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Issues: (i) Whether, while issuing process for an offence, the Magistrate can take into account a proviso and deeming provision contained in the section, or whether consideration of such defence is barred by Section 105 of the Indian Evidence Act, 1872. (ii) Whether, on the admitted facts, there was a dispute regarding the right to receive dividend so as to attract Section 127(c) of the Companies Act, 2013 and negate the offence at the stage of issuance of process.
Issue (i): Whether, while issuing process for an offence, the Magistrate can take into account a proviso and deeming provision contained in the section, or whether consideration of such defence is barred by Section 105 of the Indian Evidence Act, 1872.
Analysis: A proviso is not merely an exception; it may qualify and control the main enactment and, where the complaint itself discloses the material attracting the proviso, the court need not shut its eyes to that material at the threshold. A deeming provision creates a legal fiction that must be given full effect according to its purpose. Section 105 of the Indian Evidence Act, 1872 governs burden of proof for special defences, but it does not prevent the court from considering admitted facts already appearing in the complaint and accompanying material when deciding whether an offence is disclosed at the stage of process.
Conclusion: The Magistrate can consider the proviso and deeming provision at the stage of issuing process where the complaint itself reveals the factual foundation for their application.
Issue (ii): Whether, on the admitted facts, there was a dispute regarding the right to receive dividend so as to attract Section 127(c) of the Companies Act, 2013 and negate the offence at the stage of issuance of process.
Analysis: The materials before the court showed an admitted and continuing dispute between the shareholder and the company/directors regarding entitlement to receive dividend, with connected proceedings pending before other fora. Section 127(c) provides that no offence shall be deemed to have been committed where there is a dispute regarding the right to receive the dividend. The existence of a real dispute, and not a mere denial of liability, was sufficient to attract the proviso and prevent the offence from being made out on the face of the complaint.
Conclusion: Yes, a dispute regarding entitlement to dividend existed and Section 127(c) applied, so the process could not be sustained.
Final Conclusion: The process and notices were quashed because the complaint itself disclosed a dispute falling within the statutory proviso, and therefore no offence under Section 127 was made out on the admitted material.
Ratio Decidendi: Where the complaint itself contains admitted facts bringing the case within a proviso that negatives commission of the offence, the court may rely on that material at the stage of process and must not issue process if the offence is not disclosed.
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