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Graphite India Ltd. and anr. Vs. Dalpat Rai Mehta and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCriminal Revision Case No. 78 of 1978
Judge
Reported in[1978]48CompCas683(Cal),82CWN903
ActsCompanies Act, 1956 - Section 293A
AppellantGraphite India Ltd. and anr.
RespondentDalpat Rai Mehta and anr.
Appellant AdvocateBalai Chandra Ray, ;Dilip Kumar Dutta, ;S.N. Dey, ;Ramesh Chowdhury, ;H. Bhattacharjee, ;Sasanka Kumar Ghosh, ;C.R. Bag, ;Ranjit Kumar Dutta and ;Debabrata Mukherjee, Advs.;Biswanath Sanyal, Adv.
Respondent AdvocateParty in person
Excerpt:
- .....in contravention and in violation of the provisions of section 293a of the companies act. 2. the learned magistrate after perusing the petition of complaint and examining the complainant took cognizance and issued summons under section 293a of the companies act against the petitioners and others. in this rule, the petitioners have prayed that the proceedings instituted against them on the basis of the aforesaid petition of complaint in the court of the learned chief metropolitan magistrate be quashed. 3. mr. balai chandra ray, learned advocate appearing on behalf of the petitioners, has firstly submitted that when the resolution was passed in an annual general meeting of the company on june 20, 1977, for insertion of the advertisements, the complainant was not registered as a.....
Judgment:

P.C. Borooah, J.

1. On November 3, 1977, the opposite party No. 1, Dalpat Rai Mehta, filed a petition of complaint in the court of the Chief Metropolitan Magistrate, Calcutta, against the petitioner and others alleging commission of an offence under Section 293A of the Companies Act, 1956. It was stated, inter alia, in the complaint that the said opposite party was a shareholder of Graphite India Ltd. and on perusal of the annual report and accounts of the company for the year 1976, he came across an item of expenditure of Rs. 1,52,000 stated to have been incurred for advertisements in the All India Congress Committee Souvenirs. It was further alleged that the aforesaid expenditure paid to a political party in any manner is a contribution to a political party for a political purpose in contravention and in violation of the provisions of Section 293A of the Companies Act.

2. The learned Magistrate after perusing the petition of complaint and examining the complainant took cognizance and issued summons under Section 293A of the Companies Act against the petitioners and others. In this rule, the petitioners have prayed that the proceedings instituted against them on the basis of the aforesaid petition of complaint in the court of the learned Chief Metropolitan Magistrate be quashed.

3. Mr. Balai Chandra Ray, learned advocate appearing on behalf of the petitioners, has firstly submitted that when the resolution was passed in an annual general meeting of the company on June 20, 1977, for insertion of the advertisements, the complainant was not registered as a shareholder, and as such he has no locus standi to question the expenditure and file the complaint.

4. The second submission of Mr. Ray is that a sum of money even paid to a political party for an advertisement in any journal or newspaper does not tantamount to a contribution to a political party within the meaning of Section 293A of the Companies Act and, as such, the proceedings pending against the petitioners in the court of the learned Magistrate should be quashed.

5. Mr. Biswanath Sanyal, learned advocate appearing on behalf of the State, has supported Mr. Ray in his arguments.

6. The opposite party No. 1, Mr. Dalpat Rai Mehta, has appeared before us in person. According to him, once a person purchased a share of a company and his name is duly registered in the books of the company, he acquires all the past, present and future rights of the shareholders. The further submission of Mr. Mehta is that the alleged brochures never saw the light of the day and the expenses of Rs. 1,52,000 incurred by the company was in fact a contribution to the Congress party and as such a prima facie case under Section 293A of the Companies Act must be said to have been made out.

7. Taking up the second submission of Mr. Ray first, Section 293A of the Companies Act prohibits a company from making any contribution to any political party or for any political purpose to any individual or body. Therefore, the question that has to be determined is whether the sum of Rs. 1,52,000 paid by the petitioner-company for an advertisement in the All India Congress Committee souvenirs can be deemed to be a contribution to the All India Congress Committee

8. In West's publication of ' Words and Phrases' the word ' contribution ' has been defined, inter alia, as giving money or other aid for a specified object. In other words, a contribution is an aid or payment without any consideration. Admittedly, payment for the insertion of an advertisement cannot be deemed to be a contribution as some benefit by way of publicity is being derived. By the advertisement the petitioner company drew the attention of the public towards their products with the ultimate object of selling or marketing them.

9. According to paragraph 3 of the petition of complaint, the expenditure of Rs. 1,52,000 had been incurred for an advertisement in the souvenirs. Moreover, the complainant-opposite party in his initial deposition before the learned Magistrate also stated, inter alia, as follows :

' From the annual report of the said company for the year 1976 I observed at page 11 that this company has paid a sum of Rs. 1,52,000 on account of advertisement in the All India Congress souvenirs which is in violation of Section 293A of the Companies Act. '

10. It is thus clear that the complainant opposite party's own case as made out before the learned Magistrate was that the company incurred the aforesaid sum on account of an advertisement in the said souvenirs. Therefore, the advertisement not being a contribution, the ingredients of Section 293A of the Companies Act cannot be deemed to have been attracted. The complainant opposite party's submission that the souvenirs never saw the light of the day cannot be considered by us because no such case was made outeither in the petition of complaint or in his initial deposition before the learned Magistrate.

11. In our view, the allegations made by the complainant-opposite party in the petition of complaint and in his initial deposition taken at their face value, and even accepted in their entirety, do not make out a prirna facie case against the petitioners and others under Section 293A of the Companies Act, As such, the continuance of the proceedings against the petitioners before the learned Magistrate would tantamount to an abuse of the process of the court and would lead to their unnecessary harassment. The proceedings, therefore, should not be allowed to be continued and must accordingly be quashed.

12. As we are allowing this application on this ground the other submission regarding the locus standi of the complainant-opposite party to file the complaint need not be gone into.

13. In the result, this application succeeds. The proceedings pending against the petitioners and others in the court of the learned Chief Metropolitan Magistrate, Calcutta, in Case No. C/3650 of 1977 are quashed.

14. Thus, the rule is made absolute.

S. C. Majumdar, J.

15. I agree.


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