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Hasimara Industries Ltd. and anr. Vs. the Company Law Board and ors. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtKolkata High Court
Decided On
Judge
Reported in1976CriLJ50
AppellantHasimara Industries Ltd. and anr.
RespondentThe Company Law Board and ors.
Cases ReferredManicklal Mondal v. The State
Excerpt:
- .....the delhi police establishment on may 17, 1971. recorded a first information report and the police investigation no. r. c. 6/ 71-fs ii (regular case no, 6 of 1971 of fraud squad ii. delhi special police establishment) was commenced. this was the first step in proceeding under chapter xiv of part v of the code of criminal procedure, 1398.5. on june 4, 1971. the deputy superintendent of police of the delhi special police establishment filed the first information report before the chief presidency magistrate, calcutta. the chief presidency magistrate records in the order-sheet that he had seen the report. on the same day, namely, june 4, 1971, the said deputy superintendent made an application to the chief presidency magistrate for the issue of search warrant under section 96 of the.....
Judgment:
ORDER

Sankar Prasad Mitra, C.J.

1. In an application under Article 226 of that Constitution, which was heard by Mr. Justice P. K. Banerjee. the petitioner. Hasimara Industries Ltd (the appellant before us) challenged the validity of a search warrant which the Chief Presidency Magistrate of Calcutta had issued on June 14, 1971. Banerjee. J. by a judgment delivered on December 13. 1973 has dismissed the application. The present appeal is directed against that judgment.

2. Between July and September, 1970 the Officers of the Directorate of Inspection, Company Law Board posted in Calcutta, inspected under Sect or. 209 (4) of the Companies Act, the book; of account, documents and papers of Britannia Engineering Co. Ltd. and some other Companies forming the McLeod Group of Companies now known as the Bajorta Group of Companies In course of this inspection, according to the respondents, it appeared from the books of account that the Directors and persons carrying on or conducting the business of the Bajoria Group of Companies, acting in conspiracy with each other, had committed various illegalities which amounted to cognizable offences punishable under Sections 406/ 409/420/468/477-A and Section 120-B of the Indian Penal Code.

3. On April 2. 1971. the Undersecretary to the Government of India, Department of Company Affairs. acting under the direction of the Secretary, sent a complaint to the Director, Central Bureau of Investigation and Inspector-General of Police, Delhi Special Police Establishment, New Delhi, regarding the commission of the aforesaid offences of criminal breach of trust, criminal misappropriation, cheating forgery, falsification of accounts and criminal conspiracy in respect of a sum of more than two crores and two lacs of rupees. It was stated that Chiranjilal Bajoria and his son Anandilal Bajoria were principally involved in the commission of these offences.

4. On receipt of the complaint the Delhi Police Establishment on May 17, 1971. recorded a First Information Report and the Police Investigation No. R. C. 6/ 71-FS II (Regular Case No, 6 of 1971 of Fraud Squad II. Delhi Special Police Establishment) was commenced. This was the first step in proceeding under Chapter XIV of Part V of the Code of Criminal Procedure, 1398.

5. On June 4, 1971. the Deputy Superintendent of Police of the Delhi Special Police Establishment filed the First Information Report before the Chief Presidency Magistrate, Calcutta. The Chief Presidency Magistrate records in the order-sheet that he had seen the report. On the same day, namely, June 4, 1971, the said Deputy Superintendent made an application to the Chief Presidency Magistrate for the issue of search warrant under Section 96 of the Code of Criminal Procedure to search some places of business and to seize incriminating documents therefrom. It was stated that this search warrant was necessary for the purpose of the investigation of the Investigating Officer.

6. The Chief Presidency Magistrate on June 4. 1971 has recorded the following order :

4-6-71. M. M Narendra Nath, D.S P., S.P.E/C. B. I/F. S. II files a petition and prays for issue of 48 s/warrants under Section 96, Cr. P. Code to search the places and to seize the documents mentioned therein. Considered materials placed before me. Perused the petition. Satisfied that the documents mentioned therein would be required for investigation. Issue s/w as prayed for fixing 6-7-71 for return and order.

It is this order of the Chief Presidency Magistrate made on the 4th June, 1971 that is under challenge in the present appeal.

7. On June 10, 1971 the search warrants were executed and a number of documents were seized from the registered office and the mill premises of the petitioners and from various other places.

8. On August 9, 1971. a number of applications under Article 226 of the Constitution was made by McLeod & Co. Ltd. and other allied or associate or sister companies forming the Bajoria Group of Companies for the purpose of restraining police investigation. The appeal we are dealing with arises out of one of such applications. All the applications, it appears, were heard together and disposed of by the same judgment of P. K. Banerjee, J. In the Rules issued by this Court pursuant to the said applications an interim order was passed on the 26th March. 1973. The interim order was that the books, documents and records which the Police had seized shall remain under the joint seal of the parties in the custody of the Officers of the Central Bureau of Investigation. We are told that the books, documents and records still remain under the joint seal as directed by the Court.

9. On behalf of the appellants our attention has been drawn to 'the provisions of Section 94(11 of the Code of Criminal Procedure. 1898 as well-as to the provisions of Section 96(1). These are as follows:

94 (1). Whenever any Court, or in any place beyond the limits of the towns of Calcutta and Bombay, any officer in charge of a police station considers that the production of any document or other thing is necessary or desirable for the purposes of any investigation, inquiry, trial or other proceeding under this Code by or before such Court or Officer, such Court may issue a summons, or such officer a written order, to the person in whose possession or power such document or thing is believed to be, requiring him to attend and produce it, or to produce it, at the time and place stated in the summons or order.

96 (1). Where any Court has reason to believe that a person to whom a summons or order under Section 94 or a requisition under Section 95, Sub-section (1), has been or might be addressed, will not or would not produce the document or things as required by such summons or requisition, or where such document or thing is not known to the Court to be in the possession of any person, or where the Court considers that the purposes of any inquiry, trial or other proceeding under this Code will be served by a general search or inspection.

It may issue a search-warrant; and the person to whom such warrant is directed, may search or inspect in accordance therewith and the provisions hereinafter contained.

It is common case that the search warrant was issued on the basis of the third provision in Section 96(1), namely, 'Where the Court considers that the purposes of any inquiry, trial or other proceeding under this Code will be served by a general search or inspection.

9-A. Counsel for the appellant has contended before us that the Court's power under Section 94(1) may be exercised for the purpose of any (a) investigation (b) inquiry (c) trial or (d). other proceeding under the Code. But the Court's power under the third limb or provision of Section 96(1) can be exercised for the purpose of any (a) inquiry (b) trial or (c) other proceeding under this Code. This shows that the Court has no power to issue a general search warrant in respect of an investigation under the Code or in aid of an investigation under the Code. Inasmuch as the present search warrant has been issued for the purpose of investigation, it is not valid in law In support of this argument reliance has been placed on three judgments of three High Courts. namely, Calcutta, Rangoon and Bombay.

10. In Re: Mahomed Tahir AIR 1934 Bom 104 : 35 Cri LJ 1024) it is pointed out that though the first two clauses of Section 96(1) obviously relate back to Section 94. the third clause does not do so. It is independent of Section 94. The Bombay High Court has held that for a search warrant to be issued under the Code of Criminal Procedure it is not necessary that the proceedings should be actually pending before the Magistrate at the time he issues the warrant. A warrant may be issued for the purpose of an inquiry about to be made, provided it is an inquiry under the Code, but not for the purpose of an inquiry either being made or about to be made otherwise than under the Code. Hence a warrant issued for the purposes of an enquiry by the customs authorities into an offence under Section 167 (72) of the Sea Customs Act, is illegal The Bombay High Court noted the decision of the Privy Council in Clarke v. Brojendra Kishore, reported in (1912) 39 lnd App 163 (PC). This is a well-known case in which their Lordships of the Judicial Committee have held that the word 'Court' in Section 96 on its true construction includes 'magistrate' who can exercise the power conferred not merely when silting as a Court but in view of an inquiry about to be made. The judgment of the Bombay High Court was delivered in respect of an inquiry not under the Code of Criminal Procedure but under the Sea Customs Act. In our case the investigation, as we shall see later is an investigation (proceeding?) under the Code.

11. In Mamsa v. Emperor AIR 1937 Rang 206 (38 Cri LJ 983), a single Judge of the Rangoon High Court had expressed the view that Clause (3) of Section 96(1) did not authorise a general search to assist any investigation. The definition of investigation in Section 4(1)(b) of the Code of Criminal Procedure has not been noticed in this judgment. The definition is as follows:

Section 4(1)(b) 'investigation' includes all the proceedings under this Code for the collection of evidence conducted by a police officer or by any person (other than a Magistrate) who is authorised by a Magistrate in this behalf.

12. In K. Hoshide v. Emperor, (1940) 44 Cal WN 82 : 41 Cri LJ 329). an Assistant Commissioner of Police wrote a letter to the Chief Presidency Magistrate, Calcutta to the effect that information had been received from the Collector of Customs. Calcutta, that systematic undervaluation of piece-goods were being committed by certain firms (which were named). The Assistant Commissioner prayed for a search-warrant to seize documents, account books and other papers of the years 1936-39. The Magistrate, without examining the police officer or the Collector of Customs and without any enquiry whatever as to the nature of the information or the necessity of seizing such a variety and volume of documents, issued a search warrant, as prayed for. The Magistrate stated that the search was 'essential to the inquiry now being made' It was issued against the petitioners which was a trading company In execution of the warrant account books, cortracts, codes and other papers were seized and made over to the customs authorities with whom they remained for several months without any charge-sheet being submitted. The .petitioners obtained a Rule .o show cause why the papers should not be returned and in his explanation the Magistrate stated that he had issued the warrant under the third clause of Section 96(1). He added that the charge-sheet was being submitted which shows that there was an inquiry. In fact, before the ht firing of the Rule a charge-sheet was .usually submitted. this Court held, inter alia, that the Magistrate was wrong in thinking that he was .aiding an inquiry whereas what was going on was merely an investigation by the Police and the Customs Authorities for the purpose of collecting evidence and the third clause of Section 96(1) did not empower the Magistrate to issue a general search-warrant in such circumstances. this Court has pointed out that under the Criminal Procedure Code there is ,a distinction between an 'inquiry' and an 'investigation', the former relating to a proceeding held by a Court or a Magistrate and the latter relating to steps taken by a police officer or a person other than a Magistrate. There is no power under the third clause of Section 96(1) of the Code to issue a search-warrant in aid of an 'investigation' by the police or Customs Authorities. this Court has noted the Privy Council's judgment in Clarke's case about the Court's power to issue a search-warrant for the purpose of inquiry or trial or other proceedings under the Code whether actually pending or anticipated or yet to be embarked upon The principal judgment was delivered by Sen, J. The other learned Judge, Mr. Justice Khundkar, in a concurring judgment has said that investigation by the Calcutta Police or the Customs Authorities in the nature of a search for evidence is not even 'investigation' as denned in the Code not being a proceeding under the Code.

13. In this case the Assistant Commissioner of Police in his application to the Chief Presidency Magistrate stated, inter alia, as follows :

I have the honour to submit that information has been received from the Collector of Customs, Calcutta, to the effect that systematic under-valuation of cotton piece-goods assessable to duty on market value resulting in considerable loss of revenue to the Government is being committed by the marginally noted parties (marked A) assisted by and in conspiracy with four persons named in the margin (marked B) for a number of years in contravention of the See. Customs Act and to cheat the Government.

14. It is obvious that the Assistant Commissioner of Police was complaining about contravention of the Sea Customs Act and the investigation that was being carried on was an investigation under the Sea Customs Act. Khundkar, J at pages 90 to 91 of the judgment has pointed out two distinctive features of the case. He has said:

It is quite obvious that the Customs Authorities wanted an examination of the books in order to see what materials they would afford in support of the information which had come into their possession. Such an examination would have had to be carried out either by Customs Officers or by the Police. In neither event would it have been an investigation under the Code. In the case of In re Mahomed Tahir 36 Bom LR 96 : AIR 1934 Bom 104 : 35 Cri LJ 1024). it was held that such 3 proceeding by the Customs Authorities was not an investigation under the Code.

An examination of the petitioner's books by the Calcutta Police would also have failed to satisfy the definition of investigation, because the Calcutta Police have no power to conduct proceeding Hinder the Code for the collection of evidence since the provisions of Chapter XIV which confer such powers have not been extended to the police in Calcutta and no provision of the Code applies to them unless expressly extended...

15. In our case an officer of the Delhi Special Police Establishment was conducting the investigation By virtue of Sub-section (3) of Section 5 of the Delhi Police Establishment Act, 1946 he was exercising the powers of the Officer-in-charge of a police station in Calcutta. Moreover, by a notification of the State Government dated 24th February, 1958, the relevant provisions of Chapter XIV of Part V of the Code had been extended to Calcutta. Therefore, the investigation he was carrying on was an investigation within the meaning of Section 4(1)(b) of the Code of Criminal Procedure under Part V, Chapter XIV of the Code. In other words, it was a proper investigation under the Code.

16. We have now to examine whether an investigation under the Code is a 'proceeding under this Code' in terms of Clause (3) of Section 96(1). This point has been dealt with by a Division Bench of the Mysore High Court in the case of Kaverappa v. Sankanayya AIR 1965 Mys 214 =(1965 (2) Cr LJ 225) We quote below paragraphs 32 and 33 at pages 218 and 219 of the judgment of Mr. Justice Somnath Iyer who delivered the judgment of the Division Bench of the Mysore High Court, The paragraphs run thus :

32. It is, of course, clear that an investigation by the police is not an enquiry, .and. it is obvious that it is not a trial. Any doubt on the question whether an investigation by the police under the Code of Criminal Procedure for the collection of evidence is or is not a proceeding under the Code is completely dispelled by Section 4(1)(b) of the Code of Criminal Procedure which defines investigation in the following way:

Definitions 4 (1). In this Code the following words and expressions have the following meanings unless a different intention appears from the subject or context...

(b) 'Investigation' includes all the proceedings under this Code for the collection of evidence conducted by a police officer by any person (other than a Magistrate) who is authorised by a Magistrate in this behalf... It is clear from this definition that an investigation under the Code during which a police officer or any other person authorised by a Magistrate collects evidence, is a proceeding under the Code. It is no disputed in this case that the investigation for which the defendant applied for a warrant of search from D.W. 4 was an investigation under the Code and that the investigation was an investigation which had for its purpose the collection of evidence. Since the defendant was of course a police officer, the investigation to aid which he sought the. search warrant was manifestly a proceeding under the Code. That being so, from the plain language of para, 3 of Section 96(1) which .authorised the issue of a search warrant for a general search if the purpose of a proceeding under the Code is served by such general search it becomes clear that the search warrant applied for by the defendant was one which the Magistrate had the power to issue.

That in my opinion, is what was should say notwithstanding the fact that the word 'investigation' occurring in Section 94(1) of the Code. So long as that paragraph employs the comprehensive words 'or other proceeding under this Code' and the definition of an 'investigation' contained in Section 4(1) of the Code makes it clear that an investigation like the one in the present case, is a proceeding under the Code, it would not be in my opinion, right for us to depend upon the inexistence of the word 'investigation' in para. 3 of Section 96(1) for founding the conclusion that an investigation is not a proceeding under the Code or that a general search to aid an investigation is not within para 3 of

(33) It may perhaps be that the omission of the word 'investigation' from para. 3 of Section 96(1) is attributable to the reason that the investigation to assist which a general search may be directed under that .paragraph should be an investigation for whose purpose a summons may be issued under Section 94(1) need not necessarily be an investigation under the Code and may include an investigation under other statutes. The contrast between the language of Section 64(1) and that of para. 3 of Section 96(1) is capable of this explanation.

17. We are in agreement with the Mysore view that an investigation under the Code is a proceeding under the Code within the meaning of the third clause of Section 96(1). From this point of view the general search warrant which was issued by the Chief Presidency Magistrate on the 4th June, 1971 in aid of an investigation under the Code appears to be valid

18. At this stage it should be recorded that the vires of the Delhi Police Establishment Act, 1946 has also been challenged. But since this Court has already upheld the validity of this Act which is under appeal to the Supreme Court the point has not been given up by the appellant.

19. The next contention of the appellants is that Clause (3) of Section 96(1) begins with the word 'where the Court considers'. These words mean that the Court must apply its mind to the materials placed before it and liven decide whether the general search is necessary for the purpose of any proceeding under the Code. In the instant case the order which the Chief Presidency Magistrate had passed was not a speaking order. There is no evidence that the Court considered the matter and came to the conclusion that an order for a general search should be made. There is no judgment of the Magistrate and no affidavit by him as to his satisfaction. Reliance was placed on the judgment of the Gujarat High Court reported in : AIR1970Guj1 (Testeels Ltd. v. N. M. Desai) in respect of a speaking order.

20. We have set out above the order which the Chief Presidency Magistrate passed on June 4, 1971. In this order he has stated (a) that he has considered the materials placed before him (b) that he has perused the petition and (c) that he is satisfied that the documents mentioned in the petition would be required for investigation. From these three statements of his it is legitimate for us to conclude that he had given his consideration to the matters placed before him in the manner required by Clause (3) of Section 96(1). The First information Report and the petition have given details of alleged mani- pulation of transactions by the appellants and on the basis of those details if the Chief Presidency Magistrate was satisfied that an order for a general search should be made we cannot hold that the satisfaction was unjustified or that there was no application of mind by him. In this connection it may be relevant to refer to a Division Bench judgment of this Court in Manicklal Mondal v. The State, reported in : AIR1953Cal341 The first limb of Section 96(1) of the Code of Criminal Procedure reads thus:

96 (1) Where any Court has reason to believe that a person to whom a summons or order under Section 94 or1 a requisition under Section 95(1) has been or might be addressed, will not or would not produce the document or thing as required by such summons or requisition... it may issue a search warrant;...

This limb of Section 96(1) came up for consideration in Manick Lars case. In that case the Magistrate did not record in writing his 'reason to believe'. this Court is of opinion that '... it does not appear from the section itself that the Magistrate was bound to record his reasons in writing. All that the section says is that the Magistrate must have reason to believe that such is the state of affairs. In other words, the Magistrate must himself be satisfied that there is necessity for the search warrant to be issued as otherwise the things would not be produced. Apart from this it appears that there were ample materials on which search warrant should have been issued by the learned Magistrate...' A similar principle ought to apply to the third clause of Section 96(1) also. We are satisfied that on the materials placed before the Chief Presidency Magistrate in the First information Report and in the petition he was justified in issuing the general search-warrant

21. For reasons aforesaid we agree with the learned trial Judge that the Rule-asked for should be discharged.

This appeal is dismissed.

There will be no order for costs.

All interim orders, if any, are vacated.

S.K. Datta, J.

22. I agree.


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