TaxTMI 
TaxTMI 
2019 (5) TMI 484
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....amely, Man Industries (India) Limited ('MIIL' for short). All the applicants are the directors of MIIL. The applicant Nos.3 and 4 are the father and son, called as RCM group; applicant Nos.1 and 2 are the independent Directors; Complainant / Respondent No.2 is the other brother of applicant No.3. Respondent Nos.2 to 4 are known as JCM group. There are various property issues between two brothers and thus, two groups JCM and RCM are at loggerheads. It is an admitted fact that the original complainant, who is from JCM group, is a shareholder in MIIL. The company had declared a dividend in the AGM dated 12.12.2015. It is an admitted fact that all the shareholders are paid dividends except the complainant. The accused RCM did not pay dividend to the complainant only on account of pendency of the dispute between the parties and, therefore, by taking protection under section 127(c) of the Companies Act, the dividends are not distributed to the complainant. Whether the process and summons issued under section 127 of the Companies Act without taking into account the provision of section 127(c) of the Companies Act can be granted is the issue. 2. Mr.Khandeparkar, the learned Counse....
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....ware Private Ltd. AIR 2017 SC 4532. On the point of interpretation and understanding of deeming provision in the proviso of the Section, he relied on following rulings: (i) Indian Oil Corporation Ltd. vs. Chief Inspector of Factories & Ors., reported in (1998) 5 SCC 738. (ii) ALI M.K. & Ors. vs. State of Kerala & Ors., reported in (2003) 11 SCC 632. (iii) Maharashtra State Electricity Distribution Co. Ltd. & Anr. vs. Datar Switchgear Limited & Ors., (2010) 10 SCC 479 . (iv) G.Vishwanathan vs. Hon'ble Speaker Tamil Nadu Legislative Assembly, Madras & Anr., reported in (1996) 2 SCC 353. (v) Kumaran vs. State of Kerala & Anr., reported in (2017) 7 SCC 471. (vi) Harish Tandon vs. Additional District Magistrate, Allahabad, U.P. & Ors., reported in (1995) 1 SCC 537. 4. Mr. Mor, in reply, submitted that the dispute is pending between the parties, however, and it is an established position that this fact cannot save the accused in the criminal case because the judgment passed in civil case has no bearing over the criminal trial. So, the dispute contemplated under section 127(c) should be between the company and its shareholders and a....
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.... a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the dividend, every director of the company shall, if he is knowingly a party to the default, be punishable with imprisonment which may extend to two years and with fine which shall not be less than one thousand rupees for every day during which such default continues and the company shall be liable to pay simple interest at the rate of eighteen per cent. per annum during the period for which such default continues: Provided that no offence under this section shall be deemed to have been committed:- (a) ..... (b) ..... (c) where there is a dispute regarding the right to receive the dividend; (d) .... (e) ...." 7. In the present case, the following issues are required to be answered: (i) The Magistrate while issuing process or notice for commission of a particular offence, should take into account a proviso and deeming provision therein or it is barred under section 105 of the Evidence Act? (ii) Whether a dis....
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....f any use for the purpose of this case. 12. In the case of G. Vishwanathan (supra), the Supreme Court while discussing the meaning of legal fiction has held that "a deeming provision is an admission of the non-existence of the fact deemed. It means that the Court must assume that such a state of affairs exists as real, and should imagine as real the consequences and incidents which evitably flow therefrom, and give effect to the same. It also further held that "the deeming provision may be intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provision". Thus, the Court must not permit his "imagination to boggle" when it comes to the inevitable corollaries of that state of affairs. (East End Dwellings Co.Ltd. vs. Finsbury Borough Council, 1952 AC 109) 13. The Supreme Court in the case of Kumaran (supra), considered the effect of possession and recovery of fine, i.e., Sections 357, 421, 431 of Cr.P.C. read with Section 64 and 70 of Indian Penal Code, i.e., imprisonment for default, however, it is not directly applicable wherein deeming provision in context with Sections 421 and 431 of Cr.P.C. regarding re....
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....egislature wants the Court to believe the existence or non-existence of certain facts, then it undoubtedly forms a part of that section without which the Section is incomplete. 19. It is to be noted that though the proviso and exception are not synonym, they are usually taken alike. Both the proviso and exception are defences and both while interpreting the statute provide internal aid independently. The proviso carves out certain situation from the enacting clause and thus proviso follows the enacting clause. Exception is an extended section. Exception is used to exempt something absolutely from the statute, otherwise it is a part of the statute. The proviso is subsidiary to main section. It is not addendum to the main provision. 20. Thus, both the proviso and exception help the reader to understand the enactment as a whole. Sub-section (c) of Section 127 of the Companies Act is a part of the proviso which further provides deeming provision. While interpreting deeming provision in the proviso, the Court cannot overlook the internal aids, which are made available by the legislature, i.e. context and simple meaning of the word, therefore, the completeness of Section is a decis....
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....ase by countering the defence of proviso or exception taken by the accused. The complainant may be equipped with factual material which may destroy the defence taken under the exception or proviso. Keeping principle of fair trial in mind, the complaint cannot be frustrated at the threshold without adjudication. However, when the complaint itself discloses the material or which is a part of the complaint leading to the proviso, then the Court is required to look into the said material and the proviso while issuing process. 25. On the point of jurisdiction and power of the High Court in quashing under section 482 of Cr. P.C., the learned counsel Mr. Mor has submitted that it is a restricted power and it cannot be used generously. 26. In the case of Kishan Singh (D) through L.Rs. vs. Gurpal Singh & Ors. (supra), it was held that FIR cannot be quashed relying on the finding given in the civil Suit though in the said case, on account of delay, the High Court had quashed the criminal proceedings against the respondent and therefore, that order was not upset. 27. Sevakram (supra) was a case of defamation. The Supreme Court held that in the case of enquiry report, the High Court s....
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.... the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party; g) where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. 29. In any matter before the Court, the law is required to be applied on the basis of the facts and the facts turn the table, as they vary. Section 105 of the Evidence Act is relied or referred to when a question of shifting of burden is raised under Part III of Chapter on production and effect of evidence. However, at certain point in the case there is no question of shifting of burden because, the facts are explicitly clear in the complaint itself and they straight way fall within Section 58 of the Indian Evidence Act which states "facts admitted need not be proved". Under such circumstances, bar under section 105 of the Evidence Act cannot restrict the Court to take into account the proviso and deeming section therein at the stage of issuance of process also.....
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....cussed what type of situation or the state of affairs can be considered as existence of dispute in view of Section 5 of Insolvency and Bankruptcy Code. The Hon'ble Supreme Court held that so long as there is real dispute as to payment between the parties that would fall within the inclusive definition contained in Section 5(6) of Insolvency and Bankruptcy Code. The dispute is not defined under Companies Act, therefore, it is useful to refer to the definition of dispute under section 5(6) of Insolvency and Bankruptcy Code. It is further held that "Authority has to verify that "dispute" is not patently feeble legal argument or an assertion of fact unsupported by evidence. Further, "Court does not need to be satisfied that defence is likely to succeed. Court does not at this stage examine merits of dispute except to extent indicated above. So long as dispute truly exists in fact and is not spurious hypothetical or illusory, adjudicating authority has to reject Application". 32. In the present case, admittedly the dispute exists between the shareholder and the directors and it was pending in Company Law Tribunal and National Company Appellate Law Tribunal. It was a....