2020 (2) TMI 1369 - HC - Companies Law

Court dismisses Criminal Original Petition, directs trial conclusion in 4 months. Liberty to present defenses granted.

M/s. Viswapriya Financial Services And Securities Ltd. Versus R. Subramanian, Registrar of Companies

The High Court dismissed the Criminal Original Petition, directing the trial Court to conclude proceedings within four months. The petitioners were ... Non-Banking Company - non-compliance of the provisions of Section 58A(6) of Companies Act - It is the contention of the petitioner that the 1st petitioner Company is exempted under Section 58A(7) of the Companies Act - HELD THAT:- The 1st petitioner Company is a Public Limited Company registered under the Companies Act 1956. The Company was initially incorporated as M/s.Viswpriya Financial Services and Securities Pvt Ltd on 13.05.1991 and later converted to Public Limited Company on 03.09.1997. The 1st petitioner company was at that time managed by the second petitioner. The second petitioner was himself the Chairman and Managing Director and in default, the person responsible for the affairs of the 1st petitioner company. The 1st petitioner Company was a non-Banking Financial Company at the time of issuance of impugned advertisement and therefore, it would be liable for punishment under 58A(6)(a)(i) and the other petitioners, who are officers are liable under Section 58A(6)(b) of the Companies Act. The trial Court also after considering the entire materials has framed charges for the offence under Section 58A(6)(a)(i) as against the 1st petitioner Company and under Section 58A(6)(b) for the 2nd petitioner. Now, whether the Registrar of Companies can file the complaint for prosecuting the petitioners and whether the allegation against the petitioners falls under Section 58A(2)(b) and punishable under Section 58A(6), are the matters for trial, after recording the evidence - Though the trial Court after taking into consideration framed the charge, the petitioner has not challenged that order but once again filed a petition invoking Section 482 Cr.P.C. This Court in VISWAPRIYA FINANCE SERVICES & SECURITIES LTD. VERSUS REGISTRAR OF COMPANIES [2001 (6) TMI 784 - HIGH COURT OF MADRAS], on the very same issues had already decided that only the trial Court has to consider all the facts from the materials available and whether the petitioner will come under exemption under Section 58A and 58A(2)b and punishable under Section 58A(6) of the act, has to be decided after recording the evidence. Once this Court has already decided the issues, cannot reopen its own decision. Since the matter is pending from 2013, the trial Court is directed to complete the trial and dispose of the case in accordance with law within a period of four months from the date of receipt of copy of this order - Petition dismissed. Issues:1. Jurisdiction of the Registrar of Companies to file a complaint against the petitioners under Sections 58A(2)(b) and 58A(7)(b) of the Companies Act, 1956.2. Exemption of the 1st petitioner Company under Section 58A(7) of the Companies Act and the applicability of Section 58A(6) to non-Banking Financial Companies.3. Consideration of legal provisions and framing of charges by the learned Magistrate.4. Res judicata principle and the dismissal of the petition by the High Court.5. Trial Court's framing of charges against the petitioners under Section 58A(6) of the Companies Act.6. Challenge to the trial Court's order by the petitioners invoking Section 482 Cr.P.C.Issue 1: Jurisdiction of the Registrar of Companies:The respondent, the Registrar of Companies, filed a complaint against the petitioners under Sections 58A(2)(b) and 58A(7)(b) of the Companies Act, challenging which the 1st petitioner-Company filed a petition under Section 482 Cr.P.C. The petitioners contended that the Registrar of Companies lacked jurisdiction to file the complaint as the petitioner's company was exempted under Section 58A of the Act. The Hon'ble Supreme Court remitted the matter back to the trial Court, emphasizing the need to consider the jurisdictional aspects. The petitioners sought to quash the charges framed by the learned Magistrate, asserting the lack of authority for the complaint.Issue 2: Exemption of the 1st petitioner Company:The petitioners argued that the 1st petitioner, a non-Banking Company, was exempted under Section 58A(7) of the Companies Act. They highlighted that as a non-Banking Finance Company, the provisions of Section 58A(6) did not apply to them. The petitioners emphasized that the advertisement released by the company was not within the purview of Section 58A, as they were registered with the Reserve Bank of India. They contended that the charges framed against them were erroneous and should be quashed based on the exemption under Section 58A.Issue 3: Consideration of Legal Provisions by the Magistrate:The petitioners raised concerns regarding the failure of the learned Magistrate to consider the legal provisions and submissions made by them before framing the charges. They argued that the Magistrate did not apply the law correctly, leading to the wrongful framing of charges against the petitioners. The petitioners sought to quash the charge sheet based on the Magistrate's alleged oversight in interpreting the relevant legal provisions.Issue 4: Res Judicata Principle:The High Court dismissed the petition, citing the principle of res judicata, as the same issues had been raised and decided previously. The court highlighted that the contentions were left open for the trial Court to address. The petitioners' subsequent approach to the High Court was deemed impermissible due to the earlier decision and direction for all defenses to be raised during the trial.Issue 5: Framing of Charges by the Trial Court:The trial Court framed charges against the petitioners under Section 58A(6) of the Companies Act, considering the nature of the 1st petitioner Company as a non-Banking Financial Company. The court found prima facie evidence for the offense and directed the trial to proceed, emphasizing the need for evidence recording to determine the applicability of Section 58A and the liability of the petitioners.Issue 6: Challenge to Trial Court's Order:Despite the trial Court's framing of charges, the petitioners invoked Section 482 Cr.P.C. to challenge the order. The High Court reiterated that the trial Court was responsible for evaluating the evidence and determining the exemption under Section 58A. The court emphasized that the trial proceedings should continue, allowing the petitioners to present their defenses.In conclusion, the High Court dismissed the Criminal Original Petition, maintaining the previous decisions and directing the trial Court to conclude the proceedings within four months. The petitioners were granted the liberty to present their defenses during the trial, emphasizing the importance of evidence recording to ascertain the applicability of legal provisions and exemptions under the Companies Act.