1952 (12) TMI 23 - HC - Companies Law

Appeal Dismissed, Conviction Upheld, Costs Awarded to Liquidators. Surrender Directive Issued.

The court dismissed the appeal, upholding the conviction and sentence. The appellant was directed to surrender, and official liquidators were awarded ... Style, etc., of liquidator and Penalty for wrongful withholding of property Issues Involved:1. Lack of Leave for Instituting Proceedings2. Formality of Complaint Filing3. Double Punishment under Article 20(2) of the Constitution4. Validity of Proceedings under Banking Companies Act5. Proof of Fraudulent IntentionDetailed Analysis:1. Lack of Leave for Instituting ProceedingsThe appellant argued that the official liquidators did not obtain the necessary leave from the court to institute proceedings under section 282A of the Indian Companies Act, as required by section 179. The court examined the language of section 179(a) and concluded that it did not mandate 'previous sanction' for instituting criminal proceedings. The section is enabling rather than prohibitory, allowing the liquidators to act with the court's sanction, which can be obtained at any time, even during the proceedings. The court found that the liquidators had indeed obtained the necessary sanction during the proceedings, thus complying substantially with section 179.2. Formality of Complaint FilingThe appellant contended that the complaint should have been filed in the name and on behalf of the company, not merely by the official liquidators. The court examined section 177 of the Indian Companies Act and found that the applications were substantially in the name and on behalf of the company, despite the technical omission in the description. The court cited precedents indicating that such formalities do not vitiate the proceedings if the substance of the complaint is clear.3. Double Punishment under Article 20(2) of the ConstitutionThe appellant argued that section 282A of the Companies Act provided double punishment, violating Article 20(2) of the Constitution. The court clarified that section 282A imposes a fine and an order for restitution, with imprisonment as an alternative punishment in case of default. This does not constitute double punishment but rather an alternative consequence for non-compliance. The court found that the appellant was not punished twice for the same offence, thus dismissing the argument.4. Validity of Proceedings under Banking Companies ActThe appellant argued that the proceedings were vitiated due to the lack of rules framed under section 45G of the Banking Companies Act. The court held that the existing rules under the Indian Companies Act applied, and the proceedings were valid. The appellant also contended that the case should have been tried summarily by a Presidency Magistrate, not the High Court. The court found that the High Court was the proper and competent court as defined under the Banking Companies Act, and the procedure followed was appropriate.5. Proof of Fraudulent IntentionThe appellant argued that fraudulent intention, required under section 282A, was not proven. The court noted that fraudulent intention can be inferred from circumstances and found that the appellant's conduct demonstrated such intent. The court reviewed the evidence and concluded that the appellant acted fraudulently and dishonestly, thus upholding the charges.Conclusion:The court found no merit in the appeal, confirming the order under appeal and dismissing the appeal. The conviction and sentence were upheld, and the appellant was directed to surrender before the Registrar. The official liquidators were awarded costs from the assets of the bank.