Ruled in favour of Gaurang Shethwala (Petitioner)
In Short
A chartered accountant who briefly served as a professional non-executive director of a company in the 1990s was dragged into a criminal case years later after the company vanished. The Gujarat High Court quashed the criminal case against him, noting that he had legally resigned long ago and had only acted in a professional expert capacity without participating in daily business management or fraud.
The Parties
Party A: Gaurang Shethwala S/O Mulchandas Shethwala
Party B: State of Gujarat and Registrar of Companies
Advocates & Judges
For Party A: Learned Advocate Mr. Nandish H. Thackar
For Party B: Learned Advocate Mr. Rohan N. Shah (APP), Learned Advocate Mr. Chaitanya S. Joshi
Judge(s): Hon'ble Justice P. M. Raval
What the Case Was About
Back in 1995, a chartered accountant took up a professional non-executive director role to help a company handle paperwork for a public share issue. He resigned and left the company completely by April 1997. Years later, the company failed to meet its targets, disappeared, and landed on a list of "vanishing companies." The Registrar of Companies filed a criminal complaint against the company and its former directors for cheating and misleading investors through the old share prospectus, dragging the long-gone chartered accountant into court decades later.
Judgment Date
23/10/2026
The Outcome
The court ruled in favour of the petitioner and allowed the application. The criminal case pending against the chartered accountant was completely quashed and set aside.
What the Court Looked At
- The court observed official records showing the petitioner legally resigned as a director on April 1, 1997.
- The court noted that the petitioner was merely a professional chartered accountant acting as a non-executive director, not managing day-to-day business.
- The court pointed out that giving professional expert consent for a prospectus does not make a person criminally liable for its misuse under the law.
- The court found zero allegations in the complaint showing that the petitioner personally induced anyone to invest money.
"Thus, giving consent as an expert... is not to be treated as authorizing the issue of the prospectus, and cannot attract criminal liability."
What This Means For You
Professional experts like chartered accountants, company secretaries, or independent non-executive directors often join companies temporarily just to handle specific compliance work like public share issues. If things go wrong later and the company goes bust, investigators sometimes blindly lump all past directors into criminal complaints. This case proves that if you stepped down legally, kept proper records like Form 32, and never took part in daily fraud or investor deception, you can successfully challenge the prosecution. Do not panic if you are dragged into old corporate disputes, but make sure your resignation paperwork is airtight. Setback Solutions is here to help you understand your options and coordinate your next steps in plain, simple language when you feel overwhelmed by a legal mess.
You Still Have Options
If you are facing a false FIR, trapped in an old corporate dispute, or wondering what to do after being falsely accused, please remember this is not the end of the road. You can always seek a second opinion, re-examine your paperwork, or look for non-judicial guidance to understand your true standing. Reach out to Setback Solutions for help understanding your options and coordinating the next step. Please note that Setback Solutions is not a law firm and does not provide formal legal advice or guarantee any court outcomes, but we are here to offer friendly, plain-language guidance when you need it most.