Skip to content


Dhirendra Nath Banerjee Vs. Jamini Kanta Mitra - Court Judgment

LegalCrystal Citation
SubjectCompany;Criminal
CourtKolkata High Court
Decided On
Case NumberCriminal Revn. Case No. 1483 of 1956
Judge
Reported inAIR1958Cal163,1958CriLJ496
ActsCompanies Act, 1956 - Sections 457, 538(1), 545, 621, 645 and 648; ;Indian Penal Code
AppellantDhirendra Nath Banerjee
RespondentJamini Kanta Mitra
Appellant AdvocateJ.M. Banerjee, ;Jagannath Gangopadhyay and ;Monohar Chatterjee, Advs.
Respondent AdvocateAjit Kumar Dutta and ;Prasun Chandra Ghose, Advs.
Cases ReferredLoomchand Sait v. The Official Liquidators
Excerpt:
- .....that the present prosecutions are not for offences against the companies act, but under the indian penalcode. the sections of the companies act to which i have referred make it clear that the legislature has thought it fit to provide for certain safeguards in the matter of prosecution for offences against the companies act. these safeguards are certainly not relevant when a person is being charged with having committed offences under the indian penal code. the presence or absence of an order of the company judge is wholly irrelevant, in my opinion, in the case of a prosecution under the general penal law. the order of s.r. das gupta j. may not have been an order directing a prosecution of the petitioner, as held by the learned chief justice. indeed, no fresh order by the company judge.....
Judgment:
ORDER

Debabrata Mookerjee, J.

1. This Rule was issued upon the Chief Presidency Magistrate of Calcutta and on the opposite party to show cause why certain proceedings under the Indian Penal Code pending against the petitioner should not be quashed or why such other or further order or orders should not be made as to this Court might seem fit and proper.

2. In November 1946, the petitioner was appointed Chief Accountant of the Bengal Textiles Association, Calcutta. On 8th September, 1945, Ordinance No. XXXII of 1945 had been promulgated to incorporate and regulate the Bengal Textiles Association for the purpose of improving procurement and whole-sale distribution of piece goods in the Province of Bengal as it then was. By an order of this Court on the Original Side dated 30th August, 1948, the Association was directed to be wound up, and Sri Bhagawati Prasad Khaitan and Sri Uma Prosad Mookerjee were appointed official liquidators. On 21st May. 1951, the official liquidators presented an application to this Court for an order on the petitioner and several other persons to pay and restore to the Association diverse sums of money and property misappropriated and misapplied and for directions for steps, civil and criminal, against the persons responsible for such misappropriation and misapplication. In December, 1951. The aforesaid liquidators were discharged, and SriRameswarlal Nopany was appointed official liquidator. On 8tn September, 1955, Sri Rameswarlal Nopany filed an application to this Court praying that he may have liberty to prosecute the petitioner and several officers of the Bengal Textiles Association for offences of forgery, using as genuine togged documents, fabrication and falsification of books of accounts of the Association and conspiracy to commit those offences. On the same date, S.R. Das Gupta J. made the following order :

'It is ordered that leave be and the same is hereby granted to the said applicant to start criminal proceedings against (1) Dhirendra Nath Banerjee, (2) Dilip Kumar Mitra, (3) G. Mukhoty, (4) Amitava Roy, (5) Atam Prakas Grover, (6) Malin Majumdar and (7) Pushpendu Ghosh under such sections of the Indian Penal Code as he may be advised.'

As against the aforesaid order of S.R. Das Gupta, J. an appeal was preferred which was heard and disposed of by the learned Chief Justice and Sarkar J. The appea1 was dismissed on the ground inter alia that the order of the learned Judge (S.R. Das Gupta, J.) was not in fact an order directing the liquidator to prosecute the petitioner or any body else. The learned Chief Justice who delivered the Judgment was of the opinion that the order under appeal was not an order under Section 237(1) Of the Companies Act 1913 properly so-called and could not be held to be appealable as such. The learned Chief Justice further observed,

'the mere fact that a reference to Section 237 was made at some stage cannot make the order an order under that section, if having regard to its nature and contents, it cannot be such an order. .. The order under appeal here is not an order directing the prosecution of the appellant. It is merely an order granting leave to the liquidator to prosecute the appellant under such sections of the Indian Penal Code, if any, as he might be advised to proceed under. No prosecution is directed, and indeed no prosecution may ever take place.'

3. Thereafter the complainant opposite party was ordered and authorised to file complaints on behalf of the Bengal Textiles Association (in liquidation) represented by the official liquidator. In all, four cases were filed in each of which the petitioner was named as an accused with other persons under Sections 120-B, 476, 477-A and 408 of the Indian Penal Code.

4. On receipt of the complaints the learned Chief Presidency Magistrate directed enquiries to be held, and thereafter on receipt of reports he issued processes against the petitioner and others in each of these four cases. The petitioner appeared in obedience to the processes issued and then applied to this Court for quashing the proceedings.

5. In support of this Rule Mr. Banerjee appearing on behalf of the petitioner has argued that these proceedings having been instituted without an order of the Company Judge in violation of some of the provisionsof the Companies Act cannot be allowed to continue. Reference is made to the judgment of the learned Chief Justice to which I have already referred to show that the order of S.R. Das Gupta J. was not in fact an order to prosecute. It was held by the Appeal Court that the order was of an administrative character; it was a domestic order addressed really to the application of the funds of the Company rather than an authorisation of prosecution. Thereafter no fresh application was made to the Company Judge for suitable directions to prosecute, and yet the present proceedings were instituted without such prior order. Reference is also made to some of the provisions of the Companies Act, 1956, and it is argued that they have not been complied with, and consequently the present proceedings pending against the petitioner are all liable to be quashed.

6. Section 644 of the Companies Act 1956 provides that the enactments mentioned in Schedule XII are all repealed. Schedule XII contains reference to the Indian Companies Act, 1913. Although Section 648 saves prosecutions instituted by the liquidator or the Court under Section 237 of the Act of 1913, and Section 645 provides that nothing in the Act of 1956 shall affect any order made or proceeding taken under any previous Company Law, provided such law or proceeding was in force at the commencement of the Act of 1956, there was no order or proceeding in existence and no steps were taken by the prosecution to obtain afresh an order of the Court authorising the prose- cution of the petitioner. Section 621 of the new Act provides that no Court shall take cognizance of offence against this Act which is alleged to have been committed by any Company or any officer thereof except on the complaint in writing of the Registrar or a shareholder of the Company or of a person authorised by the Central Government in this behalf. Section 545 says that if it appears to the Court in the course of a winding up that any past or present officer of the Company has been guilty of any offence in relation to the Company, the Court may either on the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the Registrar.

7. It is thus argued that these provisions of the Companies Act have been completely ignored by the prosecuting authorities in the present case. The contention is that after the order of S.R. Das Gupta J. had been pronounced by the Appeal Court as an order not directing the prosecution of any body, no steps were taken to obtain fresh orders from theCompany Judge in accordance with the provisions of the Companies Act to which I have just referred. That being so the present proceedings, it is argued, are not maintainable.

8. This argument, in my view, overlooks an important circumstance, viz., that the present prosecutions are not for offences against the Companies Act, but under the Indian PenalCode. The sections of the Companies Act to which I have referred make it clear that the Legislature has thought it fit to provide for certain safeguards in the matter of prosecution for offences against the Companies Act. These safeguards are certainly not relevant when a person is being charged with having committed offences under the Indian Penal Code. The presence or absence of an order of the Company Judge is wholly irrelevant, in my opinion, in the case of a prosecution under the general penal law. The order of S.R. Das Gupta J. may not have been an order directing a prosecution of the petitioner, as held by the learned Chief Justice. Indeed, no fresh order by the Company Judge was necessary as an essential preliminary to the institution of complaint or complaints for offences under the Penal Code. I feel fortified in the view I take of the matter by a decision of this Court rendered by the learned Chief Justice in the case of Sailendra Nath Sinha v. The State, : AIR1955Cal29 .

9. In that case two past directors of a company in liquidation were being prosecuted on charges under Sections 406, 467 and 477-A read with Section 120-B of the Indian Penal Code. It was argued in that case that the proceedings were incompetent on grounds similar to those urged in this case. The learned Chief Justice decided against the contention and observed as follows:

'.. even assuming that the complaint cannot properly be treated as a complaint by the Official Liquidator himself, I can find no reason for holding that it is invalid. The provisions of the Companies Act which deal with the subject of the liquidator taking criminal proceedings are concerned only with the powers of the liquidator under the Act. They purport to control him alone but not also the criminal Court. At least with regard to offences under the Indian Penal Code and not special offences created by the Companies Act, the criminal Courts are in no way limited to complaints by the liquidator and the fact that the Companies Act contains certain specific provisions regarding the initiation of criminal proceedings by the liquidator for offences committed in relation to the Company does not mean or involve that the criminal Courts cannot entertain a complaint with regard to the same offences by any one else. .. .. But Section 198 of the Criminal Procedure Code which provides that no Court shall take cognizance of an offence except upon the complaint of some person aggrieved thereby, subject to certain exceptions under which a liquidator cannot certainly come, is limited only to offences under Chapter XIX and Chapter XXI of the Indian Penal Code. In my view, no valid objection can be taken to the legality of the complaint on the ground that it is not a complaint by the liquidator.'

It is, therefore, reasonably clear that in a prosecution under the Indian Penal Code any body can prefer a complaint. It is not necessary that the liquidator is obliged to prefer it even when the complaint is for offences underthe Indian Penal Code. I respectfully agree with the observations of the learned Chief Justice read above, and I think no direction is at all necessary from the Company Judge for the purpose of proceedings under the general law. It is only in the case of special ollences created by the Companies Act that the safeguards have been provided, and the latter require that the procedure prescribed in the Companies Act must be followed. But where, as here, the complaints are laid under the general law, the limitations prescribed by the Companies Act for the institution of criminal proceedings do not apply.

10. The next ground urged by Mr. Banerjee is that the present proceedings are bad inasmuch as they have not been instituted by the liquidator himself as required by the provisions of the Companies Act. The argument is that the opposite party could not have been gladly authorised to prosecute the petitioner. There could not be any delegation of the authority to prosecute. Reliance is placed upon Section 457 of the Companies Act which says that the liquidator in a winding up by the Court shall have power with the sanction of the Court to institute or defend any suit, prosecution or other legal proceeding, civil or criminal, in the name of and on behalf of the company. It is said that these proceedings not having been instituted by the liquidator himself cannot be continued in law. Whatever may be the position in respect of offences created by the Companies Act, I think there was no bar to the opposite party preferring these complaints. The opposite party was ordered and authorised to file complaints for and on behalf of the Bengal Textiles Association (in liquidation) represented by the official liquidator. I do not agree that this is a defect in the proceedings; but even if it were. It is an informality which cannot be said to vitiate the proceedings. In my view, they are, in substance, prosecutions by the liquidator on behalf of the Company.

11. In the case of : AIR1955Cal29 , to which I have already referred, the learned Chief Justice observed:

'Except in the case of certain proceedings under the Companies Act, itself, the question whether a proceeding was brought in the form prescribed by the Act is not a question of the validity of tbe proceeding, but a question whether the liquidator will get the costs of the proceeding out of the assets of the Company. Even in the case of a proceeding under the Companies Act, it was held in the case of Loomchand Sait v. The Official Liquidators, Peerdahn Jo-harmall Bank Ltd., : AIR1953Mad595 , that the failure to bring the proceeding in the name and on behalf of the Company was only a formal defect, when the application was substantially on behalf of the Company. In the present case also, it is perfectly clear from the petition of complaint that it is being made by the liquidator on the Company's behalf.'

12. In the instant cases there cannot, in my view, be any doubt that these are the Company's complaints, the Company being represented by the official liquidator. Apart from the question whether such complaints are authorised under the Companies Act, the fact remains that these are complaints of offences under the Indian Penal Code and not under the Companies Act. As I have said anybody can set the criminal law in motion; by doing so, he merely becomes a witness in the proceedings. There is, therefore, no substance in this contention.

13. The only other ground raised by Mr. Banerjee is that the present proceedings are barred by reason of Section 538, Sub-section (1), clauses (j) and (k) of the Companies Act. Clauses (j) and (k) provide that if any person within the twelve months next before the commencement of the winding up or at any time thereafter makes or is privy to the making of any false entry in any books, papers affecting or relating to the property or affairs of the Company, or if any person within the twelve months next before the commencement of the winding up or at any time thereafter fraudulently parts with, alters or makes any omission in, or is privy to the fraudulent parting with, altering or making of any omission in any book or paper affecting or relating to the property or affairs of the Company, he shall be liable to be punished in a particular manner.

14. The point made by Mr. Banerjee isthat the present proceedings purport to relate to the commission of offences long before the twelve-months period mentioned in these clauses: and that being so, the present proceedings are not maintainable. This question of limitation, so to say, can only be decided on evidence which has not been gone into yet. Strictly speaking, this question does not arise, because it must be recalled that the present proceedings are under the Indian Penal Code and they are by no means subject to the limitation of time mentioned in clauses (j) and (k) of Sub-section (1) of Section 538 of the Companies Act. These clauses are, in my view, wholly inapplicable to the present proceedings. This contention also fails.

15. It Is to be observed that Mr. Banerjee's arguments are entirely based on considerations raised or suggested by the Companies Act. Those considerations are, in my view, wholly irrelevant in these cases. The prosecutions are not for offences against the Companies Act, but under the Indian Penal Code, and that being so, it cannot be held that they are in any way subject to any kind of limitation as respects institution of proceedings or their maintainability that may be found in the Companies Act.

16. In the result, this rule is discharged and the proceedings against the petitioner will Continue.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //