Complaint dismissed for lack of prima facie case, legal process abuse. Proceedings quashed, petitions allowed.

The court held that the complaint failed to establish a prima facie case and was deemed an abuse of the legal process. Consequently, the proceedings in C.C. No. 214/2013 were quashed, the petitions were allowed, and the interim applications IA No. 2/2015 and IA No. 2/2014 were disposed of.

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Issues Involved:
1. Alleged violation of Section 205 of the Companies Act, 1956 and Section 123 of the Companies Act, 2013.
2. Applicability of Section 447 of the Companies Act, 2013.
3. Requirement of sanction under Section 197 of Cr.P.C.
4. Prima facie case against the accused persons.
5. Abuse of process of law and malicious prosecution.

Detailed Analysis:

1. Alleged Violation of Section 205 of the Companies Act, 1956 and Section 123 of the Companies Act, 2013:
The complaint alleges that the company declared a 25% dividend for the financial year 2012-13 despite incurring a loss of Rs. 122 Crores, which is contrary to Section 205 of the Companies Act, 1956 and Section 123 of the Companies Act, 2013. However, Section 123 of the Act of 2013 was brought into effect from 01.04.2015 and is not applicable to the case since the dividend was declared in the AGM held on 13.09.2013. The equivalent provision, Section 205(1) of the Act of 1956, allows for the declaration of dividends out of profits from any previous financial year, provided certain conditions are met. The petitioners argued that the proposed dividend of Rs. 10.41 Crores was declared from the profit of the previous year not transferred to reserve, and the balance amount was transferred to the General Reserve.

2. Applicability of Section 447 of the Companies Act, 2013:
Section 447 of the Act of 2013 deals with punishment for fraud but does not define fraud. The complainant contends that the violation of Section 205 of the Act of 1956 or Section 123 of the Act of 2013 amounts to an offence punishable under Section 447. However, the complaint lacks specifics on fraudulent acts. The court observed that the resolution to declare dividends was passed in a general body meeting of shareholders, and attributing criminality to the accused for this resolution is illogical. The complaint was found to be vague, ambiguous, and not making out the culpability of the petitioners.

3. Requirement of Sanction under Section 197 of Cr.P.C.:
The petitioners argued that they are public servants appointed by the President of India and cannot be prosecuted without sanction under Section 197 of Cr.P.C. The court referred to the judgment in Mohd. Hadi Raja v. State of Bihar, which held that officers of public sector undertakings do not fall under the ambit of Section 197. Therefore, the protection under Section 197 of Cr.P.C. is not applicable to the accused persons.

4. Prima Facie Case Against the Accused Persons:
The court emphasized that a criminal trial should not be based on mere hope and expectation of finding material to implicate the accused. A prima facie case must be established with definite allegations. The complaint in this case failed to disclose a prima facie case against the accused. The court cited the judgment in State of West Bengal v. Swapan Kumar Guha, which states that when a complaint fails to disclose the commission of an offence, the court must interfere and stop the investigation.

5. Abuse of Process of Law and Malicious Prosecution:
The court noted that the complainant is a dismissed employee of the company and has a history of pursuing litigation out of personal motives. The case fits into the categories of cases listed in State of Haryana v. Bhajan Lal, where the court can exercise its power to prevent abuse of process or to secure the ends of justice. The complaint was found to be maliciously instituted with an ulterior motive for wreaking vengeance on the accused.

Conclusion:
The court concluded that the complaint failed to disclose a prima facie case and was an abuse of the process of law. The proceedings in C.C. No. 214/2013 were quashed, and the petitions were allowed. The court also disposed of the interim applications IA No. 2/2015 and IA No. 2/2014.

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