Court Affirms Section 633(2) Power Post-Prosecution, Dismisses Objection, Upholds Directors' Petition in Meta Films Case.

The court determined that the power under Section 633(2) of the Companies Act, 1956, can be invoked even after the initiation of criminal prosecution. The preliminary objection by Vis-ram Financial Services was dismissed, affirming the maintainability of the main petition filed by the directors of Meta Films (India) Ltd. The application for dismissal was rejected, allowing the applicant to respond to the main petition on its merits. This decision highlights the High Court's broader jurisdiction to grant relief under Section 633(2) beyond pre-prosecution stages, contrary to previous interpretations by various High Courts.

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Issues Involved:
1. Whether the power u/s 633(2) of the Companies Act, 1956, can be invoked after the initiation of criminal prosecution.

Summary:

Issue 1: Invocation of Power u/s 633(2) Post Prosecution Initiation

The main company petition C.P. No. 297 of 2013 was filed u/s 633 of the Companies Act, 1956, by the Managing Director and Director of Meta Films (India) Ltd., seeking relief from alleged acts of default and liability. The petition was filed against Vis-ram Financial Services Private Ltd., who had initiated a criminal complaint. Another similar petition, C.P. No. 296 of 2013, was also filed by the same petitioners against the Registrar of Companies.

Both petitions sought interim stay of criminal prosecution, which was granted on 19.9.2013. Vis-ram Financial Services then filed Comp. A. No. 1072 of 2013, seeking dismissal of the main petition on the ground that Section 633(2) can only be invoked before the initiation of criminal prosecution. The court had to decide the sole legal issue of whether the power u/s 633(2) can be invoked post-prosecution initiation.

Section 633(1) allows the court hearing the case to relieve an officer from criminal liability if they acted honestly and reasonably. Section 633(2) allows the High Court to relieve an officer if they apprehend proceedings against them. The court noted that various High Courts, including Bombay, Allahabad, Punjab & Haryana, and Delhi, had held that the High Court's power u/s 633(2) is limited to pre-prosecution stages.

Despite these precedents, the court examined the scheme of the Companies Act, 1956, and found that the High Court has broader jurisdiction. The court concluded that Section 633(2) provides additional power to the High Court to grant relief even in respect of anticipated proceedings and does not limit its jurisdiction to only pre-prosecution stages. Therefore, the preliminary objection raised by Vis-ram Financial Services was dismissed, and the main petition was held maintainable.

The application for dismissal was dismissed, and it was left open for the applicant to file a counter to the main petition on merits.

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