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Issues: (i) Whether cognizance of offences under Section 447 of the Companies Act, 2013 could be taken on a private complaint in the absence of a complaint in writing by the Director, Serious Fraud Investigation Office or an authorised officer of the Central Government; (ii) Whether the company, in respect of whose affairs the alleged fabrication and fraudulent filings were made, was a necessary party to the proceedings; (iii) Whether the criminal proceedings were liable to be quashed as an abuse of process and mala fide prosecution.
Issue (i): Whether cognizance of offences under Section 447 of the Companies Act, 2013 could be taken on a private complaint in the absence of a complaint in writing by the Director, Serious Fraud Investigation Office or an authorised officer of the Central Government.
Analysis: Section 212(6) of the Companies Act, 2013 contains a specific restriction for offences covered by Section 447 and requires a written complaint only by the Director, SFIO or an authorised Central Government officer. The Court read Section 439 as not diluting that special bar, and held that the safeguard in Section 212(6) is intended to prevent frivolous prosecutions and to ensure prosecution for fraud follows the prescribed statutory route.
Conclusion: The private complaint could not sustain cognizance for the Section 447-based offences, and the objection of the petitioners succeeded.
Issue (ii): Whether the company, in respect of whose affairs the alleged fabrication and fraudulent filings were made, was a necessary party to the proceedings.
Analysis: The allegations centred on alleged manipulation of company records, annual returns, board resolutions and share allotment made in the name of the company. In that setting, the company was treated as the primary legal entity whose records and filings were in issue, and the absence of the company as an accused was held to be fatal to the prosecution in the facts of the case.
Conclusion: The company was a necessary party and its non-joinder supported quashing of the proceedings.
Issue (iii): Whether the criminal proceedings were liable to be quashed as an abuse of process and mala fide prosecution.
Analysis: The Court noted the long delay in launching the complaint, the existence of parallel civil and company-law proceedings, and the surrounding matrimonial and corporate disputes. Applying the principles governing inherent jurisdiction, the Court found that the continuation of the prosecution would amount to abuse of process and that the allegations disclosed mala fides and private vendetta.
Conclusion: The proceedings were liable to be quashed on the grounds of abuse of process and mala fides.
Final Conclusion: The criminal petitions succeeded and the prosecution in C.C. No. 31 of 2021 could not be continued against the petitioners.
Ratio Decidendi: Where the statute prescribes a special mode for cognizance of fraud-related offences against a company, that mode must be strictly followed, and prosecution on a private complaint contrary to that bar is unsustainable.
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