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The Official Liquidator of R. C. Abrol and Company (P) Ltd. Vs. R.C. Abrol and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany;Criminal
CourtDelhi High Court
Decided On
Case NumberCriminal Appeal No. 77 of 1972
Judge
Reported in[1977]47CompCas537(Delhi); ILR1976Delhi283
ActsCompanies Act, 1956 - Sections 538
AppellantThe Official Liquidator of R. C. Abrol and Company (P) Ltd.
RespondentR.C. Abrol and ors.
Advocates: S. Jain and; P.C. Khanna, Advs
Excerpt:
.....stated that every offence shall be deemed to be a non-cognizable offence within the meaning of the code of criminal procedure, 1898. (5) thereforee, there is nothing in the criminal procedure code, or in the companies act, 1956, to indicate that the high court has original jurisdiction to try offence complained of in the present case. in fact, both the complaint as well as the accused say that this court has jurisdiction under this section to try the complaint. the purpose of that provision was to enable the court which had passed a winding up order or appointed a provisional liquidator to take cognizance of offences under section 454(5) concerning the failure to file a statement of affairs before the liquidator. thereforee, the scheme of the criminal procedure code is perfectly plain as..........on this question and i now proceed to deliver judgment. (3) i first take up the position under the code of criminal procedure, 1898, which was in force when this complaint was instituted. in section 28, it was provided that offences under the indian penalode could be tried by the high court, the court of session or any other court specified in the eighth column of the second schedule. in section 29, it was stated that any offence under any other law could be tried in a court mentioned in this behalf by that law. however, when no such court was mentioned, the trial would be in the high court or any other court mentioned in the eighth column of the second schedule as being the appropriate court. an examination of the entries in the second schedule relating to offences against other laws.....
Judgment:

D.K. Kapur, J.

(1) The Official Liquidator acting as Liquidator of M/s. R. C. Abrol & Co. (P) Ltd., in liquidation, has instituted a criminal complaint under Sections 538 and 541 of the Companies Act, 1956, on account of the failure of the accused persons to hand over the books of account and records of the company and also, on account of their failure to keep proper books of account duripg the two years immediately preceding the winding up of the company. There are eight accused in the case of whom, Shri R. C. Abrol, accused No. 1 is stated to be the ex-Managing Director, accused Nos. 2 to 4 are stated to be directors and accused Nos. 5 to 8 are stated to be Accounts Officer, Sales Officer and Administrative Officers of the company. This Court had ordered summons to issue on this complaint on 19.

(2) On 22nd September, 1975, I expressed some doubt as to whether this Court had Original Criminal jurisdiction to entertain the criminal complaint as it was not a Court of Original Criminal jurisdiction. Arguments have been addressed on this question and I now proceed to deliver judgment.

(3) I first take up the position under the Code of Criminal Procedure, 1898, which was in force when this complaint was instituted. In Section 28, it was provided that offences under the Indian Penalode could be tried by the High Court, the Court of Session or any other Court specified in the eighth column of the second schedule. In Section 29, it was stated that any offence under any other law could be tried in a Court mentioned in this behalf by that law. However, when no such Court was mentioned, the trial would be in the High Court or any other Court mentioned in the eighth column of the second schedule as being the appropriate Court. An examination of the entries in the second schedule relating to offences against other laws shows that such offences can be tried either in the Court of Session or before Special Magistrates dependent on the degree of punishment that can be awarded. There is no entry enabling the High Court to try any such offence as a Court of Original Criminal Jurisdiction.

(4) Turning now to Section 622 of the Companies Act, 1956, it is stated that no Court inferior to that of a Presidency Magistrate or a Magistrate of the First Class shall try any offence against this Act. In Section 624 of the Act, it is stated that every offence shall be deemed to be a non-cognizable offence within the meaning of the Code of Criminal Procedure, 1898.

(5) thereforee, there is nothing in the Criminal Procedure Code, or in the Companies Act, 1956, to indicate that the High Court has Original Jurisdiction to try offence complained of in the present case.

(6) Reliance has been placed on Section 446(2) of the Companies Act, 1956, to say that this Court has Original Jurisdiction to try the complaint now before me. In fact, both the complaint as well as the accused say that this Court has jurisdiction under this Section to try the complaint. The relevant portion of Secion 446 reads :

'THECourt which is winding up the company shall, notwith- standing anything contained in anyother law for the time being in force have jurisdiction to entertain, dispose of

(A)any suit or proceeding by or against the company. . - . . . ' Thus, it is claimed that the present is a proceeding by the company which can be tried by this Court under the power given by Section 446(2) of the Companies Act, 1956. The point for consideration is whether this power is wide enough to cover the present case and, whether it was the intention of the Legislature that complaints of the type now before this Court, should be tried by the Company Judge on the Original Side.

(7) I do admit that the wording of the Section appears to give a jurisdiction to the High Court or to the District Judge, (if he has jurisdiction, to entertain proceedings by or against the company). In as much as the present complaint can be deemed to be a proceeding initiated by the company through the Official Liquidator, it can be said that the present is a proceeding instituted by the company and, thereforee, is to be tried by the High Court. This interpretation is somewhat weakened by the wording of Section 454(5A) which says that a complaint under Section 454 can be tried by the Court winding up a company. The purpose of that provision was to enable the Court which had passed a winding up order or appointed a Provisional Liquidator to take cognizance of offences under Section 454(5) concerning the failure to file a statement of affairs before the Liquidator. The section would have been quite redundant if the provisions of Section 446(2) were wide enough to enable the Liquidator to file a complaint before the High Court. In my view, the question whether this Court has jurisdiction has not to be decided by trying to determine the intention of the Legislature by referring to Section 446(2) or even to the other provisions of the Compaines Act, 1956. In my view, the proper procedure is to examine the Criminal Procedure Code, as it stood in 1898, to see the necessary steps which have to be taken in order that criminal proceedings can be initiated. There is no doubt that the Court of Session can try a case under the Criminal Procedure Code. But even in the case of the Court of Session, the cognizance of the offence can only take place under Section 193 and the High Court can only take cognizance under Section 194. The wording of Section 194 which is concerned with the taking of cognizance of offences by the High Court, shows that the Advocate General of the State may after the previous sanction of the State Government, exhibit to the High Court, against persons subject to the jurisdiction of the High Court such informations as the Attorney General in England could exhibit on behalf of the Crown in the High Court of Justice in England. This is the sole provision in the Code enabling the High Court to take cognizance of an offence. On the other hand, Section 190 states that the cognizance of criminal offences can be taken by Magistrates, District Magistrate, etc., upon receiving a complaint or upon receiving a report from the police officer or upon information received from a person other than a police officer or upon his own knowledge or suspicion that an offence has been committed. Thus the normal court for taking the cognizance of offences is the Magistrate's Court.

(8) The effect of these sections can now be considered. A criminal offence can come to the cognizance of a magistrate either through a complaint filed before him, or it may be on the basis of a police report, and finally, it may be through an information received. Such a cognizance cannot be taken by the High Court. Section 193 provides that cognizance cannot be taken even by a court of Session except on committal by a Magistrate duly empowered in this behalf. thereforee, the scheme of the Criminal Procedure Code is perfectly plain as to how criminal proceedings can be instituted. A person charging another with a criminal offence can lodge a first information report with the police, who may in the usual course make a report to the Magistrate. Alternatively, the person concerned may make a complaint to the Magistrate directly and finally, information may come to the Magistrate from others or from his own knowledge concerning the commission of a particular offence. In all these cases, the Magistrate can take cognizance and can proceed to deal with the case. The Court of Session cannot take cognizance of any offence directly for trial before that Court. Finally, the High Court cannot take cognizance except on an information lodged in the manner prescribed by Section 194 by the Advocate General of the State. The present case cannot, thereforee, be instituted in this Court, because this Court has no power to take cognizance of the offence. That does not mean that this Court cannot try this case if it wants to do so, by exercise of other powers.

(9) I have up to now examined the position only under the Criminal Procedure Code of 1882. As the judgment is being given after the Code of 1973 has come into force, I would like to examine the position also under the new procedure and note if there is any change in the position. I am doing so because of the importance of the question. Under the Criminal Procedure Code of 1973, the courts empowered to try criminal offences are mentioned in Section 26 ; they are the High Court, the Court of Session or any other court by which the offence is shown as triable in the First Schedule of the Code. This is the position with regard to offences under the Indian Penal Code. In respect of offences under any other law, the courts competent to try' are the High Court or any other court by which such offence is shown as triable in the First Schedule of the Code. thereforee, there is no doubt that the High Court is a Court which is competent to try an offence under the Companies Act, 1956, if we look at Section 26 by itself. However, as I have already noticed in the above analysis, there are two stages in the trial of a criminal offence. Firstly, there must be a court which can take cognizance of the offence and secondly, there must be a court which is competent to try the offence. The cognizance of an offence is to be from the trial of an offence. Even in cases triable by a Court of Session, section 193 of the Criminal Procedure Code, 1973, states that no Court of Session shall take cognizance of any offence as a court of original jurisdiction unless the court has been committed to it by a Magistrate. Thus, before the Court of Session can try an offence triable by it, there must be a committal to that Court by a Magistrate under the Code. The taking of cognizance of an offence is dealt with by Section 190 of the Code of 1973. It states that a Magistrate may take cognizance in three ways (a) upon a complaint, (b) upon a police report and (c) upon information received from a person other than a police officer or upon the Magistrate's own knowledge. Thus, the position in respect of taking cognizance of offences under the Code of 1973, is exactly the same as under the Code of 1882. There is no provision under the Code of 1973 enabling the High Court to take cognizance of an offence. In fact, there are no provision in the Code at all as to the procedure to be followed by the High Court when trying a criminal offence. The procedure is specified only in respect of a Court of Session in Chapter xviii; before a Magistrate in a warrant case the procedure is given in Chapter Xix, and for the trial of summons cases, the procedure is given in Chapter Xix, and for summary trial the procedure is given in Chapter XXI. In my view, the only way in which a trial could take place before a High Court would be for the High Court to transfer a trial before itself under the provisions of Section 407. This analysis would reveal that even under the Criminal Procedure Code of 1973, the High Court cannot try the present complaint even if filed before this Court, but can transfer the proceedings to this Court under Section 407. I read this power of transfer as being added by the power of transfer given by Section 446(3) of the Companies Act, 1956, as I will presently set out.

(10) I must mention that the anomaly created by the fact that Section 26 of the new Code enables the High Court to try offences not only under the Indian Penal Code but any other laws, but does not enable the High Court to take the initial steps in those proceedings, is due to the historical background of the English law. At one time, the Grand Assizers could first consider an indictment and then the actual 288 trial would take place before a Little Assizer. The corresponding procedure is reflected in our law in the fact that in serious cases a- Magistrate has to commit for trial before the Court of Session. This procedure applied in England only for the trial of felonies: In the case of lesser offences or, petty offences the proceedings had to be initiated either before a Justice of the Peace or before a Magistrate. That is exactly the position in respect of lesser offences under our law also, the only difference is that under the existing code of 1973, all proceedings have to be initiated before a Magistrate. The only exception I can think of is the one given by Section 454 of the Companies Act, 1956, which enables the High Court to directly take cognizance of an offence without a Magistrate interfering. Thus, the position with respect to complaints before this Court is that it has no jurisdiction to take cognizance of the same, which must be filed before a Magistrate

(11) One more Explanationn is necessary to show how the provisions of the Companies Act, 1956, and particularly of Section 446 can be reconciled with the above analysis. In my view, the fact that a Magistrate has to take cognizance of the offence does not prevent this Court from transferring the case to itself at a later stage by recourse to Section 446(3) of the Companies Act, 1956. That Section states as follows :

'(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for 'the time being in force, be transferred to and disposed of by that Court.'

This shows that once a proceeding by or against a company has become a pending proceeding in any Court, it can be transferred to the Court which is winding up a company. For instance, if the present complaint is filed before a Magistrate who takes cognizance of it, then the case would become a pending case before a Magistrate and could be transferred to this Court under Section 446(3), if the Court thought it fit to transfer the same.

(12) Thus, the result of this analysis is that the present proceedings cannot be initiated in this Court, because this Court has no jurisdiction to take cognizance of an offence either under Sections 538 or 541 of the Companies Act, 1956. This Court's jurisdiction to take cognizance of offences is restricted to that which is contained in Section 454(5-A) of the Act. However, this Court has power to transfer a pending complaint for trial to itself under Section 446(3) of the Act. The result will be that this complaint has to be returned on the ground that it is not cognizable by this Court and may only be filed before a Magistrate. The result would be that this complaint will have to be returned to the complainant who may file it before the proper Court.


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