AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
1958 (9) TMI 18
X X X X Extracts X X X X
X X X X Extracts X X X X
....he official liquidator and the official liquidator had obtained the directions of the High Court to file the complaint. On May 5, 1953, the appellant applied to the Presidency Magistrate for dismissal of the complaint as being without the sanction of the company judge and therefore the official liquidator in his official capacity was incompetent to prefer the complaint, being the creation of the statute he could only act within the four corners of the statute. He possessed only those powers which the statute conferred on him. This application was dismissed by the Presidency Magistrate on June 13, 1953. The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of prior direction judicially given by the High Court under section 237(1) of the Indian Companies Act. The High Court found against the appellants and discharged the rule. The learned Chief Justice held that the provisions of section 237(1) are no bar to a prosecution by the liquidator; that under section 237(1) there is "nothing in the nature of a judicial proceeding"; that it could not be said that the order was not a va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct. This order said: "It is ordered that the said applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Mitra as set out in the said exhibit A." The passage already quoted from the judgment of the learned Chief Justice shows that all the relevant facts were before the company Judge, as they were all set out in the affidavits placed before him. The complaint was then filed on July 23, 1952. During the pendency of the complaint the appellants took an appeal against the order of the company Judge dated July 22, 1952, but it was dismissed on the objection taken by the liquidator that it was an administrative order and not a judicial order. On August 5, 1953, the official liquidator took out misfeasance proceedings under section 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of commencement of proceedings under section 235. This application was also heard with the rule wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t any past or present director, manager or other officer, or any member, of the company has been guilty of any offence in relation to the company for which he is criminally liable, the court may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the registrar. (2)If it appears to the liquidator in the course of a voluntary winding up that any past or present director, manager or other officer or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall forthwith report the matter to the registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking copies of any documents, being information or documents in the possession or under the control of the liquidator relating to the matter in question, as he may require. (3)Where any report is made under sub-section (2) to the registrar, he may, if he thinks fit, refer the matter to the Central Government for further enquiry, and the Central Government shall thereupon investiga....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the prosecution ought to be instituted he can do so if advised by the Advocate-General or the public prosecutor. But emphasis was placed by counsel for the appellants on the proviso that no prosecution could be undertaken without first giving the accused person an opportunity of making a statement to the registrar or of being heard and it was urged that if the registrar cannot institute prosecution without first giving an opportunity to the person accused to file an explanation, no directions- could be given by the Judge unless the persons accused are first allowed an opportunity of giving an explanation. But this contention must be repelled. Under section 237(1) the court may direct the liquidator to himself prosecute the offender or to refer the matter to the registrar. Giving an opportunity to the offender before such direction is given by the court is not a prerequisite of the Judge making an order under sub-section (1). Under sub-section (6) the registrar is required to give the offender an opportunity to show cause before a prosecution is undertaken. That is a far step from saying that section 237(1) of the Companies Act requires a Judge to give the offender an opportun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the power given me-by section 167 of the Companies Act, 1862, to direct the official receiver to institute and conduct a prosecution at the expense of the assets. It is obvious that no one legitimately can or ought to institute a criminal prosecution with a view to his personal profit. Neither should a prosecution be instituted from motives of vengeance against the offender. The motive of every prosecution ought to be to inflict punishment upon the criminal for the proper enforcement of the law and for the advantage of the State and with a view to deter others from doing the like." This passage does not support the giving of an opportunity to the offender before the judge can give direction nor do they affect the powers of the liquidator to start a prosecution or the criminal court to entertain a complaint when filed by the liquidator. The following passage from Buckley's Company Law under the commentary under section 334 of the English Companies Act, 1948, which corresponds to section 237 of the Indian Companies Act, was then referred to: "Proceedings will accordingly be taken by the Director of Public Prosecutions (or Lord Advocate) or not at all." But this is because....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sel relied on The Queen v. Cubitt [1889] 22 QBD 622 which was a case under the Sea Fisheries Act which created certain offences and by section 11 provided: " The provisions of this Act . . . . .shall be enforced by sea-fishery officers", who are defined by that section, and it was held that the effect of the words was that no one except the sea-fishery officer could prosecute an offence under the Act. But there are no such words of limitation in section 237. In Taylor v. Taylor [1875] 1 Ch. D. 426 the words of the statute were "entitled to the possession or the receipt of the rents and profits" and it was held that the order under the statute could only be made upon a petition which was within the words above quoted and if there was no such person no order could be made but that again was decided on the peculiar language of the statute. Counsel also relied on Nazir Ahmed v. Crown [1936] LR 63 IA 372, 381 where it was held that if the statute authorises the doing of an act in one way then it had to be done in that way or not at all. The argument of Mr. Choudhuri really comes to this that the complaint filed on behalf of the official liquidator was incompetent in the absence of a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the latter provides that "no court shall take cognizance . . . . ." There are two cases decided by two Indian High Courts which support the submission of the respondents' counsel. In Emperor v. Bishan Sahai [1938] 8 Comp. Cas. 26 it was held that the Companies Act nowhere provides that without the directions of a Judge no criminal prosecution can be instituted. In Mrityunjoy Chakravarti v. Provat Kumar Pal [1952] 22 Comp. Cas. 353 , it was held that neither section 179 nor section 237 indicates that if the liquidator takes action without a direction of the court this action would be illegal or invalid or it would invalidate a prosecution. It would thus appear that both on the language of section 237(1) as well as on precedent the complaint made by the liquidator against the appellants suffers from no such infirmity as to make the proceedings null and void. The section contains no such words which indicate that such a prosecution cannot be instituted by a liquidator without the sanction of the judge or that the court cannot take cognizance of a complaint without such sanction or direction. Section 179, as the learned Chief Justice of the Calcutta High Court has rightly pointed....