REPORTABLE        

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  2033          OF 2011 (Arising out of SLP (Crl.) No. 85 of 2011

Mrs. Anita Malhotra     .... Appellant(s)

Versus

Apparel Export Promotion Council & Anr.     .... Respondent(s)

J U D G M E N T  

P. Sathasivam, J.

1)  Leave granted.

2) 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  

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(hereinafter referred to as “the Act”)  in the Court of ACMM,  

New Delhi.

3) 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 dishonour 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 she was not in a  

position to give the information sought for.   

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(b) The Respondents filed a complaint under Section 138 of  

the Act being 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.

4) Heard Mr. Akhil Sibal, learned counsel for the appellant  

and Mr. G.L. Rawal, learned senior counsel for the respondent  

No.1.

5) 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.  

6) 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  

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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  

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issued certain cheques in favour 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/dishonoured  by  the  drawee  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.   

7) 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  

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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 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  

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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.  

8) 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  

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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.  

9) 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 she 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  

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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.    

10) 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 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  return  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,

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(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”

610.  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  the  officers  for  the  registration  of  

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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.”  

11) 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 make it clear that  

a certified copy of annual return is a public document and the  

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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.  

12) In  DCM Financial  Services  Limited vs.  J.N.  Sareen  

and Another, (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  

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as an authorised 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 dishonoured. He had no say in  the matter of seeing that the cheque is honoured. 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.”

13) In  Harshendra Kumar D. vs.  Rebatilata  Koley  and  

Others,  (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  defence 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  defence  before  the  trial  court.  In  such  a  matter,  for  

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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 defence 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.

14) 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  

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responsible  for  the  dishonour  of  the  cheques  issued  in  the  

year 2004.  

15) 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 vs.  

Harmeet Singh Paintal and Another, (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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16) 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.                

        ...…………….…………………… ……J.                                 

       (P. SATHASIVAM)                                  

.……....…………………………………J.   (JASTI CHELAMESWAR)  

NEW DELHI; NOVEMBER 8, 2011.

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