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In Re: Hindusthan Wire and Metal Products - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCompany Application No. 133 of 1980
Judge
Reported in[1983]54CompCas104(Cal)
ActsCompanies Act, 1956 - Sections 295, 295(4), 633 and 633(2); ;Code of Civil Procedure (CPC) , 1973 - Sections 2, 190, 192, 200, 204, 468, 469 and 473
AppellantIn Re: Hindusthan Wire and Metal Products
Appellant AdvocateS.B. Mukherjee and U.B. Mukherjee, Advs.
Respondent AdvocateSunil Mukherjee, Adv.
Cases ReferredSri Krishna Parshad v. Registrar of Companies
Excerpt:
- .....the consequence of default and there should be injunction against the respondent from taking any criminal proceedings against the petitioners.5. now, the point arose as to whether the application under section 633 is maintainable after the said complaint has been filed and cognizance of the same being taken by the metropolitan magistrate and if so as it is admitted that under sub-section (2) of section 633 it is only at the stage of apprehension of any criminal proceedings, this court has jurisdiction to issue an order under sub-section (1) of section 633 relieving the defaulting officers and directors of the company from the consequence of the default in the facts and circumstances of the case if the court is satisfied in this particular case. there cannot be any doubt that, in the.....
Judgment:

Salil K. Roy Chowdhury, J.

1. This is an application under Section 633 of the Companies Act, 1956, for relieving the petitioners as a consequence of default and violation of Section 295 of the Companies Act, 1956, in granting a loan to another company being M/s. Associated Industrial Development Co. Pvt. Ltd. The application was presented on 28th June, 1980, and, thereafter/a notice was served on the respondent and directions for filing the affidavits were also given and it also appears that on 2nd July, 1980, there was an ad interim order of injunction in terms of prayer (c) restraining the respondent, the Registrar of Companies, West Bengal, from commencing any prosecution against the petitioners for the default and purchase as mentioned in the respondent's letter dated 12th May, 1980, or in similar notices in respect of the several violations under Section 295 of the Companies Act.

2. It appears from the affidavit-in-opposition that the respondent, on 12th June, 1980, filed a petition of complaint before the Chief Metropolitan Magistrate, Calcutta, and it was adjourned till 4th November, 1980, due to congestion in the diary of the said Chief Metropolitan Magistrate. It also appears that prior to the said application by the respondent before the Chief Metropolitan Magistrate a notice dated 12th May, 1980, was served on petitioners Nos. 1 to 4 by the Registrar of Companies, West Bengal, pointing out about the contravention of Section 295 of the Companies Act, 1956, giving particulars of the loans and the amounts and asking for a reply to that notice or show cause within 15 days from the date of the said notice. The company, by its letter dated 27th May, 1980, replied to the said notice of the Registrar, inter alia, stating that as soon as the said contravention was brought to the notice of the company's director concerned, she submitted her resignation from the company which was accepted by the Board on 29th September, 1979, and a return to that effect was filed with the Registrar of Companies, West Bengal, and the said loan together with interest was repaid by M/s. Associated Industrial Development Co. Pvt. Ltd. on 21st January, 1980. Therefore, contravention, if any, has been made good and no offence was continuing on that date. The copies of the notice dated 12th May, 1980, and the reply to the notice dated 27th May, 1980, are annexed to the petition and the present petition was filed on 28th June, 1980, and on 2nd July, 1980, an ad interim order was obtained restraining the respondents from proceeding in any way by way of complaint or otherwise for that alleged contravention under Section 295 by the petitioners.

3. As I have noticed earlier, it will appear from the photostat copy of the order sheet that on 12th June, 1980, before the Chief Metropolitan Magistrate a petition under Section 473 of the Criminal Procedure Code, 1973, for condonation of delay in filing a complaint could not be taken up as the diary of the said Magistrate was congested and the same was directed to be put up on 4th November, 1980. After the present application was made and the said interim order was obtained and the same was served on the respondent on 5th July, 1980, on 10th July, 1980, an affidavit of service was filed and directions were given for filing affidavits and the interim order was directed to continue. It appears that on 4th November, 1980, the Chief Metropolitan Magistrate condoned the delay under Section 473 and, after perusing the complaint, took cognizance of the offence under Section 295(4) of the Companies Act, 1956, and personal attendance of the accused was dispensed with. Such order was made by the Chief Metropolitan Magistrate and on the very same day the matter was transferred to the Metropolitan Magistrate's 17th Court for issue of summons and adjourned till 23rd December, 1980, for service return. On 20th December, 1980, summons of the proceedings before the Chief Metropolitan Magistrate was received by the petitioners, the accused therein. On 23rd December, 1980, appearance of the accused was fixed before the Metropolitan Magistrate as will appear from the photostat copy of the said order.

4. Mr. S.B. Mukherjee, appearing with Mrs. U.B. Mukherjee for the petitioners, submitted that in this case the alleged offence of granting a loan in contravention of Section 295, Sub-section (4), of the Companies Act has been made good as the loan has been repaid by the company and, therefore, in the facts and circumstances of the case, the petitioners should be relieved from the consequence of default and there should be injunction against the respondent from taking any criminal proceedings against the petitioners.

5. Now, the point arose as to whether the application under Section 633 is maintainable after the said complaint has been filed and cognizance of the same being taken by the Metropolitan Magistrate and if so as it is admitted that under Sub-section (2) of Section 633 it is only at the stage of apprehension of any criminal proceedings, this court has jurisdiction to issue an order under Sub-section (1) of Section 633 relieving the defaulting officers and directors of the company from the consequence of the default in the facts and circumstances of the case if the court is satisfied in this particular case. There cannot be any doubt that, in the facts and circumstances of this case, it must be held that the offence, if any, has been made good by repayment of the loan and the director concerned has also resigned from the Board which has been accepted. Therefore, the offence; no longer is continuing and it has been made good and, in the facts and circumstances of the case, the court will not hesitate to relieve the petitioners from the consequence of such default and issue the necessary injunction.

6. The point involved is whether filing the complaint and making an application for condoning the delay under Section 473 of the Cr.P.C. can be said to be the institution of a criminal proceeding or initiation of a proceeding before the delay is condoned and the offence is taken cognizance of by the criminal court where the proceeding has been filed. In order to appreciate the question involved, Mr. Mukherjee drew my attention to various sections of the Criminal Procedure Code, firstly, to Section 2(d), where a complaint is defined as follows :

'Clause (d) 'Complaint' means any allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report'

7. Thereafter, Mr. Mukherjee drew my attention to Section 190 in Chap. XIV with the heading ' CONDITIONS REQUISITE FOR INITIATION OF PROCEEDINGS ':

' Section 190(1).--Subject to the provisions of this Chapter any Magistrate of the first class, and any Magistrate of the second class specifically empowered in this behalf under Sub-section (2) may take cognizance of any offence--

(a) upon receiving a complaint of facts which constitute such offence;

(b) upon a police report of such facts;

(c) upon information received from any person other than a police officer, or upon his own knowledge, that stich offence has been committed... '

8. Then Section 192 of the Cr.PC provides as follows:

'Section 192(1).--Any Chief Judicial Magistrate may, after taking cognizance of an offence, make over the case for enquiry' or trial to any competent Magistrate subordinate to him.'

9. Then Section 200 under Chap. XV with the heading 'COMPLAINTS TO MAGISTRATES ':

'Section 200.--A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate:

Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses.'

10. Then Section 204 in Chap 'XVI--' COMMENCEMENT OF PROCEEDINGS BEFORE MAGISTRATES. '

'Section 204(1).--If in the opinion of a Magistrate taking cognizance of an offence there is sufficient ground for proceeding, and the case appears to be--

(a) a summons-case, he shall issue his summons for the attendance of the accused, or

(b) a warrant-case, he may issue a warrant, or, if he thinks fit, a summons, for causing the accused to be brought or to appear at a certain time before such Magistrate or (if he has no jurisdiction himself) some other Magistrate having jurisdiction.

(2) No summons or warrant shall be issued against the accused under Sub-section (1) until a list of the prosecution witnesses has been filed.

(3) In a proceeding instituted upon complaint made in writing, every summons or warrant issued under Sub-section (1) shall be accompanied by a copy of such complaint.'

11. Then Section 468 :

'468(1).--Except as otherwise provided elsewhere in this Code, no Court shall take cognizance of an offence of the category specified in Sub-section (2), after the expiry of the period of limitation.

2. The period of limitation shall be--

(a) six months, if the offence is punishable with fine only;

(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year;

(c) three years, if the offence is punishable with imprisonment ,for a term exceeding one year but not exceeding three years.'

12. Then Section 469(1): 'The period of limitation, in relation to an offender, shall commence,--

(a) on the date of the offence ; or

(b) where the commission of the offence was not known to the person aggrieved by the offence or to any police officer, the first day on which such offence comes to the knowledge of such person or to any police officer, whichever is earlier ; or

(c) where it is not known by whom the offence was committed, the first day on which the identity of the offender is known to the person aggrieved by the offence or to the police officer making investigation into the offence, whichever is earlier.

(2) In computing the said period, the day from which such period is to be computed shall be excluded.'

13. Then Section 473 : 'Notwithstanding anything contained in the foregoing provisions of this Chapter, any court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interests of justice.'

14. All these sections, being Sections 468, 469 and 473, occur in Chap. XXXVI of the Cr. PC which has a heading ' LIMITATION FOR TAKING COGNIZANCE OF CERTAIN OFFENCES .'

15. In this particular case it is admitted that on 12th June, 1980, a petition under Section 473 of the Criminal Procedure Code was filed. The complaint against the petitioners was barred, otherwise there was no question of condoning the delay in filing the complaint. It also appears from the order sheet that on 12th June, 1980, the said matter was not taken up and it was put up for hearing on 4th November, 1980. In between, the present petition was filed on 28th June, 1980, and an ad interim order of injunction was obtained against the respondent from commencing or instituting any criminal proceeding for the alleged offence under Section 495 of the Companies Act on 2nd July, 1980. Thereafter, direction for affidavits was given and the respondent filed an affidavit in this application affirmed by one Sourindra Narayan Guha dated I5th January, 1981. In para. 19 of the said affidavit-in-opposition it is mentioned about the application under Section 473 of the Cr. PC for condoning the delay, which was filed on 12th June, 1980, and the delay was condoned by the order dated 4th November, 1980, and the offence was taken cognizance of by the Chief Metropolitan Magistrate and the case was transferred to the Metropolitan Magistrate, 17th Court. It is strange that in the said affidavit it is not mentioned that the order condoning the delay and taking cognizance of the alleged offence was passed on 4th November, 1980, and not on 12th June, 1980, as would appear from the photostat copy of the order sheet. Again in para. 22 of the said affidavit it is repeated that the present petition was moved by the petitioners on or about 2nd July, 1980, whereas the criminal case was initiated on 12th June, 1980, before the learned Chief Metropolitan Magistrate and as such this court has no jurisdiction to stay the criminal proceeding and has no power to grant any relief to the petitioners and the present petition is misconceived and not maintainable in law. It appears, the said affidavit is not only misleading but incorrect facts are stated, which is clear from the photostat copy of the order sheet and the records of the present application as the delay was not condoned under Section 473 of the Cr. PC on 12th June, 1980, but the same was ordered on 4th November, 1980, when also the petition of complaint was filed after the condonation of the delay by the Chief Metropolitan Magistrate and cognizance was taken by the Chief Metropolitan Magistrate. In the meantime, on 28th June, 1980, the present application was filed and on 2nd July, 1980, an ad interim order of injunction was issued against the respondent from commencing any proceeding against the petitioners in terms of the notice dated 12th May, 1980, or any similar notice for the alleged violation of the provisions of Section 495 of the Companies Act, 1956. But the whole question turns round the fact whether the offence was taken cognizance of before the present application was made and an ad interim order of injunction was issued.

16. Mr. Mukherjee, after drawing my attention to the said sections of the Cr. PC, submitted that on the admitted facts the violation of Section 295 was known to the respondent from the balance-sheet of the company. As the filing of the complaint was barred, the respondent made an application for condonation of the delay under Section 473 of the Cr. PC and filed the same on 12th June, 1980, but no order was made condoning the delay as there was a congestion in the diary and the same was put up on 4th November, 1980. Therefore, on 12th June, 1980, it cannot be said that cognizance of the said offence was taken of or any proceeding was initiated against the accused in respect of the alleged offence under Section 295 of the Companies Act, as, unless the bar of limitation was lifted by condonation of delay by an order of the Magistrate made under Section 473 of the Cr. PC, there cannot be any question of taking cognizance of the offence or filing of the complaint against the accused. Before that could be done, on 4th November, 1980, the present petition was filed in this court on 28th June, 1980, and an ad interim order of injunction was obtained against the respondent from filing any complaint in respect of the offence pursuant to the letter dated 12th May, 1980, against the petitioners. Therefore, admittedly, the said petition of complaint was filed during the period when the injunction order against the respondent, Registrar of Companies, West Bengal, was in force and operative as issued by this court in this petition which was filed on 28th June, 1980, and an ad interim injunction was passed on 2nd July, 1980. Therefore, the said petition of complaint was filed in violation of the injunction order and cognizance of the offence was taken by the Magistrate during the period when the injunction was in force and operative against the respondent. Therefore, the said proceeding is bad and a nullity according to the well-known principle that anything done in violation of the injunction order is of no effect and non est.

17. Mr. Mukherjee drew my attention also to a decision in Krishna Sanghi v. State of Madhya Pradesh [1977] Cri LJ 90, where a Single Bench of the Madhya Pradesh High Court, dealing with an application for condonation of delay in filing a criminal complaint, observed that after the delay is condoned by the court on its being satisfied in the manner as mentioned in the said decision, then alone it would register the case and proceed with the same in accordance with law. Before condoning the delay, according to the principles of natural justice, the accused persons must be heard before passing an order in the record, inasmuch as the order is bound to affect the valuable right which accrues to the accused which cannot be allowed to be taken away lightly. As such, the accused are to be heard when an application under Section 473 of the Cr. PC is moved by the prosecution before cognizance is taken. Relying on the said principle Mr. Mukherjee rightly submitted that in this case admittedly no notice was served on the accused persons before the application under Section 473 of the Cr. PC was disposed of by the Metropolitan Magistrate, Calcutta, on 4th November, 1980. Therefore, the said order is also vitiated and against the principle of natural justice as laid down in the said decision. Mr. Mukherjee also cited a decision in E. Pedda Subba Reddy v. State, : AIR1969AP281 , where the meaning of the word 'cognizance ' occurring in Section 190 of the Cr. PC has been interpreted as indicating the point of time when a criminal court first takes notice of an offence. Taking cognizance is not the same thing as the initiation of the proceedings, as cognizance is taken of the offence and not of the persons. Therefore, taking 'cognizance' of an offence by a Magistrate does not necessarily lead to the conclusion that the judicial proceedings against the offender has been started. Relying on the said principle Mr. Mukherjee, in my view, rightly submitted that in this case before the order of 4th November, 1980, made ex parte by the Metropolitan Magistrate, it cannot be said that any criminal proceeding has been initiated against the accused who are the petitioners in this application. Therefore, Mr. Mukherjee rightly submitted that in the circumstances of this case where there was an ad interim injunction against the respondent to take any proceedings against the petitioners pursuant to the letter dated 12th May, 1980, or any other letter, he was debarred or incapacitated to move the said criminal court on the 4th November, 1980, and to obtain the said order of condonation of delay under Section 473 of the Cr. PC and cognizance of the offence under Section 295(4) as recorded in the said order. The order must be said to be in violation of this court's order of injunction and also against the principles of natural justice and in that view it must be said to be non est and a nullity so far as the proceeding before the criminal court is concerned. Mr. Mukherjee also referred to the decision in Sri Krishna Parshad v. Registrar of Companies [1978] 48 Comp Cas 397 (Delhi), where, from the judgment it appears, the initiation and cognizance of the offence before the proceeding under Section 633(2) of the Companies Act was admittedly pending and, therefore, it was held that the court had no jurisdiction to grant any relief under Section 633(2) as the criminal proceeding was pending and there was no question of apprehension of criminal proceeding. Therefore, the said case and also from the judgment it is not quite clear whether the questions which have arisen in this case were before the Delhi High Court, which was a Single Bench, or not.

18. Mr. Sunil Mukherjee, appearing for the Registrar, submitted relying on the said decision in [1978] 48 Comp Cas 397 (Delhi), that this court has no jurisdiction and, in the facts and, circumstances of this case, the application should be dismissed. I am of the view that there is no substance or merit in the contention raised on behalf of the respondent as the said criminal proceeding is clearly in violation of the order of injunction passed by this court and it is strange enough that before the criminal court the respondent has not brought to the notice of the court the order of this court dated 2nd July, 1980, by which the respondent was restrained from proceeding or taking any step against the petitioners pursuant to the letter dated 12th May, 1980, by way of initiating any criminal proceeding. It must be held, according to the provisions of the Criminal Procedure Code, which I have set out before, that there was no pending criminal proceeding or initiation of any criminal proceeding against the petitioners before the present application was made. It is only after the present application was made and an ad interim order was issued, as herein- before stated, that the said order condoning the delay was passed ex parte without any notice to the accused and cognizance of the offence was taken at the instance of the respondent, who was restrained by an injunction of this court from taking any step in the matter. Therefore, the said act on the part of the respondent is clearly violative of the injunction order and prim a facie was guilty of contempt but Mr. Sunil Mukherjee has rightly tendered his apology on behalf of the respondent and submitted that through ignorance and good faith they have initiated the said proceeding and as the diary of the Magistrate was congested on 12th June, 1980, the same was adjourned till 4th November, 1980, and on the adjourned date the order was made by the Magistrate, Photostat copies of the said orders are produced before me. There is no dispute that the petitioners have already repaid the loan and the person concerned, being a common director, also resigned which was accepted. Therefore, in these circumstances, I am satisfied that the petitioners should be relieved from the consequence of default as there is no longer any default which had been made good as soon as the same was brought to the notice of the petitioners. Further, it appears that the offence which is alleged to be in contravention of Section 295(4) of the Companies Act was known to the respondent from the balance-sheet of the company and the same was barred and, therefore, an application under Section 473 of the Criminal Procedure Code for the condonation of delay was made by the respondent in which the order was made ex parte in violation of the principles of natural justice and also in violation of this court's order of injunction on 4th November, 1980. In these circumstances, the said order is of no effect and a nullity and without jurisdiction and, therefore, it cannot be taken any notice of. In that view of the matter, it cannot be said that any criminal proceeding was pending as no cognizance of the offence was taken of before the present application was made and an ad interim order was passed as hereinbefore stated.

19. Therefore, I have no hesitation in passing an order confirming the ad interim order and relieving the petitioners from the consequences of the alleged default under Section 295 of the Companies Act, which has already been made good by refund of the loan and resignation of the common director.

20. In the peculiar circumstances of this case, I am making no order as to costs.


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