2019 (1) TMI 1255 - HC - Companies Law

High Court restores ACMM's summoning order, directs additional summoning for offences under Sections 408/447 IPC

Yogesh Chandra Goyal & Anr. Versus Kamlesh Kumar Goel & Ors. And M/s. Glory Apartment Pvt. Ltd. & Ors.

The High Court set aside the revisional court's order and restored the ACMM's summoning order, directing the additional summoning of the respondent for ... Offense under companies act - - Penalty for wrongful withholding of property - acquiring dominion over the immoveable property - control over the moveable properties of the complainant company lying in the premises though resigned from the Board of directors - offences punishable under Sections 630 of the Companies Act, 1956 and Sections 406/408/441 of Indian Penal Code, 1860 (IPC) - whether a case of “employer-employee” relationship between the complainant company and the first accused can be assumed? Held that:- The first accused Kamlesh Kumar Goel, being a director of the company, would be covered under the description “officer” as used in Section 630 of the Companies Act, 1956 and there is no escape from his accountability to restore and return the property of the company over which he may have had acquired dominion during the period he was associated with it. For the above reasons, the impugned order of the revisional court is found to be wholly erroneous and, thus, must be set aside. At the same time, this court also finds substance in the submissions of the petitioners that the order of summoning passed by the ACMM was also deficient in that in spite of there being sufficient material presented in the pre-summoning inquiry, the summoning order does not cover criminal prosecution for offences of criminal breach of trust or criminal trespass. There is no inhibition in law that if the company seeks prosecution for the offence under Section 630 of the Companies Act, 1956, it cannot invoke the penal provisions under the general law, as provided in the Indian Penal Code, 1860. There is clear evidence adduced in the pre-summoning inquiry indicating that Kamlesh Kumar Goel (the first accused) had acquired dominion over the aforementioned premises of the complainant company on account of he being then a director on its Board. His acquiring dominion over the said immoveable property, and the moveable properties referred to earlier lying therein, initially may have been lawful. But then, they remained property – immoveable and moveables – over which he had no title of his own. They belong to the complainant company. His possession of the premises became unlawful, after he had resigned from the Board of directors, in the wake of which event he was duty bound to restore its possession to the lawful owner. His control over the moveable properties of the complainant company lying in the premises was also in the nature of trust. After he had resigned from the Board of directors he was obliged in law, particularly on demand being made to such effect (as is alleged), to return the said moveable property to its original owner and failure to do so would prima facie constitute the offence of criminal breach of trust. The complainants’ request for summoning order to be passed additionally for offences under Section 408 IPC and 447 IPC should also have been properly construed, considered and granted. The order of the ACMM dated 15.09.2015 declining to pass summoning order for such offences does not set out any reasons worth the name for such disinclination, rendering it vitiated. Thus the petitions are allowed - Order setting aside the summoning order dated 15.09.2015 passed by the ACMM on the criminal complaint of the petitioners is vacated. The order of the ACMM summoning the respondents stands restored with modification to the effect that the respondent Kamlesh Kumar Goel shall also stand summoned additionally on the accusations for offences punishable under Sections 408/447 IPC. Issues Involved:1. Validity of the Board Resolution authorizing the complaint.2. Competency of the complainant company under Section 252 of the Companies Act, 1956.3. Employer-employee relationship under Section 630 of the Companies Act, 1956.4. Summoning order for offences under Sections 408/447 IPC.Detailed Analysis:1. Validity of the Board Resolution Authorizing the Complaint:The revisional court questioned the validity of the Board Resolution dated 02.04.2012, which authorized the first petitioner to file the complaint on behalf of the complainant company. The court concluded that the resolution 'appeared' to be 'invalid and non est' based on a document suggesting that one of the directors had resigned in 2003, leaving the company with only two directors. This, according to the revisional court, violated Section 252 of the Companies Act, 1956, which requires a minimum of three directors for a company to be functional. However, the High Court found this approach erroneous, stating that whether the resignation was effective required proper inquiry or trial, and the mere issuance of a notice seeking explanation could not be treated as the final word on the matter.2. Competency of the Complainant Company Under Section 252 of the Companies Act, 1956:The revisional court relied on a letter dated 04.08.2015 from the Assistant Registrar of Companies, which indicated that the complainant company did not comply with Section 252 due to the resignation of a director in 2003. The High Court criticized this reliance, noting that the letter merely solicited an explanation and did not constitute definitive evidence. The court emphasized that questions of fact should not be addressed in revisional jurisdiction unless supported by unimpeachable evidence of sterling quality.3. Employer-Employee Relationship Under Section 630 of the Companies Act, 1956:The revisional court observed that the relationship between the complainants and the first respondent did not 'appear to be of such nature' to attract the penal clause in Section 630. The High Court clarified that Section 630 is not restricted to wrongful withholding of company property by its 'employee' but also includes 'officers' of the company, as defined in Section 2(30) of the Companies Act, 1956. The court concluded that the first accused, being a director, would be covered under the description 'officer' and is accountable to return the company's property.4. Summoning Order for Offences Under Sections 408/447 IPC:The High Court found that the ACMM's order dated 15.09.2015, which restricted the initiation of criminal action to the offence under Section 630 of the Companies Act, 1956, was deficient. The court noted that there was sufficient material presented in the pre-summoning inquiry to justify summoning for offences of criminal breach of trust (Section 408 IPC) and criminal trespass (Section 447 IPC). The High Court held that there is no legal inhibition preventing the company from invoking penal provisions under the Indian Penal Code in addition to the Companies Act.Conclusion:The High Court set aside the revisional court's order dated 02.04.2016 and restored the ACMM's summoning order with modifications. The court directed that the respondent Kamlesh Kumar Goel be additionally summoned for offences under Sections 408/447 IPC. The complaint case was scheduled to be taken up by the ACMM on 18.02.2019 for further proceedings in accordance with the law.