Company court lacks criminal jurisdiction to commence trial for Companies Act offences in oppression and mismanagement proceedings.

A company court dealing with oppression and mismanagement proceedings could not assume criminal jurisdiction to take cognizance of alleged offences under the Companies Act. The power to commence a criminal trial must be expressly conferred by statute, and section 406 with Schedule XI did not authorise such action at the interlocutory stage, especially without a complaint, identified accused persons, or a prima facie finding after conclusion of the main proceedings. In the absence of an express special procedure, the Code of Criminal Procedure applied, and the direction to begin criminal trial was without authority of law and unsustainable.

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Issues: Whether the company court had jurisdiction to direct a criminal trial and take cognizance of offences alleged under the Companies Act in proceedings under sections 397 and 398.

Analysis: The proceeding under sections 397 and 398 was essentially a civil oppression and mismanagement matter. The power to take cognizance of and try criminal offences must be expressly conferred by statute, and cannot be assumed by implication. Section 406 and Schedule XI did not authorise the company court to commence a criminal trial at the interlocutory stage, especially without a complaint, without identification of accused persons, and without a prima facie finding after conclusion of the main proceedings. The Code of Criminal Procedure applied in the absence of an express special procedure, and the company court had no original criminal jurisdiction to try the alleged offences in the manner directed. The distinction between civil relief under sections 397 and 398 and criminal liability under the penal provisions of the Companies Act had to be maintained.

Conclusion: The direction to commence criminal trial and the assumption of criminal jurisdiction were without authority of law and were unsustainable.

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