Shareholder cannot file criminal case for Companies Act offense; must apply to Tribunal for investigation. Magistrate's order quashed.

The shareholder cannot initiate proceedings before the Magistrate for an offence under Section 447 of the Companies Act, 2013. The offence under Section 447 is cognizable, and the shareholder's remedy lies in applying to the Tribunal under Section 213 for an investigation. The Magistrate's order in the present matter lacked legal compliance with relevant sections and was quashed.

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Issues Involved:
1. Whether a shareholder, minority or otherwise, can initiate proceedings before the Magistrate for an alleged offence under Section 447 of the Companies Act, 2013.
2. Whether the offence under Section 447 of the Companies Act, 2013 is a cognizable or non-cognizable offence.
3. What is the remedy available to a shareholder alleging fraud requiring initiation of proceedings under Section 447 of the Companies Act, 2013.
4. Does the order passed by the learned Magistrate in the present matter suffer from legal infirmity requiring interference.
5. What order should be passed.

Detailed Analysis:

1. Whether a shareholder, minority or otherwise, can initiate proceedings before the Magistrate for an alleged offence under Section 447 of the Companies Act, 2013:

Section 447 of the Companies Act provides for punishment for fraud involving a significant amount or public interest. However, Section 439 makes all offences under the Companies Act non-cognizable, allowing complaints by the Registrar, a shareholder, or a person authorized by the Central Government. Specifically, Sub-Section (6) of Section 212 mandates that for offences under Section 447, only a complaint by the Director, Serious Fraud Investigation Office (SFIO), or an authorized officer of the Central Government is valid. Therefore, a shareholder cannot initiate proceedings for an offence under Section 447 by themselves.

2. Whether the offence under Section 447 of the Companies Act, 2013 is a cognizable or non-cognizable offence:

Sub-Section (6) of Section 212 clearly states that an offence under Section 447 is cognizable. Thus, the offence under Section 447 of the Act is a cognizable offence.

3. What is the remedy available to a shareholder alleging fraud requiring initiation of proceedings under Section 447 of the Companies Act, 2013:

A shareholder cannot file proceedings directly before the Magistrate for an offence under Section 447. Instead, they can apply to the Tribunal under Section 213, which allows for an investigation into the company's affairs by an inspector appointed by the Central Government. If the inspector's report indicates fraud, the SFIO can proceed under Section 212, leading to criminal proceedings under Section 447.

4. Does the order passed by the learned Magistrate in the present matter suffer from legal infirmity requiring interference:

The Magistrate's order suffers from legal infirmity as it did not comply with the requirements of Sections 212, 213, 439, and 447. The Magistrate took cognizance without adhering to the mandated procedure, making the order contrary to applicable law.

5. What order should be passed:

ORDER:
i. The Criminal Petition is allowed.
ii. The proceedings in C.C.No.561/2016 pending on the file of the Principal Civil Judge and JMFC, Mulabagal, and all orders passed therein are hereby quashed.

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