Section 482 CrPC cannot stay director-status disputes as they are factual issues | Director liability under Payment and Settlement Systems Act : Delhi HC

The Delhi High Court dismissed two revision petitions filed by Amit Kumar, holding that the question of whether he was a director at the relevant time is a factual dispute to be decided by the trial court, and that the Court’s inherent power under Section 482 CrPC was not warranted.

Background & Facts

The Dispute

The petitioner, Amit Kumar (also styled Amit Kumar @ Amit Goel), is facing prosecution in two separate complaints filed under Section 25 of the Payment and Settlement Systems Act, 2007 read with Chapter XVII of the Negotiable Instruments Act, 1881. The petitioner contends that he had resigned from his position as Director of M/s Intec Capital Ltd. on 11.03.2013, and therefore the complaints, which relate to a legal notice and an electronic fund transfer dated 2017, could not have been filed against him.

Key Facts

• Petitioner resigned as Director on 11.03.2013.
• The legal notice that forms the basis of the complaints was issued in 2017.
• The electronic fund transfer in question also occurred in 2017.
• Two criminal complaints were lodged under Section 25 of the Payment and Settlement Systems Act, 2007 read with Chapter XVII of the Negotiable Instruments Act, 1881.
• Notices under Section 251 CrPC have been served on the petitioner and other accused persons; the case is at the stage of the complainant’s evidence, with no witness having yet entered the witness box.
• The petitioner filed two revision petitions: CRL.M.C. 2575/2022 and CRL.M.C. 4981/2024.

Procedural History

• 11.03.2013: Petitioner resigns as Director of M/s Intec Capital Ltd.
• 2017: Legal notice issued and electronic fund transfer made.
• Date not specified: Two criminal complaints filed under the relevant statutes.
• Date not specified: Notices under Section 251 CrPC served on the accused.
• 28.07.2026: The Court, while hearing similar petitions, observed that the director-status issue is a factual dispute.
• 05.08.2026: The Delhi High Court delivered the judgment dismissing both revision petitions.

Parties' Positions

• Petitioner: Argues that he was not the Director at the relevant time; therefore the complaints are untenable and seeks dismissal of the proceedings via the Court’s inherent jurisdiction.
• Respondent (M/s Intec Capital Ltd.): Maintains that the question of the petitioner’s directorship is a factual issue that must be resolved during trial; no admission or acknowledgment of the fact by the complainant has been made.

Relief Sought

The petitioner sought dismissal of the two criminal complaints on the ground that he was not a Director at the relevant time and that the Court should invoke its inherent power under Section 482 CrPC to quash the proceedings.

The Legal Issue

Whether the Delhi High Court can invoke its inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 to stay or dismiss criminal proceedings when the factual question of the petitioner’s directorship at the relevant time remains unresolved and is to be decided at trial.

Arguments Presented

For the Petitioner

• The petitioner contended that his resignation on 11.03.2013 precludes any liability under the complaints filed for actions occurring in 2017.
• He urged the Court to exercise its inherent power under Section 482 CrPC to dismiss the complaints as they were filed against a person who was no longer a Director.
• Relied on the principle that the Court may intervene to prevent abuse of the process when the charge does not stand on a factual basis.

For the Respondent

• The respondent argued that the status of the petitioner as Director at the relevant time is a disputed question of fact.
• Cited precedents (Sarveshwar Shrivastava v. Modern Paper Mart Pvt. Ltd. and Ors., RL Toshniwal v. Indo Rama Synthetics (India) Ltd.) emphasizing that such factual disputes must be resolved by the trial court after evidence is led.
• Maintained that the inherent jurisdiction under Section 482 is not a substitute for a proper trial and should not be invoked at the revision stage.

The Court's Analysis

The Court began by noting that the petitioner’s resignation on 11.03.2013 and the subsequent legal notice and electronic fund transfer in 2017 create a factual matrix that cannot be conclusively resolved without a trial. It referred to its earlier observations in Sarveshwar Shrivastava v. Modern Paper Mart Pvt. Ltd. and Ors. (2026 DHC 6078) where it held that the question of whether a Director had resigned is a disputed question of fact, not amenable to summary dismissal.

"Fact, however, remains that the aforesaid complaints are at initial stage. The fact whether the petitioner ceased to be the Director of the said company at the relevant time is a disputed question of fact, which cannot be gone into comprehensively by this Court in a petition of the present nature, particularly when there is no admission or acknowledgement about the aforesaid fact by his adversary i.e. complainant."

The Court further relied on RL Toshniwal v. Indo Rama Synthetics (India) Ltd. and other authorities, emphasizing that the inherent power under Section 482 CrPC is to be exercised sparingly and only when the proceeding is manifestly an abuse of the process of law. Here, the existence of a factual dispute precludes such a finding. The Court observed that the petitioner could place all relevant documents before the trial court, allowing the complainant to respond, and that the trial court is the appropriate forum to determine the director-status issue.

Consequently, the Court concluded that invoking Section 482 at this stage would be premature and unwarranted. It dismissed the three revision petitions, clarified that there is no adjudication on merits, and reserved the matter for determination by the trial court.

The Verdict

Both revision petitions (CRL.M.C. 2575/2022 and CRL.M.C. 4981/2024) were dismissed. The Court held that the question of whether the petitioner was a Director at the relevant time is a factual issue for the trial court, and therefore the inherent jurisdiction under Section 482 CrPC could not be exercised. No monetary or punitive relief was awarded; the parties’ rights and contentions remain reserved for determination at the appropriate stage of trial.

What This Means For Similar Cases

Inherent Jurisdiction Is Not a Substitute for Trial

• Courts will not entertain applications under Section 482 CrPC where the dispute hinges on factual issues that require evidentiary assessment.
• Litigants must present documentary evidence before the trial court rather than seeking pre-emptive dismissal.

Factual Disputes Must Be Resolved During Trial

• Questions such as the status of a director, resignation dates, or other corporate positions are to be decided on the basis of evidence adduced at trial.
• Parties should be prepared to file and rely on relevant documents, resignation letters, and board minutes during the evidentiary stage.

Preserve Rights for Trial Court Determination

• Even if a revision petition is dismissed, the parties retain the right to raise the same factual issues before the trial court.

• Courts may clarify that no merits have been decided, ensuring that the matter proceeds without prejudice.

• Practical Takeaway: When faced with a factual dispute, avoid premature reliance on Section 482; instead, focus on building a robust evidentiary record for the trial court.

• Practical Takeaway: Draft comprehensive document bundles and be ready to submit them at the earliest stage of the trial to pre-empt any adverse inference.

• Practical Takeaway: Counsel should advise clients that the inherent jurisdiction is a narrow tool, invoked only in cases of clear abuse of process, not merely to avoid factual determinations.