2000 (6) TMI 767 - HC - Companies Law

High Court lacks jurisdiction to try Companies Act offences; petitioner can file separate petition under section 340

The High Court concluded that it lacks jurisdiction to take cognizance of or try offences under the Companies Act. Offences under the Act must be tried by ... Winding up - Suits stayed on winding up order Issues Involved:1. Whether the High Court can take cognizance of offences under the Companies Act.2. Whether the High Court can try offences under the Companies Act.3. Whether the Company Court can conduct an inquiry and direct an officer to make a complaint under section 340 of the Code of Criminal Procedure for offences under the Indian Penal Code.Detailed Analysis:1. Whether the High Court can take cognizance of offences under the Companies Act:The petitioner requested the High Court to take cognizance of an offence allegedly committed by the managing director under section 629 of the Companies Act, 1956. The Court examined whether it has the jurisdiction to take cognizance of such offences. Section 621 of the Companies Act specifies that no court shall take cognizance of any offence against the Act except on a complaint in writing by the Registrar, a shareholder, or a person authorized by the Central Government. The Court concluded that it cannot take cognizance of the offence under section 629 as there is no provision in the Act or the Code of Criminal Procedure that allows the Company Court to take cognizance of offences under the Companies Act.2. Whether the High Court can try offences under the Companies Act:The Court analyzed whether it can try offences under the Companies Act based on the provisions of the Code of Criminal Procedure and the Companies Act. Section 4 of the Code of Criminal Procedure states that all offences under the Indian Penal Code and any other law shall be tried according to the provisions of the Code unless a special procedure is provided in the specific Act. The Companies Act does provide special procedures for certain offences, such as those under section 454(5A), but generally, offences under the Act must be tried by a magistrate as per section 622, which states that no court inferior to that of a Presidency Magistrate or a magistrate of the first class shall try any offence against the Act. The Court concluded that the trial of offences under the Companies Act must be conducted as per the Code of Criminal Procedure and cannot be tried by the Company Court.3. Whether the Company Court can conduct an inquiry and direct an officer to make a complaint under section 340 of the Code of Criminal Procedure for offences under the Indian Penal Code:The petitioner also requested the Court to conduct an inquiry into the alleged commission of offences under sections 193, 191, 199, and 51 of the Indian Penal Code and to direct an officer to make a complaint under section 340 of the Code of Criminal Procedure. The Court noted that since it cannot take cognizance of the offence under section 629 of the Companies Act, it is not in a position to conduct such an inquiry or direct the filing of a complaint. However, the Court dismissed the petition without prejudice to the petitioner's right to file a separate petition for conducting an inquiry and filing a complaint under section 340 of the Code of Criminal Procedure.Conclusion:The High Court cannot take cognizance of or try offences under the Companies Act. The trial of such offences must be conducted by a magistrate as per the provisions of the Code of Criminal Procedure. The petition was dismissed without prejudice to the petitioner's right to file a separate petition for conducting an inquiry and filing a complaint under section 340 of the Code of Criminal Procedure.