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Priya Nath Choudhury Vs. the State - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCriminal Revn. No. 935 of 1957
Judge
Reported inAIR1959Cal387,1959CriLJ707
ActsCompanies Act, 1913 - Sections 138, 141A, 195 and 278; ;Companies (Amendment) Act, 1956 - Sections 235, 242 and 621
AppellantPriya Nath Choudhury
RespondentThe State
Appellant AdvocateJ.M. Bannerjee and ;A. Sen Gupta, Advs.
Respondent AdvocateN.C. Sen, Adv.
Excerpt:
- .....'retail textile dealers' syndicate' was a limited company incorporated in the year 1948 under the indian companies act, 1913. the petitioner priyanath choudhury was from the very inception a director of the said company. the company went into liquidation and was directed to wound up by an order made in the original side of this court. after the company went into liquidation and when liquidation proceedings were pending, the petitioner on the 8th november, 1954, filed a complaint before the additional chief presidency magistrate, calcutta, under section 282 and section 133 (3) of the indian companies act and also under sections 468, 469 and 471 lead with section 120b of the indian penal code against the other directors, auditor, and accountant of the said company charging them with.....
Judgment:
ORDER

N.K. Sen, J.

1. This Rule was issued for quashing the proceedings in Cases Nos. C-1631 and C-1632 of 1956 pending against the petitioner before the Chief Presidency Magistrate, Calcutta.

2. The facts leading to the institution of the aforesaid proceedings may be summarised below in order to appreciate the grievance made by the petitioner in this Court.

3. 'Retail Textile Dealers' Syndicate' was a limited company incorporated in the year 1948 under the Indian Companies Act, 1913. The petitioner Priyanath Choudhury was from the very inception a director of the said company. The Company went into liquidation and was directed to wound up by an order made in the Original Side of this Court. After the company went into liquidation and when liquidation proceedings were pending, the petitioner on the 8th November, 1954, filed a complaint before the Additional Chief Presidency Magistrate, Calcutta, under Section 282 and Section 133 (3) of the Indian Companies Act and also under Sections 468, 469 and 471 lead with Section 120B of the Indian Penal Code against the other directors, auditor, and accountant of the said company charging them with falsifications, misstatements etc. in the balance sheet and profit and loss account for the year ending 30th Tune, 1950. The learned Additional Chief Presidency Magistrate called for a report from the Registrar, Joint Stock Companies, and after getting a report from him summoned the accused in that case under Sections 282 and 133 (3) of the Indian Companies Act.

4. After the accused persons had entered appearance in the case and while the trial was in progress, the learned Public Prosecutor thought fit to file an application before the Magistrate for leave to enter appearance in the case under instructions from the Registrar, Joint Stock Companies. Why he should have made this application it is difficult to guess, because the carriage of the prosecution was them in the hands of the complainant.

5. In this petition the learned Public Prosecutor made a prayer for permission of the Court for investigation of the case by the Police under Section 155(2) of the Code of Criminal Procedure. Cognizance of the case had already been taken and in fact the trial was in progress.

6. Under the law, the court was not entitled at that stage to stay the case and ask the Police to carry on an investigation. Very rightly, therefore, the learned Magistrate refused to accede to this prayer of the learned Public Prosecutor. He however said that the Public Prosecutor might lead the prosecution with the assistance of the pleader for the complainant.

7. Then followed, if I may say so, a tussle between the learned Public Prosecutor and the learned pleader for the complainant as to who to be in charge of the prosecution. The learned Magistrate appears to have settled this dispute by ordering that the complainant's pleader was to conduct the prosecution. It appears that the course suggested was not accepted by the Public Prosecutor. Thereafter the accused persons made an application praying for their discharge under Section 253 (2) of the Code of Criminal Procedure and when arguments on this application were being heard the learned Public Prosecutor made another application, rather extraordinary in character, by which he wanted to withdraw the prosecution under Section 494 of the Code of Criminal Procedure on the ground of 'present insufficiency of evidence.' It may be observed that the learned Public Prosecutor had not put in appearance in the case. By an order dated the 18th May, 1958, (Sic) the learned Magistrate refused to discharge the accused persons. By the same order he also refused the prayer of the Public Prosecutor to withdraw the case under Section 494 of the Code of Criminal Procedure. The Public Prosecutor thereafter took no further interest in the matter. Some of the accused persons, however, moved this Court in revision upon which a Rule was issued (Revision Case No. 864 of 1955) against the order of the learned Magistrate refusing to discharge them. It may be stated that the Public Prosecutor did not take any steps against the order refusing his prayer, nor did he appear at the hearing of the said Revision Case No. 864 of 1955. The prayer of the accused persons in that Rule was in an alternative form, namely, either the proceedings against the accused then pending before the Presidency Magistrate, Calcutta, should be quashed or in the alternative they should be stayed pending the disposal of the liquidation proceedings pending before the Original Side of this Court. Mr. Justice Debabrata Mookerjee who heard the case on the 15th of December, 1955, did not quash the criminal proceedings against the accused persons but ordered the same to be stayed on certain conditions. The operating portion of his Lordship's order is as follows : In the circumstances I think the best course would be to stay the present criminal proceedings pending in the court of Sri A. P. Das, Presidency Magistrate, till such reasonable time as the Public Prosecutor may take in causing proceedings to be instituted in accordance with Section 141A of the Indian Companies Act against the persons who appear to be concerned in the commission of an offence already disclosed or to be disclosed as the result of further investigation and the conclusion of the examination of the complainant opposite party Priyanath Choudhury and Brahmobrata Roy, director, be made under Section 195, of the Indian Companies Act. It is hoped that the Public Prosecutor will act with expedition and I think there can be no reason for delaying the examination already ordered of the opposite party and of other directors under Section 195 of the Indian Companies Act.'

8. I have carefully gone through the judgment of his Lordship and find that it was never his intention that when a criminal case was pending regarding commission of certain offences there should be any separate prosecution of the selfsame persons with regard to the same facts. What happened thereafter is that in the liquidation proceedings the above named Brahmabrata Roy has not been examined yet under Section 195 of the Indian Companies Act. Instead, however, of waiting for the conclusion of his examination, the Registrar of Joint Stock Companies filed two complaints before the Chief Presidency Magistrate, Calcutta. The first complaint is No. C-1631 of 1956. In this complaint the petitioner and four others were made accused and the allegations were that as directors of the said company they had contravened the provisions of Section 101 (2 B) and Section 101 (2C) of the Indian Companies Act. In the second complaint the petitioner and eleven others which included the petitioner and two other persons were complained against alleging that they had as ex-directors of the said company committed offences under Section 282 and Section 133(3) of the Indian Companies Act.

9. In this connection it will be profitable to refer to the complaint No. C-1651 of 1954 instituted by the present petitioner and which was the subject, matter of the revision case No. 864 of 1955. It will be seen that the complaint was made against fourteen persons who are now accused either in one case or in the other and the subject-matter of the complaint is very substantially the same as has been disclosed in the two petitions of complaint which are now sought to be quashed in the present Rule only with this difference that this time the petitioner who was the complainant has been impleaded as an accused in both these cases.

10. The learned Advocate for the petitioner contends that the action of the Registrar of Joint Stock Companies in filing these complaints in utter disregard of the order of Debabrata Mookerjee J. was one which can never be supported. The complaints are the learned Advocate submits, mala fide and should not have been entertained by the Court so long as the complaint covering the same subject-matter made by the petitioner had not been disposed of.

11. The learned Advocate for the petitioner has taken me through the complaints made by the Registrar of Joint Stock Companies and also the complaint made by the petitioner which is still alive. On a. comparison of these, I can hardly find any substantial difference in the subject-matter of the complaints except that this time the petitioner has been made an accused in both the cases. Mr. Sen appearing on behalf of the State has taken me through various sections of the Indian Companies Act, 1913, particularly through Sections 138, 140, 141A. In short, his argument is that there was a report by the Government Inspector as, a result of his investigation on which the Public Prosecutor who was one of the statutory authorities wanted to prosecute the offenders. He laid great stress on the report made under Section 138 of the Act and argued that the present prosecutions were not at all hit by the directions of Debabratu Mookerjee J, According to Mr. Sen, when a complaint is made which discloses the commission of an offence, it is incumbent on the Court to take cognizance thereof and as such the present two complaints having disclosed some offences, the courts1 below were bound to take cognizance and it cannot be said that they have done anything improper or illegal. Mr. Sen further argues that on reading the entire judgment of Debabrata Mookerjee J. it will be seen that it was never his Lordship's, intention to stop any prosecution as a result of the report of inspection under Section 138. In this connection he also referred to Section 141A which gave power to the Public Prosecutor to launch a prosecution. According to Mr. Sen, when Debabrata Mookerjee J. hoped that the Public Prosecutor will act with expedition etc., as mentioned in the last paragraph of his judgment, his Lordship only expressed a wish and nothing more.

12. On an examination of the scheme of the Indian Companies Act, 1913, it will be seen that the sections referred to by Mr. Sen appear in Part IV of the Act which refers to management and administration. The various sections mentioned in this part of the Act clearly refer to companies which have not gone into liquidation. The examination of the directors was going on under part V of the Act which refers to winding up proceedings. It is not disputed that winding up proceedings were pending before the Original Side of this Court with respect to the company in question. Therefore, in my judgment the various sections of part IV of the Act have no application whatsoever to the facts of this case. Moreover, it is impossible on a proper reading of the judgment of Debabrata Mookerjee J. to say that his Lordship only expressed a wish and did not direct the stay of the proceedings instituted by the petitioner till the conclusion of examination of the directors under Section 195 of the Act.

13. It is indeed true that for offences separate prosecutions can be started but the question is whether it is proper to do so and whether the institution of so many proceedings should be allowed in the interest of justice. I am unable to accept this argument on behalf of the State as advanced above.

14. The learned Advocate for the petitioner further submits that on a plain reading of the judgment and order of Debabrata Mookerjee J. it can be seen that his Lordship ordered that if as a result of the examination of persons under Section 195 of the Indian Companies Act, it was disclosed that any other person was concerned in the commission of the offence, such person was to be prosecuted. In other words, it was argued that as a result of such examination if the petitioner was found to have been concerned with the commission of any offence, he too was liable to prosecution. It was therefore argued that the institution of the present complaint was against all canons of natural justice and amounted to a gross abuse of the process of the Court and in any case was tantamount to circumventing the order of his Lordship Debabrata Mookerjee J. by virtually stifling the prosecution started by the petitioner which his Lordship refused to do.

15. There is great force in this argument and I find it difficult to disagree with the learned Advocate for the petitioner. Why, instead of waiting till the conclusion of the examination under Section 195, the Registrar of Joint Stock Companies should have rushed to the criminal court while his purpose could have been amply served had the waited for the conclusion of such examination is difficult to appreciate. A prosecution by the State at the instance of the Registrar of Joint Stock Companies should be a fair one and there should not be the slightest reason for suspecting the same to be inspired by any motive other man securing the ends of justice.

16. In my judgment, these two prosecutions should never have been launched until the examination of the directors had been concluded under Section 195.

17. I would therefore quash the two proceedings complained of and direct that the course indicated by Debabrata Mookerjee J. be followed.

18. This Rule is therefore made absolute. The petitioner will be discharged from his bail bond.


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