1980 (11) TMI 136 - HC - Companies Law

High Court's Jurisdiction under Companies Act 1956: Clarification on Criminal Cases

The High Court affirmed its jurisdiction to try suits and proceedings, including criminal cases, by or against a company under the Companies Act, 1956. ... Winding up – Suits stayed on winding-up order Issues Involved:1. Jurisdiction of the High Court to try the complaint filed by the official liquidator against the respondents.2. Interpretation of relevant provisions of the Companies Act, 1956, including sections 2(11), 10, 446, and 454(5A).3. Scope of the term 'any suit or proceeding' under section 446(2) of the Companies Act.4. Applicability of inherent powers of the High Court under section 482 of the Code of Criminal Procedure.Detailed Analysis:1. Jurisdiction of the High Court to Try the Complaint:The primary issue was whether the High Court has the jurisdiction to try the complaint filed by the official liquidator against the respondents under sections 538, 478 read with section 446 of the Companies Act, 1956. The respondents argued that the complaint should be filed before the Judicial Magistrate Ist Class, as per section 2(11) of the Act, which states that for any offence against the Act, the jurisdiction lies with a Magistrate of the First Class.2. Interpretation of Relevant Provisions:The judgment delved into the interpretation of several key sections of the Companies Act, 1956:- Section 2(11): Defines the term 'the Court' and distinguishes between matters relating to a company and offences against the Act.- Section 10: Outlines the jurisdiction of courts under the Act, primarily vesting it in the High Court unless specified otherwise.- Section 446: Grants the court winding up the company the jurisdiction to entertain or dispose of any suit or proceeding by or against the company, notwithstanding any other law.- Section 454(5A): Specifies that the court which made the winding-up order can take cognizance of offences related to the winding-up process.3. Scope of 'Any Suit or Proceeding':The court examined whether the phrase 'any suit or proceeding' under section 446(2) includes criminal proceedings. The official liquidator argued that this phrase is broad enough to encompass criminal complaints initiated by the liquidator. The respondents contended that 'any proceeding' does not include criminal proceedings, citing previous judgments like the Full Bench decision of the Lahore High Court in Smt. Shakuntala v. Peoples' Bank of Northern India Ltd. However, the court found that this precedent did not directly address the inclusion of criminal proceedings.The court also referred to the Supreme Court's decision in S. V. Kondaskar, which emphasized that 'legal proceedings' under section 446(2) must be such that the winding-up court can appropriately deal with them. The court concluded that the scheme of the Act suggests that section 446(2) was intended to grant the High Court wide jurisdiction, including the ability to entertain criminal proceedings if it so chooses.4. Inherent Powers of the High Court:The court noted that the deletion of section 194 of the old Code of Criminal Procedure, which previously required commitment proceedings for the High Court to take cognizance, has removed this procedural barrier. Consequently, the inherent powers of the High Court under section 482 of the Code of Criminal Procedure can be invoked to take cognizance of offences in appropriate cases.The court also referenced Rule 9 of the Companies (Court) Rules, 1959, which preserves the inherent powers of the court to pass orders necessary for the ends of justice or to prevent abuse of the process of the court.Conclusion:The High Court concluded that it has the jurisdiction to try suits and proceedings, including criminal proceedings, by or against the company in appropriate cases. The question of law was answered affirmatively, and the case was directed to be listed before a learned single judge for appropriate orders.