2019 (2) TMI 1118 - HC - Companies Law

Court affirms jurisdiction over IPC and Companies Act violations, emphasizing fraud's scope and conspiracy examination during trial.

Vikas Agarwal Versus Serious Fraud Investigation Office

The court upheld the trial court's jurisdiction to summon the petitioner under Sections 418/120B of IPC and Section 447 of the Companies Act, 2013. The ... Commission of offence under Sections 418/120B of IPC and under Section 447 of the Companies Act, 2013 - HELD THAT:- Definition of fraud provided in the explanation to Section 447 of the Companies Act, 2013 makes it clear that the prosecution is to relate to the companies in the first instance and also to other persons who have in any manner connived in commission of the offence to gain undue advantage. A bare perusal of Section 212 of the Companies Act, 2013 reveals that there is no bar of limitation to proceed under Sections 212 or 447 of the Companies Act, 2013. What is the larger conspiracy cannot be prejudged at this initial stage and is required to be examined at trial. At the summoning stage, limited scrutiny is required to be undertaken. Upon doing so, find no illegality or infirmity in the impugned order. This Court finds that the trial court has jurisdiction to proceed against petitioner, as sanction for the prosecution has already been taken. In the considered opinion of this Court, trial court does not lack the jurisdiction to proceed against petitioner. Issues: Jurisdiction of trial court to summon petitioner under Sections 418/120B of IPC and Section 447 of the Companies Act, 2013.In the judgment delivered by Mr. Sunil Gaur J., the petitioner challenged the impugned order summoning them for offenses under Sections 418/120B of IPC and under Section 447 of the Companies Act, 2013. The petitioner argued that the prosecution under the Companies Act should be limited to the company and not private individuals. Reference was made to Section 447 of the Companies Act, 2013, emphasizing that fraud should be in relation to the company's affairs, not individuals. The petitioner contended that the trial court lacked jurisdiction to summon them. However, the respondent argued that Section 447 includes any person conniving to deceive or gain undue advantage from a company, giving the trial court jurisdiction to summon the petitioner. The respondent further stated that the petitioner could raise their pleas during the charge stage and that the sanction for prosecution was granted based on a prima facie case.Upon analysis, the court found that the definition of fraud under Section 447 of the Companies Act, 2013 includes persons conniving to deceive or gain undue advantage from a company. The court noted that there is no limitation to proceed under Sections 212 or 447 of the Companies Act, 2013. It was emphasized that the larger conspiracy should be examined at trial, and limited scrutiny is required at the summoning stage. The court concluded that the trial court had jurisdiction to proceed against the petitioner as the prosecution sanction had been obtained. Therefore, the court dismissed the petition and application, stating that the trial court did not lack jurisdiction to proceed against the petitioner.In summary, the judgment upheld the trial court's jurisdiction to summon the petitioner under Sections 418/120B of IPC and Section 447 of the Companies Act, 2013, based on the definition of fraud involving persons conniving to deceive or gain undue advantage from a company. The court emphasized that the larger conspiracy should be examined during trial and that limited scrutiny is required at the summoning stage. The court found no illegality in the impugned order and dismissed the petition and application, without commenting on the case's merits to avoid prejudicing the petitioner at trial.