JUDGMENT:- Heard learned counsel for the petitioner and learned APP for respondent no.2. None present for respondent no.1. 2. By this petition, the petitioner prays for quashing of criminal complaint no.20/5/2000 pending in the Court of Add\. Chief Metropolitan Magistrate, Esplanade, Mumbai. 3. The petitioner joined Moneshi Agro Foods Ltd. (hereinafter referred to as 'the Company') as a non executive Director sometime in February, 1994 and continued to be so till he resigned on 21st June, 1997. The Company came out with a public issue of shares in April, 1994. Prior to the issue, the Company had issued a prospectus dated 30th March, 1994. The issue of the prospectus was authorised and consented to by the petitioner and other Directors of the company. The company collected from institutional investors and public are at large a sum of Rs.8,17,50,000/ - or thereabout in the public issue. On account of several complaints received from investors investigation was carried out by CBI and/or Economic Offences Wing which revealed that the company and its directors had committed offence punishable under the Indian Penal Code (for short 'the IPC') Accordingly, a prosecution was launched against the company and its directors by the CBI for offences punishable u/s.120-B, 420, 467 and 471 of the IPC. I am informed at the bar that the present petitioner was initially named as an accused in the said criminal case but the prosecution against him under the IPC has since been quashed. Subsequently, the respondent no.1, Securities and Exchange Board of India (for short 'the SEBI') filed a complaint (since registered a criminal case no.20 of 2000) in the Court of Add!. Chief Metropolitan Magistrate against the company and all its directors including the present petitioner for offences punishable u/s.63 and 68 of the Companies Act. The present petition has been filed for quashing of the criminal complaint filed by the respondent no.1. In the complaint, it is averred that the statements made in the prospectus were untrue, false and misleading. The company and all its directors including the petitioner who had authorised and consented to the issue of the prospectus which contained untrue and misleading statements knowingly or recklessly are alleged to have committed an offence punishable u/s.63 and 68 of the Companies Act. 4. The company and all its directors including the petitioner who had authorised and consented to the issue of the prospectus which contained untrue and misleading statements knowingly or recklessly are alleged to have committed an offence punishable u/s.63 and 68 of the Companies Act. 4. The statements in the prospectus which are to be untrue are narrated in the complaint and they can be summarised as follows At page 14 of the prospectus, it is stated that the facility of the company would be located at 12 acres of land bearing Survey No.657. Timayyapalam, Vinukonda, Guntur Dist. A.P. The prospectus further states that the company had acquired land' admeasuring 12 acres from P. Dilip Kumar on outright basis for Rs.12 lakhs and that the formalities for transfer of the land in the name of the company in the revenue records would be completed on 31.3.1994. The prospectus also states that the company had taken possession of the land and permission for use of land for industrial purpose was awaited. The complaint states that these statements were untrue and faise. Mr. Dilip Kumar from whom the company is al1eged to have purchased the land did not himself own 12 acres of land and the agreement was made by the company for purchase of 2 acres of land only. (ii) The prospectus states that the order of supply of cooling systems, canning line equipments for packing, filling tunnel equipment's and distribution system were placed with M/s. Humphry Engineers, 702, Swapna Lok Complex, S.Y. Road, Hyderabad who had undertaken the job on turnkey basis for design engineering implementation and commissioning or commercial production. The investigation revealed that no firm by name M/s. Humphry Engineers was in existence. These statements in the prospectus were also untrue and false. (iii) It was revealed that the company had collected a sum of Rs.8, 17,50,000/- by way of subscription for the shares on the basis of untrue statements in the prospectus. The funds were not utilised for the purpose of which they were raised and the amount was diverted to various other companies of the same group and for defraying expenses of the public issue. 5. So far as these allegations are concerned Mr. The funds were not utilised for the purpose of which they were raised and the amount was diverted to various other companies of the same group and for defraying expenses of the public issue. 5. So far as these allegations are concerned Mr. Soni appearing for the petitioner, did not address me on the correctness or otherwise of the averments and in my view rightly so, because at the stage of issuance of the process, the Magistrate not determine whether the avennents are true or false. He has only to look to the averments made in the complaint and whether there is a prima facie material in support of the avennents. The learned Magistrate had issued the process on being satisfied that there was prima facie material in support of the aforesaid averments made in the complaint. 6. Mr. Soni, learned counsel for the petitioner however submitted that the petitioner became a Director of the Company in February, 1994 only a few months prior to the issue of the prospectus. He had relied upon a certificate of due diligence issued by M/s. Master Trust Ltd. who had carried out the due diligence before issuance of the prospectus and relying upon the said due diligence certificate and bonafidely believing that the statements made by prospectus including those extracted above were true he had authorised and consented to the issue of the prospectus. In fact, he had given a power of attorney to Sunil Pawaskar. Company Secretary, to record his consent in writing for issuance of the prospectus. He submitted since the petitioner had a reasonable ground to believe that the statements contained therein were true he was not liable. 7. In order to appreciate the contention, it is necessary to quote section 63(1) of the Companies Act which reads thus: "63(1) Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorised the issue of the prospects shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, that the statement was true." Sub-section (1) of section 63 can be divided into two parts. The first part of sub-section (1) provides that where a prospectus issued after the commencing of the Act includes any untrue statement every person who authorizes the issue of the prospectus shall be punishable with Imprisonment for a term which may extend to two years or a fine which may extend to Rs.50.000/- or both. The second part of subsection (1) creates an exception in favour of a person who proves either that the statement was immaterial or that he had a reasonable ground to believe and did upto the issue of the prospectus believed that the statement was true. The burden of proving the first part i.e the prospectus contains the untrue statements lies on the prosecution. The burden of proving the second part viz. that the person who had authorised the issue of prospectus had reasonable ground to believe that the statement was true lies on the person who claims so. This is also in consonance of section 105 of the Indian Evidence Act which says that where a person is accused of any offence, the burden of proving that the case falls within any of the general exceptions in the IPC, or within any special exception, or proviso contained in any part of the IPC, or any law defining the offence, is upon him. In my view, the burden of proving that the petitioner reasonably believed the statement to be true whether on the basis of a due diligence report of the Master Trust Ltd or otherwise lies on the petitioner. The prosecution cannot be thrown out at the threshold as prima facie the statements made in the prospectus are prima facie untrue and the burden of proving that the petitioner had a reasonable cause to believe them to be true, is on the petitioner. 8. In the circumstances, the prosecution or the issuance of the process cannot be quashed. Petition is accordingly dismissed. Rule is discharged. All interim orders stand vacated. 9. In view of the fact that the prosecution which is commenced in the year 2000 has remained pending on account of the stay granted by this court learned Magistrate is directed to complete the trial expeditiously and in any event within one year. Petition dismissed.