1995 (5) TMI 210 - HC - Companies Law

Court denies quashing petition in criminal case, citing factual disputes & jurisdiction clarification.

The court held that the petition to quash criminal proceedings was not justified at the current stage as the facts were yet to be established. It was ... Officer who is in default – Meaning of, Court – Jurisdiction of, Company – Service of documents on members by, Shares certificate – Limitation of time for issue of certificate Issues Involved:1. Quashing of criminal proceedings.2. Responsibility under the Companies Act.3. Delivery of share certificates.4. Jurisdiction of the trial court.5. Limitation period for filing the complaint.6. Powers of the Company Law Board.7. Maintainability of the petition under section 482 of the Criminal Procedure Code.Issue-wise Detailed Analysis:1. Quashing of Criminal Proceedings:The petition was filed under section 482 of the Criminal Procedure Code to quash the proceedings of Criminal Case No. 164 of 1994. The court held that the inherent powers under section 482 could only be exercised in cases of abuse of process of law or when proceedings are frivolous or vexatious. Since the facts were yet to come on record, the petition for quashing the proceedings was not justified at this stage.2. Responsibility Under the Companies Act:The complaint alleged violations of sections 61, 73, and 113 of the Companies Act. The court discussed the definition of 'officer who is in default' as per section 5 of the Act. It was argued that only the managing director, whole-time director, or manager could be held responsible. However, the court noted that whether these positions existed in the company was a factual question to be determined by the trial court, and no interference could be made at this stage.3. Delivery of Share Certificates:The petitioner argued that the shares were sent by registered post and that the obligation was discharged. The court noted that section 113 requires delivery within three months and section 53 raises a rebuttable presumption of service by post. Since the document provided was not conclusive, the court held that the proceedings could not be quashed based on this argument.4. Jurisdiction of the Trial Court:The petitioner contended that the trial court in Jaipur lacked jurisdiction as the registered office was in Bombay. The court noted that the application for shares and the collection of money occurred in Jaipur, involving factual questions that could not be decided in a petition under section 482. The petitioner could raise this point before the trial court.5. Limitation Period for Filing the Complaint:The petitioner argued that the complaint was barred by limitation under section 468 of the Criminal Procedure Code. The court referred to the Madras High Court decision in Ghanshyam Chaturbhuj v. Industrial Ceramics P. Ltd., which held that the offence under section 113 is a continuing offence. The court concluded that the complaint was not barred by limitation.6. Powers of the Company Law Board:The petitioner argued that amendments to the Companies Act conferred jurisdiction on the Company Law Board, not the court. The court clarified that the Company Law Board could extend the time for delivery of share certificates but did not have the power to punish with a fine. Therefore, this objection was dismissed.7. Maintainability of the Petition under Section 482:The respondent argued that the petition under section 482 was not maintainable as the Magistrate could recall the summoning order. The court referred to the decision in Nagawwa (Smt.) v. Veeranna, stating that the Magistrate's role at the stage of issuing process is to be prima facie satisfied with the allegations. The court found that the allegations were neither patently absurd nor improbable and that the complaint disclosed all essential ingredients of the offence. Therefore, the petition under section 482 was not maintainable.Conclusion:The court concluded that the petition did not justify discharging the petitioner at this stage. The personal attendance of the company's directors was not to be insisted upon by the trial court. Jurisdiction and other issues would be decided upon an application under section 245(2). The petition was disposed of with these observations and directions.