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Sanatan Ganguly Vs. State and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany;Criminal
CourtKolkata High Court
Decided On
Case NumberCriminal Revision No. 354 of 1981
Judge
Reported in[1984]56CompCas93(Cal),88CWN781
ActsCompanies Act, 1956 - Sections 210(1), 210(3), 210(5) and 633(1); ;Code of Criminal Procedure (CrPC) , 1973 - Sections 4(2), 295 and 296
AppellantSanatan Ganguly
RespondentState and ors.
Appellant AdvocateB.N. Sur, amicus curiae;S.N. Chowdhuri and ;Tapan Kumar Mukherjee, Advs. and R.K. Dev, Adv.
Respondent AdvocateS.K. Dasgupta, Adv.
Excerpt:
- .....the rules framed thereunder has laid down any procedure for such an enquiry. section 4(2) of the code of criminal procedure, 1973 ('code' for short), provides that all offences under any other law (other than the indian penal code) shall be investigated, inquired into, tried and otherwise dealt with, according to the provisions of the code, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. in the absence of any provision in the act or the rules framed thereunder, the enquiry under section 633(1) has, therefore, to be held according to the provisions of the code. it was, however, contended that the inquiry contemplated under section 633(1) of the act was not an enquiry.....
Judgment:

Monoj Kumar Kukherjee, J.

1. The Assistant Registrar of Companies, West Bengal, filed a complaint against the four directors of Ganguly Traders (P) Ltd. of 7, Bipin Behari Ganguli Street, Calcutta, in the court of the learned Chief Metropolitan Magistrate, Calcutta, alleging commission of an offence under Section 210(5) of the Companies Act, 1956, hereinafter referred to as ' the Act', By his order, dated November 3, 1978, the learned Magistrate took cognizance upon the same, issued process against the accused and transferred the case to the learned Metropolitan Magistrate, 11th Court, Calcutta, for disposal. After entering appearance, one of the accused, Sri Sanatan Ganguly, filed an application under Section 633(1) of the Act for being relieved of his liability, as a director of the company, in respect of the offence alleged against him. In his application he contended, inter alia, that the other directors were inimically disposed towards him and in spite of his best efforts he could not persuade them to comply with the requirements of Section 210 (1) and (3) of the Act, for which the prosecution had been launched. Along with the application he filed some documents in support of his above contention. The complainant and the other three accused persons refuted the allegations by filing written objections. After hearing the parties and considering the materials placed before him, the learned Magistrate rejected the application. Aggrieved thereby, Sri Ganguly moved this court and obtained the present rule.

2. At the time of hearing of this rule, a threshold question as to the legality of the procedure followed by the learned Magistrate in disposing of the application under Section 633(1) of the Act cropped up. Since it appeared that the question was of some importance, Mr. Baren Sur, a learned advocate of this court, was requested to appear as amicus curiae and he rendered valuable assistance in finding an answer.

3. At the outset, it will be profitable to refer to Section 633(1) of the Act which reads as under:

'Section 633(1). If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit: Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust. '

4. A plain-reading of the above section will unmistakably show that it provides for a special remedy, inter alia, to a person who is being prosecuted in a criminal court for having committed an offence under the Act. Normally, when a person is arraigned in a criminal court for an offence, the proceeding has to end in an order of conviction, acquittal or discharge; and if the case ends in conviction the accused is liable to be punished for such conviction unless he is released on probation. Section 633(1) of the Act makes a departure, and enables a person accused of an offence under the Act to be relieved of his liability, either wholly or partly, if it appears to the court during the course of hearing of the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust for which the prosecution is launched but he has acted honestly and reasonably. To arrive at such a decision the court has to hold an enquiry and it has, therefore, to be ascertained how the enquiry is to be conducted.

5. It appears that neither the Act nor the Rules framed thereunder has laid down any procedure for such an enquiry. Section 4(2) of the Code of Criminal Procedure, 1973 ('Code' for short), provides that all offences under any other law (other than the Indian Penal Code) shall be investigated, inquired into, tried and otherwise dealt with, according to the provisions of the Code, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. In the absence of any provision in the Act or the Rules framed thereunder, the enquiry under Section 633(1) has, therefore, to be held according to the provisions of the Code. It was, however, contended that the inquiry contemplated under Section 633(1) of the Act was not an enquiry in respect of an offence and, therefore, such an enquiry need not be according to the Code of Criminal Procedure. I am, however, unable to accept this contention having regard to the language of Section 4(2) of the Code and that of Section 633(1) of the Act. Under Section 633(1), it has to appear to the court that the officer of the company in question 'is or may be liable in respect of the negligence, default...... ' and the court has also to find that ' he ought fairly to be excused ' before the court can relieve him of the liability. It will thus be seen that unless the liability of the person is fixed or, in other words, the court finds that he is guilty or may be guilty, the court cannot invoke the said provision. This position has been made abundantly clear by the words ' he ought fairly to be excused '. The question of excuse comes only when a person is found to have committed some wrong. It necessarily means that the enquiry that is to be held by the court is whether the person has committed the offence or may have committed the offence and then only the court can invoke the powers under that section to relieve him of the liability on being satisfied that he has acted honestly and reasonably. In the ultimate analysis, therefore, the court has first to enquire into the commission of the offence and that necessarily will mean invocation of Section 4(2) of the Code of Criminal Procedure. It must, therefore, be held that the procedure laid down under the Code is required to be followed in dealing with the application under Section 633(1) of the Act. The matter can be viewed from another angle.

6. The power of the court under Section 633(1) of the Act is a discretionary one and it is to be exercised only when the court is satisfied that the defaulting officer has acted honestly and reasonably and that having regard to all the circumstances of the case he ought fairly to be excused. It is just and desirable, therefore, that this power should not be exercised in a casual manner and a decision should not be arrived at solely relying upon the averments made in an application under Section 633(1) and the written objection thereto. For those considerations the best procedure to be adopted is to dispose of any application, if filed under Section 633(1) of the Act, along with the case, on the basis of evidence adduced during trial, including the evidence that may be adduced by the accused. Who files the application under Section 633(1) of the Act. This is all the more necessary as, under the Code, the court's finding as to whether an offence has been committed or not has to be based on evidence to be adduced through examination of witnesses, except where provision has been expressly made in the Code to adduce such evidence through affidavits, namely, Sections 295 and 296 of the Code.

7. Since, in the instant case, the application under Section 633(1) of the Act was disposed of only on the basis of the averments made therein and the objections thereto, I am unable to sustain the order. I, therefore, set aside the impugned order and direct the learned Magistrate to dispose of the application under Section 633(1) of the Act in accordance with law and in the light of the observations made in this judgment. The rule is thus disposed of.


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