MANU/SC/1323/2011

Equivalent C itation: A I R2012SC31, 2013(1)A LT(Cri)SC233, I V(2011)B C665, 2012(3)B.L.J.26,

2011(6)BomCR694, 2011(2) CGB CL J 263, [2011]168CompCas240(SC), 2012CriL J625,
183(2011)DLT488, 183(2011)DLT488(SC), (2012)2ML J371(SC), 2012(1)N.C.C.260,
2011(4)RCR(Civil)930, 2011(4)RCR(Criminal)835, RLW 2011(4)SC3586, 2011(12)SCA L E471,
(2012)1SCC520, [2011]110SCL489(SC), 2012(1)UC318, 2011(6)UJ3765

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 2033 of 2011 (Arising out of SLP (Crl.) No. 85 of 2011)
Decided On: 08.11.2011
Appellants: Anita Malhotra
Vs.
Respondent: Apparel Export Promotion Council and Anr.
Hon'ble Judges/Coram:
P. Sathasivam and Jasti Chelameswar, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Akhil Sibbal, Deepak Khurana, Archit Birmani and
Umesh Kumar Khaitan, Advs.
For Respondents/Defendant: G.L. Rawal, Sr. Adv. and Ashwani Kumar, Adv.
Case Note:
Criminal - Dishonour of Cheque - Liability of Ex-Director of the Company -
Section 138 of the Negotiable Instruments Act, 1881 (Act) - Appellant/
Director resigned in the year 1998 - Form 32 duly filed by the Company to
record the resignation - Complaint filed in year 2005 arrayed Appellant as
accused therein - Quashing of Complaint sought - Whether the Appellant
has made out a case for quashing the criminal complaint under Section 138
of the Act - Held, in case of a Director, complaint should specifically spell
out how and in what manner the Director was in charge of or was
responsible to the accused Company for conduct of its business and mere
bald statement that he or she was in charge of and was responsible to the
company for conduct of its business is not sufficient - In the case on hand,
except the mere bald and cursory statement with regard to the Appellant,
the complainant has not specified her role in the day to day affairs of the
Company - Appellant successfully established that she had resigned from
the Company as a Director in 1998, well before the relevant date when the
cheques were issued, the High Court, in the light of the acceptable
materials such as certified copy of annual return and Form 32 ought to have
exercised its jurisdiction under Section 482 and quashed the criminal
proceedings - Appellant accordingly was held to be as entitled to succeed
Law of Evidence - Admissibility of Certified Copy of Annual Return of the
Company as proof of reliance - Section 74 of the Indian Evidence Act, 1872
- Impugned finding of the High Court had rejected the reliance on Annual
Return as proof to substantiate resignation of the Director in the absence of

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Form-32 - Held, there is a statutory requirement under Section 159 of the
Companies Act that every Company having a share capital shall have to file
with the Registrar of Companies an annual return which include details of
the existing Directors - Provisions of the Companies Act require annual
return to be made available by a Company for inspection under Section 163
as well as Section 610 which entitles any person to inspect documents kept
by the Registrar of Companies - High Court committed an error in ignoring
Section 74 of the Indian Evidence Act, 1872 - Sub-section (1) of Section 74
refers to public documents and Sub-section (2) provides that public
documents include "public records kept in any State of private documents" -
A conjoint reading of Sections 159, 163 and 610(3) of the Companies Act,
1956 read with sub-section (2) of Section 74 of the Indian Evidence Act,
1872 makes it clear that a certified copy of annual return is a public
document and the contrary conclusion arrived at by the High Court cannot
be sustained - Thus, as the certified copy of the annual return is a public
document, Appellant was held to be as validly resigned from the
Directorship of the Company and hence cannot be held responsible for the
dishonour of the cheques issued in the year 2004
JUDGMENT
P. Sathasivam, J.
1. Leave granted.
2.The appeal is allowed in terms of the signed reportable judgment.
3. Leave granted.
4. This appeal is filed against the final judgment and order dated 16.12.2009 passed
by the High Court of Delhi at New Delhi in Crl. Misc. Petition No. 1238 of 2007
wherein the learned single Judge of the High Court dismissed the petition filed by the
Appellant herein for quashing of Criminal Complaint being No. 993/1 of 2005 filed
against her under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter
referred to as "the Act") in the Court of ACMM, New Delhi.
5. Brief facts:
(a) The Appellant, who was a non-executive Director on the Board of M/s
Lapareil Exports (P) Ltd. (hereinafter referred to as "the Company"), resigned
from the Directorship w.e.f. 31.08.1998. On 20.11.1998, recording the
resignation of the Appellant, the Company filed statutory Form 32 with the
Registrar of Companies. A notice dated 10.12.2004 was issued to the
Appellant regarding dishonor of alleged cheques under Section 138 of the Act
by the Respondents. The Appellant, vide letter dated 15.12.2004, replied to
the said notice informing the Respondents that she had resigned from the
Directorship of the Company long back in 1998. By letter dated 17.12.2004,
the Respondents sought for certain information/documents from the
Appellant relating to the Company. On 18.12.2004, the appellant replied to
the aforesaid letter reiterating that after her resignation she had nothing to
do with the Company and as such her was not in a position to give the
information sought for.
(b) The Respondents filed a complaint under Section 138 of the Act being

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 Complaint No. 993/1 of 2005 in the Court of ACMM, New Delhi against the
Company arraying the Appellant herein as accused No. 3. The Appellant
herein also filed a petition being Criminal Misc. (Main) Petition No. 1238 of
2007 before the High Court of Delhi for quashing of the complaint pending in
the Court of ACMM, New Delhi. The High Court, by impugned judgment dated
16.12.2009, dismissed her petition.
(c) Aggrieved by the said judgment, the Appellant has filed this appeal by
way of special leave before this Court.
6 . Heard Mr. Akhil Sibal, Learned Counsel for the Appellant and Mr. G.L. Rawal,
learned senior counsel for the Respondent No. 1.
7. The only point for consideration in this appeal is whether the appellant has made
out a case for quashing the criminal complaint filed by the Respondents under
Section 138 of the Act.
8 . In the complaint filed by the Respondents before the ACMM, New Delhi, the
Appellant herein was shown as A3. Apparel Export Promotion Council-Complainant
No. 1 therein is a Company duly registered under Section 25 of the Companies Act,
1956 and has been sponsored by the Government of India through Ministry of
Textiles and has been looking after all the matters relating to export of readymade
garments from India to various parts of the world and also administer Garments
Export Policy (GEP) issued by the Government of India from time to time.
Complainant No. 2 is the Joint Director and is otherwise a Principal Officer in the
Apparel Export Promotion Council. Accused No. 1 is a Company incorporated under
the Companies Act, 1956 and in the complaint it was stated that accused Nos. 2 and
3 are its Directors. Insofar as the role of A2 and A3 are concerned, it was stated in
the complaint that they are the Directors of the Company and are responsible for the
conduct of the business and also responsible for day to day affairs of the Company. It
was further stated that all the accused persons, who were in charge of and were
responsible to the Company for the conduct of its business at the time the offence
was committed shall be deemed to be guilty of the offence. It is further seen from the
complaint that on 01.06.2004, the Company had issued certain cheques in favor of
the complainant for the purpose of allocation of quota and revalidation and utilization
thereof. All the cheques mentioned in para 5 of the complaint were sent for
encashment but the same were bounced/dishonored by the drawer Bank, namely, the
Punjab & Sind Bank for the reason "funds insufficient". The complaint further shows
that the said fact was informed to the accused. Thereafter, the complainant intended
to take action under Section 138 of the Act and the complainant got issued a
statutory notice dated 10.12.2004. It was specifically stated in the complaint that the
notices were sent by Regd. AD post on 15.12.2004 and through courier on
13.12.2004 which were duly served on the accused.
9. Mr. Akhil Sibal, Learned Counsel for the Appellant, by drawing our attention to the
reply sent by the Appellant to the aforesaid notice vide her letter dated 15.12.2004
informing the complainant that she had resigned from the Directorship of the
Company long back in 1998, submitted that the complainant having received such
reply dated 15.12.2004 suppressed the same both in the complaint as well as before
the courts below. In the said reply dated 15.12.2004, the appellant has highlighted
that she had resigned from the Directorship of the Company long back in 1998. It is
the grievance of the Appellant that in spite of specific assertion that she ceased to be
a Director from 1998 she was arrayed as accused No. 3 purportedly in her capacity as

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a Director of the Company and her reply to the statutory notice was willfully
suppressed. When this aspect was confronted to Mr. G.L. Rawal, learned senior
counsel for the Respondent, he fairly admitted that the complaint does not refer to
the reply dated 15.12.2004. He further stated that the said omission at the instance
of an undertaking of the Government of India has to be ignored. We are unable to
accept the said contention. Inasmuch as the reply to the statutory notice contains
specific information that she had resigned from the Company in 1998, the
complainant was not justified in not referring the same in the complaint and arrayed
her as accused No. 3 in the complaint filed in the year 2005. No doubt, whether the
Appellant has furnished the required documents in support of her claim for
resignation from the Company in 1998 is a different aspect which we are going to
discuss in the subsequent paras. The reading of the complaint proceeds that on the
date of issuance of cheques, that is, on 01.06.2004, the appellant was a Director of
the Company and in charge of all the acts and deeds of the Company and also
responsible for the day to day affairs, funding monies etc. This assertion cannot be
sustained in the light of her reply dated 15.12.2004 intimating that she had resigned
from the Company in 1998.
10. Mr. Akhil Sibal, Learned Counsel for the Appellant, by drawing our attention to a
certified copy of Annual Return of the Company dated 30.09.1999 filed with the
Registrar of Companies, which was placed on record before the High Court,
contended that it is a public document in terms of Section 74(2) of the Indian
Evidence Act, 1872 and the High Court ought to have accepted the same as a valid
document and quashed the criminal proceedings insofar as the appellant is
concerned. The High Court, in the impugned order, after recording the statement of
counsel for the Petitioner therein (appellant herein) that Form-32 is not available in
the record of the Registrar of Companies and finding that Form-32 is the only
authentic document and annual return dated 30.09.1999 filed by the accused-
Company is not a public document rejected the claim of the appellant and dismissed
the petition filed for quashing the complaint.
11. As regards the reference made by the High Court as to the statement said to have
been made by the counsel for the Petitioner therein that Form-32 is not available in
the record of the Registrar of Companies, Learned Counsel for the Appellant
submitted that no such statement was ever made by the counsel before the High
Court and he placed on record copy of Form-32 as Annexure-P2. A perusal of the
document makes it clear that with effect from 31.08.1998, the appellant Smt. Anita
Malhotra ceased to be a Director since her resigned from the Directorship of the
Company, i.e., Lapareil Exports (P) Ltd. The High Court proceeded that Form-32 is
the only authentic document and in the absence of the same, reliance on Annual
Return is not permissible. The High Court has further held that annual return is not a
public document. It is the assertion of the Appellant that no such statement was ever
made or could have been made as the petition itself enclosed copies of Form 32 and
the receipt of filing of the same. Though the Appellant (petitioner before the High
Court) was unable to produce certified copy of the said Form 32 as it was not
available with the ROC, copy of Form 32 was placed before the High Court. In that
event, we are of the view that the High Court has ignored the fact that the Appellant
has placed on record copy of Form 32 filed by the Company reporting the cessation
of Directorship of the Appellant along with the receipt of filing with the Registrar of
Companies.
12. Mr. Akhil Sibal by taking us through the relevant provisions of the Companies
Act, 1956, particularly, Sections 159, 163 and 610(3) contended that the Annual

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Return dated 30.09.1999 is a public document and the same is reliable and legally
acceptable insofar as the contents of the same are concerned. The said Sections are
reproduced hereunder:
159. Annual returns to be made by company having a share capital.-
- (1) Every company having a share capital shall within sixty days from the
day on which each of the annual general meetings referred to in Section 166
is held, prepare and file with the Registrar a return containing the particulars
specified in Part I of Schedule V, as they stood on that day, regarding--
(a) its registered office,
(b) the register of its members,
(c) the register of its debenture-holders,
(d) its shares and debentures,
(e) its indebtedness,
(f) its members and debenture-holders, past and present, and
(g) its directors, managing directors, managers and secretaries, past and
present:
Provided that any of the five immediately preceding returns has
given as at the date of the annual general meeting with reference to
which it was submitted, the full particulars required as to past and
present members and the shares held and transferred by them, the
return in question may contain only such of the particulars as relate
to persons ceasing to be or becoming members since that date and
to shares transferred since that date or to changes as compared with
that date in the number of shares held by a member.
Xxx xxxx
163. Place of keeping and inspection of, registers and returns.--
(1) The register of members commencing from the date of the registration of
the company, the index of members, the register and index of debenture-
holders, and copies of all annual returns prepared under Sections 159 and
160, together with the copies of certificates and documents required to be
annexed thereto under Sections 160 and 161, shall be kept at the registered
office of the company:
Xxx xxxx
6 1 0 . Inspection, production and evidence of documents kept by
Registrar.
Xxxx xxx
Xxxx xxx
(3) A copy of, or extract from, any document kept and registered at any of

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 the officers for the registration of companies under this Act, certified to be a
true copy under the hand of the Registrar (whose official position it shall not
be necessary to prove), shall, in all legal proceedings, be admissible in
evidence as of equal validity with the original document.
1 3 . A reading of the above provisions make it clear that there is a statutory
requirement under Section 159 of the Companies Act that every Company having a
share capital shall have to file with the Registrar of Companies an annual return
which include details of the existing Directors. The provisions of the Companies Act
require annual return to be made available by a company for inspection (S. 163) as
well as Section 610 which entitles any person to inspect documents kept by the
Registrar of Companies. The High Court committed an error in ignoring Section 74 of
the Indian Evidence Act, 1872. Sub-section (1) of Section 74 refers to public
documents and Sub-section (2) provides that public documents include "public
records kept in any State of private documents". A conjoint reading of Sections 159,
163 and 610(3) of the Companies Act, 1956 read with Sub-section (2) of Section 74
of the Indian Evidence Act, 1872 makes it clear that a certified copy of annual return
is a public document and the contrary conclusion arrived at by the High Court cannot
be sustained. Annual Return dated 30.09.1999 which provides the details about the
existing Directors clearly show that the Appellant was not a Director at the relevant
time. Had the High Court considered the contents of the certified copy of the annual
return dated 30.09.1999 filed by the Company which clearly shows that the appellant
herein (A3) has not been shown as Director of the Company, it could have quashed
the criminal proceedings insofar as A3 is concerned.
1 4 . I n DCM Financial Services Limited v. J.N. Sareen and Anr.
MANU/SC/7699/2008 : (2008) 8 SCC 1, this Court, while considering Sections 138
and 141 of the Act came to the following conclusion which is relevant for our
purpose:
21. The cheque in question was admittedly a post-dated one. It was signed
on 3-4-1995. It was presented only sometime in June 1998. In the meantime
the first Respondent had resigned from the directorship of the Company. The
complaint petition was filed on or about 20- 8-1998. Intimation about his
resignation was given to the complainant in writing by the first Respondent
on several occasions. The Appellant was, therefore, aware thereof. Despite
having the knowledge, the first Respondent was impleaded as one of the
accused in the complaint as a Director in charge of the affairs of the
Company on the date of commission of the offence, which he was not. If he
was proceeded against as a signatory to the cheques, it should have been
disclosed before the learned Judge as also the High Court so as to enable
him to apply his mind in that behalf. It was not done. Although, therefore, it
may be that as an authorized signatory he will be deemed to be person in-
charge, in the facts and circumstances of the case, we are of the opinion that
the said contention should not be permitted to be raised for the first time
before us. A person who had resigned with the knowledge of the complainant
in 1996 could not be a person in charge of the Company in 1998 when the
cheque was dishonored. He had no say in the matter of seeing that the
cheque is honored. He could not ask the Company to pay the amount. He as
a Director or otherwise could not have been made responsible for payment of
the cheque on behalf of the Company or otherwise. [See also Saroj Kumar
Poddar v. State (NCT of Delhi), Everest Advertising (P) Ltd. v. State,
Govt. of NCT of Delhi and Raghu Lakshminarayanan v. Fine Tubes.

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15. In Harshendra Kumar D. v. Rebatilata Koley and Ors. MANU/SC/0100/2011
: (2011) 3 SCC 351, while considering the very same provisions coupled with the
power of the High Court under Section 482 of the Code of Criminal Procedure, 1973
(in short 'the Code') for quashing of the criminal proceedings, this Court held:
25. In our judgment, the above observations cannot be read to mean that in
a criminal case where trial is yet to take place and the matter is at the stage
of issuance of summons or taking cognizance, materials relied upon by the
accused which are in the nature of public documents or the materials which
are beyond suspicion or doubt, in no circumstance, can be looked into by the
High Court in exercise of its jurisdiction under Section 482 or for that matter
in exercise of revisional jurisdiction under Section 397 of the Code. It is
fairly settled now that while exercising inherent jurisdiction under Section
482 or revisional jurisdiction under Section 397 of the Code in a case where
complaint is sought to be quashed, it is not proper for the High Court to
consider the defense of the accused or embark upon an enquiry in respect of
merits of the accusations. However, in an appropriate case, if on the face of
the documents -- which are beyond suspicion or doubt -- placed by the
accused, the accusations against him cannot stand, it would be travesty of
justice if the accused is relegated to trial and he is asked to prove his
defense before the trial court. In such a matter, for promotion of justice or to
prevent injustice or abuse of process, the High Court may look into the
materials which have significant bearing on the matter at prima facie stage.
As rightly stated so, though it is not proper for the High Court to consider the
defense of the accused or conduct a roving enquiry in respect of merit of the
accusation, but if on the face of the document which is beyond suspicion or doubt
placed by the accused and if it is considered the accusation against her cannot stand,
in such a matter, in order to prevent injustice or abuse of process, it is incumbent on
the High Court to look into those document/documents which have a bearing on the
matter even at the initial stage and grant relief to the person concerned by exercising
jurisdiction under Section 482 of the Code.
16. Inasmuch as the certified copy of the annual return dated 30.09.1999 is a public
document, more particularly, in view of the provisions of the Companies Act, 1956
read with Section 74(2) of the Indian Evidence Act, 1872, we hold that the Appellant
has validly resigned from the Directorship of the Company even in the year 1998 and
she cannot be held responsible for the dishonor of the cheques issued in the year
2004.
1 7 . This Court has repeatedly held that in case of a Director, complaint should
specifically spell out how and in what manner the Director was in charge of or was
responsible to the accused Company for conduct of its business and mere bald
statement that he or she was in charge of and was responsible to the company for
conduct of its business is not sufficient. (Vide National Small Industries
Corporation Limited v. Harmeet Singh Paintal and Anr. MANU/SC/0112/2010 :
(2010) 3 SCC 330). In the case on hand, particularly, in para 4 of the complaint,
except the mere bald and cursory statement with regard to the Appellant, the
complainant has not specified her role in the day to day affairs of the Company. We
have verified the averments as regard to the same and we agree with the contention
of Mr. Akhil Sibal that except reproduction of the statutory requirements the
complainant has not specified or elaborated the role of the appellant in the day to
day affairs of the Company. On this ground also, the Appellant is entitled to succeed.

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1 8 . In the light of the above discussion and of the fact that the appellant has
established that she had resigned from the Company as a Director in 1998, well
before the relevant date, namely, in the year 2004, when the cheques were issued,
the High Court, in the light of the acceptable materials such as certified copy of
annual return dated 30.09.1999 and Form 32 ought to have exercised its jurisdiction
under Section 482 and quashed the criminal proceedings. We are unable to accept
the reasoning of the High Court and we are satisfied that the Appellant has made out
a case for quashing the criminal proceedings. Consequently, the criminal complaint
No. 993/1 of 2005 on the file of ACMM, New Delhi, insofar as the appellant herein
(A3) is quashed and the appeal is allowed.

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