Companies Act contravention as an offence, but High Court lacked original criminal jurisdiction to try it directly.

Contravention of a Companies Act provision imposing a daily fine on an unqualified person acting as director was treated as a penal breach, not a merely civil default, and was therefore an offence punishable with fine. The Full Bench further held that the Act did not confer original criminal jurisdiction on the High Court to take cognizance and try such offences directly on an application under Section 85. In the absence of an express special forum, offences under the Act were to be dealt with through the ordinary criminal procedure, with cognizance taken in the manner authorised by that procedure.

---

---

Issues: (i) Whether contraventions of the provisions of the Companies Act are offences. (ii) Whether the High Court has jurisdiction to take cognizance of and try such offences and impose the fines prescribed by the Act.

Issue (i): Whether contraventions of the provisions of the Companies Act are offences.

Analysis: The provision in question made an unqualified person acting as director liable to a fine for every day of default. The liability created was not merely civil in character, but a penal consequence imposed by the statute. The language of the Act showed that breach of the provision was intended to be punishable as an offence.

Conclusion: Yes. Contravention of Section 85 of the Indian Companies Act was held to be an offence punishable with fine.

Issue (ii): Whether the High Court has jurisdiction to take cognizance of and try such offences and impose the fines prescribed by the Act.

Analysis: The provisions of the Companies Act did not designate any special court with original criminal jurisdiction to try offences under the Act. Section 3 only identified the court having jurisdiction under the Act, while Section 278 merely excluded courts inferior to certain magistrates. Under the Code of Criminal Procedure, offences under special laws were to be dealt with according to the ordinary criminal procedure unless the statute otherwise provided. The relevant provisions contemplated cognizance by a Magistrate in the usual course, commitment where required, and cognizance by the High Court only upon commitment or by a recognized statutory procedure. A direct application to the High Court under Section 85 did not confer original jurisdiction to try the accused straightaway.

Conclusion: No. The High Court had no jurisdiction to take cognizance of and try the accused directly on an application under Section 85 of the Indian Companies Act.

Final Conclusion: The reference was answered in part in the affirmative and in part in the negative, with the High Court holding that the contravention was an offence but that the Court lacked original jurisdiction to try it on the application as made.

Ratio Decidendi: Where a special statute creates a penal liability but does not expressly confer original criminal jurisdiction on a particular court, the offence must be dealt with under the ordinary criminal procedure, and the High Court can try it only in the manner authorized by that procedure.

---