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Harish Chandra Vs. Kavindra NaraIn Sinha and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAllahabad
Decided On
Reported inAIR1936All830
AppellantHarish Chandra
RespondentKavindra NaraIn Sinha and ors.
Excerpt:
- - section 85(3), companies act, like numerous other sections of the act makes any unqualified person who acts as a director of a company liable to a fine not exceeding rs......answers: (1) are contraventions of the provisions the companies act 'offences'? (2) if so, has the high court jurisdiction to take cognizance of and try such offences and to impose the fines prescribed by the provisions of the act? section 85(3), companies act, like numerous other sections of the act makes any unqualified person who acts as a director of a company liable to a fine not exceeding rs. 50 for every day,' etc. it is noteworthy that this section does not say that the court hearing an application can impose such a fine on the person, but merely declares that such a person shall be liable to a fine. similar words have been used in other sections of the act. there can be no doubt, therefore, that a contravention of the provisions of section 85, companies act, is an offence which.....
Judgment:
ORDER

1. In this case an application was filed purporting to be under Section 85, Companies Act, making allegations against several directors of the Bharat Dharma Syndicate, Ltd., of Benares. The allegation inter alia was that the opposite party who is one of the directors had contravened the provisions of Section 85, Companies Act, inasmuch as he had acted as a director without possessing qualification shares in accordance with Article 56 of the Articles of Association. A question arose as to whether his prosecution could be ordered or whether he could be tried by the High Court. Accordingly the following questions have been referred to this Full Bench for answers: (1) Are contraventions of the provisions the Companies Act 'offences'? (2) If so, has the High Court jurisdiction to take cognizance of and try such offences and to impose the fines prescribed by the provisions of the Act? Section 85(3), Companies Act, like numerous other sections of the Act makes any unqualified person who acts as a director of a company liable to a fine not exceeding Rs. 50 for every day,' etc. It is noteworthy that this section does not say that the Court hearing an application can impose such a fine on the person, but merely declares that such a person shall be liable to a fine. Similar words have been used in other sections of the Act. There can be no doubt, therefore, that a contravention of the provisions of Section 85, Companies Act, is an offence which is punishable with fine. The answer to the first question referred to us must therefore be in the affirmative.

2. The second point referred to us raises the question as to whether the High Court has not only jurisdiction to try a person for an offence committed under any of the sections of the Companies Act, but also whether the High Court can itself in the first instance take cognizance of the offence and try the accused and convict him and punish him. The learned advocate for the applicant has urged before us that the High Court is the Court which has been specifically mentioned in Section 3, Companies Act as being empowered to try such persons. But Section 3(1) merely provides that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate. The jurisdiction of the High Court referred to in Section 3 is obviously the jurisdiction exercised by virtue of the specific provisions of the Act and not a jurisdiction which may be invoked where merely a criminal offence is declared. It is very difficult to say that Section 3 has specifically mentioned that the High Court would be the Court which should as a Court of first instance try persons who have been guilty of an offence committed on account of breaches of the provisions of the sections of the Act.

3. On behalf of the opposite party it was first suggested that Section 278(1) which lays down that no Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence against the Act, shows that the Magistrates are mentioned as a Court which should try such offences. We are unable to accept this contention. All that Section 278 lays down is that no Court of a grade inferior to that of certain Magistrates shall have power to try such offences. It does not say that any particular Magistrate or the Sessions Court or the High Court shall try such offences. Sub s. (2) of that section refers to the Presidency Towns of Calcutta, Madras and Bombay and has no application to this High Court. It therefore follows that the Companies Act does not mention any particular Court which would have jurisdiction to try offences under Section 85 and other sections of the Act. Great reliance has been placed by both the learned Counsel on Section 29, Criminal P.C. Mr. Malik has contended before us that under Section 29(2), the High Court has been declared to be one of the Courts which is to try such an offence and that there are no restrictions in it. On the other hand, Dr. Katju has contended that the High Court cannot take cognisance of such an offence, unless and until there has been a commitment to it.

4. It seems to us that there is absolutely no conflict between the provisions of Section 5 and those of Section 29, Criminal P.C. Section 29 merely empowers the High Court, when no Court is mentioned for any offence under any law other than the Indian Penal Code, to try such offences. Section 5(2), on the other hand, lays down that all offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, etc. The mere fact that Section 29 empowers the High Court to try such an offence does not show that the High Court can take cognisance of the offence straight off, try the accused and convict him and punish him without following the procedure laid down in the Code. Indeed we are of opinion that there are elaborate rules of procedure laid down in the Code regulating the trial of accused persons, and it is imperative that they should be followed. Ordinarily under Section 177 every offence is to be inquired into and tried by a Court within the local limits of whose jurisdiction it was committed. Then a Magistrate is empowered to take cognizance of an offence under Section 190. Section 193 lays down how a Court of Session can take cognizance of an offence When the accused had been committed to it by a Magistrate. Section 194(1) then provides that the High Court may take cognizance of any offence upon a commitment made to it in the manner hereinafter provided. The word 'may' has obviously been used to give to the High Court a discretion to take cognizance of such an offence when a commitment has been made to it or to direct that a commitment may be made to the Sessions Court. It does not imply that the High Court can without any commitment made to it, take cognizance of an offence straight off. The reason why the language of Section 193 has not been reproduced in Section 194 is that there is another method by which the High Court can take proceedings, namely, on an application made by the Advocate-General.

5. There would be considerable difficulties if we were to lay down that an application of this kind can be filed in the High Court and the accused person tried straight off here. In the first place, the High Court ordinarily tries accused persons with the aid of a jury, though in certain other cases the procedure may be different. In the next place, an accused person is entitled to a right of appeal when he has been convicted and punished and a large fine imposed upon him. If he is convicted by a Judge of this Court there would be no further appeal. Clauses 16 and 17, Letters Patent, also do not show that the High Court has any such original jurisdiction as is suggested on behalf of the applicant. We are therefore of opinion that the application made to this Court has been misconceived. It was not; a case of the winding up of a Company where in the course of the enquiry the Company Judge came to the conclusion that an offence has been committed in which event he may order an enquiry under Section 237, Companies Act. The matter is not pending before the High Court at all and the Court has been moved for the first time by applicant. We therefore think that if the case were committed to the High Court under Section 194(1), Criminal P.C., or proceedings were started on an application of the Advocate-General under Section 194(2), or were transferred to it under Section 526, Criminal P.C., then the High Court would have jurisdiction to try the accused; but that it would not have jurisdiction to try the accused merely on an application made under Section 85, Companies Act. The answer to the second question referred to us is therefore in the negative.


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