitor General of India Shri Devang Vyas on behalf of respondent no.1 strongly opposed this application and has submitted that the applicant was a Director when the company had come out with a public issue and thus no matter if the applicant had resigned thereafter, the complaint for not utilizing the prospectus of the public issue for the purpose for which it had been raised would be valid consideration for filing of criminal case under Sections 63, 68 and 628 of the Companies Act, 1956. It is stated by learned Additional Solicitor General that since the applicant was a Director he ought to have ensured that the proceeds raised from the public issue should be utilized for the purpose for which it had been raised and since the applicant does not appear to have done so, this Court may not interfere with the complaint at this stage.
9. As against the same, in rejoinder learned Senior Advocate Shri Naik relied upon affidavit filed by whole time Director of the company annexed with the further statement of the applicant before the learned Magistrate and submits that since the whole time Director had accepted and stated that the applicant was neither involved or in- Page 9 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 charge of procurement of finance and its utilization nor was the applicant actively involved in day to day affairs of the company therefore the applicant ought to have been discharged.
10. Learned Senior Advocate Shri B.B. Naik has relied upon the decision of this Court in case of Hafez Rustom Dalal vs. Registrar of Companies in Company Application Nos. 51 with Company Application and 52 of 2003 and in case of Vadibhai M. Patel vs. Registrar of Companies in Special Criminal Application No. 2841 of 2011.
11. Heard learned Advocates for the parties who have not submitted anything further.
12. Since the offences alleged against the present applicant are under Sections 63, 68 and 628 of the Companies Act 1956 and whereas the crux of the submission on part of the applicant being that the learned Magistrate ought to have exercised powers under Section 633 of the Companies Act 1956, this Court deems it appropriate to refer to reproduce the said Section as hereinbelow;
"63 Criminal liability for mis- statements in prospectus.
(1) Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorised the issue of the prospectus shall be punishable with imprisonment for a term which may extend to two years, or Page 10 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 with fine which may extend to fifty thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did, up to the time of the issue of the prospectus believe, that the statement was true.
(2) A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given-
(a) the consent required by section 58 to the inclusion therein of a statement purporting to be made by him as an expert, or
(b) the consent required by sub- section (3) of section 60.
68. Penalty for fraudulently inducing persons to invest money. Any person who, either by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or mis- leading, or by any dishonest concealment of material facts, in- duces or attempts to induce another person to enter into, or to offer to enter into-
(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting shares or debentures; or
(b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of shares or debentures;
shall be punishable with imprisonment for a term which may extend to five years, or with fine which may extend to ten thousand rupees, or with both.
628. Penalty for false statements. If in any return, report, certifi- cate, balance sheet, prospectus, statement or other document re- quired by or for the purposes of any of the provisions of this Act, any person makes a statement-
(a) which is false in any material particular, knowing it to be false; or
(b) which omits any material fact knowing it to be material; he shall, save as otherwise expressly provided in this Act, be punish- able with imprisonment for a term Page 11 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 which may extend to two years, and shall also be liable to fine.
"633. Power of Court to grant relief in certain cases.(1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit:
Provided that in a criminal proceeding under this sub- section, the Court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.
(2) Where any such officer has reason to apprehend that any pro-
ceeding will or might be brought against him in respect of any negli- gence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such appli- cation shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub- section (1).
(3) No Court shall grant any relief to any officer under sub- section (1) or sub- section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted."
12.1 Section 63 of the Companies Act 1956 inter alia envisages that if there is untrue statement in prospectus then every person who authorized the issue of such prospectus shall be punishable with Page 12 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 imprisonment or fine as stated in the said section unless it is proved that the statement was immaterial or that the person had reasonable ground to believe that the statement was true till the time of issuance of prospectus.
12.2 Section 68 of the Companies Act, 1956 states regarding punishment for a person who knowingly or recklessly makes a false, deceptive or misleading statement or promise or by any dishonest concealment of material facts, induces or attempts to induce another person to enter into, or to offer to enter into any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting shares or debentures; being punishable punishable with imprisonment and fine as stated in the said Section.
12.3 Section 628 of the Companies Act, 1956 states regarding punishment for making a false statement or material ground in any return, report, certificate, balance sheets, prospectus etc required by or for the purposes of any of the provisions of the Act .
13. In this backdrop of the scheme of the Sections, contravention of which is alleged, the allegation against the applicant as made in the complaint is required to be looked into. For the purpose of better Page 13 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 appreciation, paragraph nos. 2, 3 and 4, 5 of the complaint is reproduced hereinbelow.
"2. That the Accused No.1 to 7 were the Managing/ Whole time/Director of the company during relevant period & signatory of the prospectus to which the complaint relates and are liable for default /violation of the Act.
3. That the company came out with a public issue of Equity Shares vide prospectus dated 25-06-1996. The details of public issue, object of issue and the statement /forecast made, by the signatories to the prospectus and observant on of the Compliant are stated, in brief, as per the Show cause notice issued 11-07-2002 annexed herewith marked, as Annexure 'A' and abstract of prospectus as Annexure "B" to this complaint.
4. That the signatories to the prospectus being Directors of the company, have failed to implement the project for which issue was made and/or failed to fulfill the promise/statement so made, by mis-utilization of the issue proceed for the purpose other than those for which it was raised.
5. That since the Company did not implement the project and /or did not fulfill the statement/forecast/promises made in the prospectus, for which public issue was made, which amounts to deceptive and misleading statement made knowingly, and/or recklessly inducing public/investors to subscribe its shares offered through the said prospectus. By doing so, the Accused No. 1 to 7 have committed default under Sections, 63,68 and 628 of the Act and have rendered themselves liable to be punished under the said provisions of the Act."
14. The crux of the allegation against all the Directors of the Company including present applicant ( at the relevant point of time) Page 14 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 appears to be that the Directors had failed to implement the project for which the public issue was made and had failed to fulfill the promise/statement and that the Directors have misutilised the proceed for purpose other than those for which it was raised. It is alleged that since the project was not implemented and the permission made in the prospectus for public issue was not satisfied, the same amounts to making of deceptive, misleading statement knowingly made and/or recklessly inducing public to subscribed the shares offered through the prospectus.
15. As such what becomes clear here is that while there is allegation of misutilization of proceeds of the public issue for purpose other than which had been raised there are no specific allegations against the applicant as Director of having made specific statement which was either untrue or deceptive or misleading, has been stated in the complaint.
16. As against the same, Section 633 of the Companies Act, 1956 empowers the Court in a proceeding for negligence, default, breach of duty etc. against an officer of the Company to discharge the said person even when the officer concerned would be liable in respect of negligence, default, breach of duty etc. but the officer had acted Page 15 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 honestly and reasonably and having regard to all circumstances of the case including those connected with his appointment.
17. As noticed hereinabove a closer perusal of Section 633 of the Companies Act, 1956 also reveals that while hearing the case if it appears to the Court that the Officer is or may be liable, then for the reasons stated hereinabove may relieve him partially from the liability. That use of the words ' he is or may be" empowers the Court to exercise the power at any stage inasmuch as the words "may be"
connotes the discretion available to the Court to discharge a person during the course of the Trial whereas having regard to all the facts and circumstances, the Court comes to a conclusion that the person concerned may be liable for negligence etc. On the other hand the words "he is" connotes the discretion available to the Court to discharge a person after the Trial even if the Court is convinced that the person is liable. Thus the Section empowers the Court to relieve the person taking into consideration all the circumstances of the case including those connected with his appointment. In the considered opinion of this Court, the provisions of the said Section gives vast powers to the Court hearing the case to relieve an officer of the Company even if the Court is convinced that the officer is liable or it appears to the Court that the officer may be liable for the breach as Page 16 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 stated in the said Section albeit after coming to a conclusion that the officer had acted honestly and reasonably and that the Court can also take into consideration all the circumstances of the case including those connected with the appointment of the officer concerned.
18. Since Section 633 envisages proceedings against an officer of the company therefore the issue of whether the applicant would fall under the definition of officer of the company also requires consideration. At this stage it would be worthwhile to quote definition of Section 2(13) and Section 2(30) of the Companies Act,1956.
2. Definitions. In this Act, unless the context otherwise requires,- (13) " director" includes any person occupying the position of director, by whatever name called;
(30) " officer" includes any director, manager or secretary, or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is or are accustomed to act,]
19. Having regard to the definitions above juxtaposed with the facts of the present case, the present applicant though claiming to be a Director appointed on account of his position as an Advocate to advise the company on legal issues, is a Director none the less as regards the term officer, the definition inter alia envisages about any Page 17 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 director, in accordance with whose direction or instructions, the Board of Directors or any of the Director is or are accustomed to act. The applicant being appointed as a Director and according to his own admission giving advise on legal issues, it can be reasonably held that on legal aspects, the Board of Directors or the Managing Director or any other Director managing the company would be or would have acted as per advise of the applicant hence, on a conjoint reading of Section 2(13) read with Section 2(30), the applicant would be an officer of the Company and thus entitled to have his case considered by the Court under Section 633 of the Companies Act.
20. Appreciated from the context of the discretion available to the Court under Section 633, it appears that this was fit case for invoking the powers available to the Court herein and relieve the applicant. The relevant consideration here would be (1) that the applicant a practicing lawyer appears to have been appointed as a Director for providing legal advise whereas there is nothing to the contrary coming on record (2) the prospectus for the public issue was dated 25.06.1996 and whereas the applicant had submitted his resignation on 22.03.1997 which had been received and accepted by the company and Form No. 32 had been filed in the office of the Registrar of companies.(3) full time Director of the company has Page 18 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 stated in the affidavit that the applicant was never in-charge of procurement of finance and its utilization and that the applicant was never actively involved in day to day management and affairs of the company. That the applicant does not have any knowledge of the implementation or otherwise of the project as per the prospectus. The project as per the prospectus, as can be culled out from the notice by respondent no.1 dated 11.07.2002 was to part finance cost of products for producing agricultural products like fruits, cash- crops, coarse grain etc.
21. The balance sheets which had been relied upon by the respondent alleging non implementation of project by the company are dated 31.03.1997 and 31.3.2000 31.03.2001. 31.03.1997 being in close proximity to the resignation of the applicant whereas balance sheet dated 31.03.2000, 31.03.2001 being after three years and four years respectively after resignation of the applicant.
22. Show cause notice had issued on 11.07.2002 and the complaint also being filed in the year 2002, approximately 5 years of after the applicant resigned from the company.
23. At this stage, this Court deems fit appropriate to refer to Page 19 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 observations of this Court in case of Hafez Rustom Dalal vs. Registrar of Companies in Company Application Nos. 51 and 52 of 2003 more particularly para 31 thereof which is reproduced hereinbelow.
"31. If the opponent is of the view that the Directors and/or Promoters of the Company have committed breach of the provisions contained in Sections 63, 68 & 628 of the Act, he should not have waited for long ten years. Such commission or omission on their part would have come to the forefront immediately. The action taken after ten years itself suggests that it was based on the instruction issued by the Director of Inspection and Investigation to initiate actions against the Vanishing Companies. While issuing notices, the respondent authority has not pointed out any specific instances stating that which false or deliberate statements were made in the Prospectus or that such statements were made to induce the public for subscribing the shares of the Company. If any action is sought to be taken without any basis, the Court has every power to entertain an application under Section 633(2) of the Act. It says that Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under Sub-section (1).
24. Taking into consideration the relevant aspects as stated hereinabove this Court is of the considered opinion that learned Additional Chief Metropolitan Magistrate, Ahmedbad had committed error in order below Exh. 4 in Criminal Case No. 325 of 2002 in not relieving the present applicant under the powers available to it under Section 633 of the Companies Act.
25. Having regard to the discussion, observation and findings Page 20 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022 R/CR.MA/5984/2013 JUDGMENT DATED: 31/08/2021 hereinbaove, in the considered opinion of this Court, the impugned order passed below Exh. 4 in Criminal Case No. 325 of 2002 dated 30.01.2011 by the learned Additional Chief Metropolitan Magistrate, Ahmedabad is erroneous and therefore the same is required to be quashed and set aside and is accordingly quashed and set aside by this Court. The application Exh. 4 preferred by the petitioner in Criminal Case no. 325 of 2002 to be treated as allowed . The petitioner is directed to be discharged ( relieve) from the proceedings to Criminal Case No. 325 of 2002. Rule is made absolute to the aforesaid extent.
sd/-
(NIKHIL S. KARIEL,J) NIRU Page 21 of 21 Downloaded on : Sun Jan 16 11:18:34 IST 2022