TaxTMI 
TaxTMI 
2018 (6) TMI 1727
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....oceeding, whether it be at the stage of contemplation or at the stage of actual pendency. The distinction has nothing to do with Court, especially the High Court. 46. To put it differently, the jurisdiction of a Magistrate of First Class or the jurisdiction of a District Court, to grant relief, is confined only to cases, which are actually pending before them. These courts do not have the jurisdiction to grant relief in respect of the apprehended proceedings. But, the High Court is conferred with an additional power under Section 633(2) even to take care of the contemplated proceedings also. The power under Section 633(2) is in addition to the power already available to the High Court under Section 633(1) and also under several other provisions of the Code. Such an additional power cannot be taken to mean the imposition of a restraint or limitation on the jurisdiction of the High Court to grant relief in pending proceedings. In other words, the conferment of an additional power under sub-section (2), to grant relief even in respect of anticipated proceedings, cannot be taken to mean that the power vested in sub-section (1) is taken away. Therefore, with great respect to th....
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....any Petition No. 297 of 2013 [filed by the Respondents] and prayed for dismissal of the said Petition. As against the dismissal of C.A. No. 1072 of 2013, the Appellant, has filed the present Original Side Appeal before this Court. 5. The Learned Counsel for the Appellant submits that the Learned Single Judge had committed an error in holding that as though the Hon'ble High Court can exercise its power under Section 633(1) of the Companies Act, 1956 to relieve a person from his liability in a proceeding pending before the Magistrate Court, which is directly contrary to the ingredients of Section 633(1), which specifically sets out that 'Power is vested only on the Court hearing the case', meaning the Court where the proceeding is pending. 6. The Learned Counsel for the Appellant contends that the Learned Single Judge had failed to appreciate that the only question that was to be determined by the Hon'ble High Court as to whether it could exercise such power in respect of a proceeding pending not before it, but, at the Magistrate's Court and the issue before it was not whether the High Court can exercise powers under Section 633(1) of the Companies Act, 1956....
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....fferent High Courts that once the proceedings for an offence punishable under the Companies Act is pending before a Court, the power to relieve under Section 633(1) of the Companies Act, 1956 can only be exercised by that Court and not by any superior Court including the Hon'ble High Court. 11. The Learned Counsel for the Appellant comes out with a plea that the Learned Single Judge had erred in not appreciating the contention of the Appellant that the Hon'ble High Court can exercise its power only under Section 633(2) of the Companies Act, 1956 in respect of an apprehension of prosecution or that it could not exercise the power under Section 633(1) of the Companies Act in respect of prosecution pending before it directly when the case of the Appellant is only that in the present case the proceeding is pending on the file of the Learned Additional Chief Metropolitan Magistrate [EO1], Egmore and hence the 'High Court' is not the Court before which the proceeding is pending and in such a case, the High Court cannot exercise its powers under Section 633[1] of the Companies Act as that the power is vested in such a case where the proceeding is pending. 12. The Lea....
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.... same has caused grave and substantial injustice to the Appellant. Therefore, the present Original Side Appeal filed by the Appellant before this Court is very much maintainable in the eye of Law. Appellant's Decisions: 16. The Learned Counsel for the Appellant cites the decision of In re Tolaram Jalan and Others reported in AIR 1959 Bombay at Page 245 wherein at Paragraph Nos. 6 to 8, it is observed as under: "6. It is urged that the word 'claim' would prima facie mean a civil claim such as a claim for damages which may be made by a company against a defaulting director or an officer of the company or where the company is in liquidation by the liquidator or a creditor or a contributory and not a penal proceeding contemplated by sections such as Section 162. The dictionary meaning of the word "claim" is undoubtedly an assertion of a right to something and a relief provided by statute. I have also been pointed out several sections of the Act where the Legislature has used the word "claim" such as Sections 101, 104, 429, 474 and 529 and it is clear from these sections that the meaning that can be attached to the word "claim" used in these sections must mean....
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.... remedy and yet Sub-section (1) speaks of a proceeding connected with misfeasance and even breach of trust. It seems therefore that there is no clear demarcation made in this section between proceedings of a penal nature and a civil remedy by way of a claim provided in Sub-section (2) of this section. Inasmuch as a proceeding in connection with misfeasance is included in Sub-section (1), the word 'proceeding" therein used cannot be said to mean proceeding of a penal nature only but would include proceedings also of a civil nature. 8. As I have pointed out, Section 633 is the exact replica of Section 372 of the English Act of 1929. That section came up for consideration in at least two decisions pointed out to me. In re Barry and Stains Linoleum Ltd., (1934) 1 Ch 227 a director failed to obtain his qualification shares within the time fixed thinking that he had them at the date of his appointment, and having either overlooked or forgotten the definition of qualification shares in the company's articles of association. At the end of the time he ceased, in accordance with Sub-section (3) of Section 141 of the Companies Act, 1929 to be a director, but continued to act ....
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....gh no proceeding has commenced or is pending. The only distinction that Maugham J. seems to make is between a proceeding for a fine and a penalty and a proceeding where the company might make a claim with regard to something which the director may be liable to pay to the company in which case he thought the Company Court would not readily grant relief without knowing the wishes of the shareholders." 17. The Learned Counsel for the Appellant relies on the decision of Thakur Dan Singh Bist V. Registrar of Companies reported in 1960 AIR [Allahabad] page 160 whereby and where under at Paragraph Nos. 10 to 12, it is observed as following: "10. The terms of Section 633 and the way in which it has been framed appear to support the contention of the learned counsel for the Registrar. Sub-section (1) of Section 633 which confers jurisdiction for granting relief on the Court before which a proceeding is pending appears to have been very widely worded. It covers all kinds of proceedings and relief under it can be granted in respect of every kind of liability--penal as well as civil. That sub-section can, however, apply only when the proceedings become pending because it is only th....
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....ing of the word 'claim' was considered in paragraph 17 of that judgment. It was conceded that the word was a word of very extensive signification embracing every specie of legal demand. Keeping in view the fact that the word signified "a right of demand or supposed right; a calling of another to pay something due or supposed to be due as a claim for wages or services" it was held that the word "claim' was comprehensive enough to embrace actions founded On torts as well as actions founded on contracts. This case does not therefore support the contention that the word 'claim' could include proceedings for criminal prosecution also. In (1934) 150 LT 254 (supra), Maugham J., had before him a petition under Section 372 of the English Companies Act of 1929 which corresponds to Section 633 of the Indian Companies Act of 1956. A certain director of the company in that case had acted as a director and performed the duties of that officer without possessing the required qualifications. During the period in which he had so acted he had received 1,000/- per annum as remuneration in accordance with the provisions of the Articles of Association of the compan....
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.... officers, or by a liquidator or share-holder for misfeasance. He noted that in the former kind of proceedings the company or its share-holders were not intended to have any say and the concern was mainly of the Exchequer. In the latter kind of proceedings, however, the company or the liquidator or the share-holders were the persons mainly concerned. Under Sub-section (1) of Section 372 be relieved the director who was the petitioner before him wholly from his liability to the fine which could be imposed upon him under Section 141 of the Act but refused to grant relief under Section 372, Sub-section (2), for civil liabilities because he did not have before him the opinion of the company or its share-holders. In this case therefore the learned Judge practically assumed that under Sub-section (1) of Section 372 he had jurisdiction to grant relief against a possible prosecution. He also overlooked that under Sub-section (1) of Section 372 under which he was granting relief jurisdiction to grant relief vested only in the Court before which the proceedings were pending and no proceedings under Section 141 were pending in this Court." 18. The Learned Counsel for the ....
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.... the scope of that sub-section is wide enough to cover criminal prosecution. The word " claim " in Sub-section (2) must be construed as having been used in a special sense so as to include also criminal prosecution. The High Court has, therefore, power under Section 633(2) to grant relief against an apprehended prosecution. 19. The Learned Counsel for the Appellant adverts to the decision of Auto Link Finance Private Limited V. Registrar of Companies reported in ILR 1970 1 Delhi at Page 573 : 1971 (41) CC 63 wherein at Paragraph Nos. 4 and 7, it is observed and held as under: "4. On behalf of the Registrar of Companies it has been urged that this Court has no jurisdiction to grant relief under section 633(2) of the said Act, Section 633(2) of the Act empowers the Court to grant relief in certain cases of negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company. Section 2(11) of the Act defines the Court with reference to any offence under the Act. The Court means the Court of the Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence and with respect to any matter ....
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.... defaults and breaches which have already become subject matter of prosecution and that for any relief in relation to such defaults etc. the proper remedy of the petitioner would be an application under sub-section (1) of Section 633 to the Court hearing the cases. The only question that, therefore, requires consideration is whether there is a case for the petitioner being excused under sub-section (2) of Section 633 of the Act of liability on account of defaults and breaches of the Company in respect of which proceedings are apprehended. 4. Section 633 of the Act empowers the Court to give relief where it is satisfied that the officer of a Company, even though technically guilty of negligence, breach of duty, misfeasance or breach of trust or otherwise liable on account of any default or breach of the Company has nevertheless acted honestly and reasonably and that having regard to all the circumstances of the case, "including those connected with his appointment", he ought fairly to be excused. The object of the section appears to be to provide against undue hardship in deserving causes and to give relief from liability to persons who, though liable in law, ought to be ex....
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....ints and limitations and if such a distinction is not made it is likely to scare such persons away from any possible association with the Company as directors. It is, therefore, unreasonable to fasten liability on directors for the defaults and breaches of a Company where such directors are either the nominee directors or are appointed by virtue of their special skill or expertise. It is also unfortunate that with the limited accountability an effective control of the management of the affairs of a Company by the Board is not possible. While there is a strong case for urgent legislative action, both in the matter of widening the frontiers of accountability of a company, both to its Board of Directors and to the members, as also in relieving the special category of directors from consequences of default and breaches of the Company, judicial moderation is necessary in the administration of Section 633 of the Act so as to ensure that such categories of Directors are not subjected to the harassment of legal proceedings for breaches and defaults of a Company, which may at times be rather protracted. It would be proper in such cases to relieve such directors of consequences of the defaul....
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....wer of the High Court is the same as that of the Magistrate. There is no doubt on this because the subsequent words in Sub-section (2) of Section 633 show that the power is the same. However, the power though it is the same can only be exercised when an apprehension exists which has not yet been transformed into an actuality. The learned counsel has referred to G.D. Bhargava v. Registrar of Companies [1970] 40 Comp Case 664 (All) and P.C. Pothen, Liquidator of the Commonwealth Bank Ltd. (In Liquidation), 2nd [1966] 1 Ker 1, in which both courts have held that the powers of the High Court are the same as that of the Magistrate. As indicated above I am in perfect agreement with this conclusion. In fact, this is what the section states. These two cases do not deal with what the power of the High Court is after a proceeding has been actually initiated in a criminal court. I may also indicate that the other court covered by Section 633(1) need not necessarily be a criminal court because there may very well be a civil proceeding, criminal proceeding or even revenue proceeding in respect of which Section 633(1) may apply. In all such cases if a proceeding is anticipated, the officer conce....
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....Board as referred to above. This circular though not of statutory nature, contains one of the policy decisions which the Company Law Board and the Central Government have formulated. Their operative and binding character qua the third parties may be quite doubtful. However, so far as the Registrar of Companies, who is an authority subordinate to the Company Law Board is concerned, the same did call for respect and adherence. It could not be that those directions were applied in the case of some of the companies and ignored with regard to others. When once the petitioners had moved the company court under sub-section (2) of section 633, he could have waited for the result of these proceedings or at the most required the court to expeditiously dispose of them instead of stealing a march over the petitioners and filing the complaints. 6. Mr. K. S. Bindra, appearing from the side of the intervene, has vehemently contended that these circulars have no binding character and in any case they could not be considered to have any legitimacy after the coming into force of the new Code of Criminal Procedure, 1973. He has made reference to the new provisions of the law of limitation in....
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....may relieve him, either wholly or partly, from his liability on such terms as it may think fit: Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust (2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under Sub-Section(1), (3) No court shall grant any relief to any officer under Sub-section (1) or Sub-section(2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted. 20. A perusal of the various provisions....
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....nnot be contended that the authorities are not contemplating any action against the petitioners for such alleged contravention. Action would normally and logically include initiation of prosecution. In these circumstances, it cannot be reasonably contended that the petitioners apprehension of any prosecution being launched is baseless. Therefore, this contention of the Department is not acceptable, because after initiation of the prosecution, application under Section 633(2) of the Companies Act cannot lie and this Court will have no jurisdiction to allow such an application. In that event an application under Section 633(1) only is contemplated. I find support for this view from an earlier pronouncement of this Court in the case of Shri Krishna Parshad and Others vs. Registrar of Companies Delhi and Haryana reported as 1978 Vol 48 Company cases, 397. The counsel for the Department has not pointed out any ruling to the contrary. 12. For the purposes of deciding the present application it is not necessary for me to express any opinion on the interpretation of or to go into the questions relating to the construction of Section 370 of the Companies Act. Such questions can be ....
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....ch of duty, misfeasance or breach of trust against an officer of the company, it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly from his liability on such terms of as it may think fit. This provision to my mind clearly invests the Court; including the court of learned Metropolitan Magistrate, with power to excuse the accused in any proceedings before it provided the requirements of this sub-section are satisfied. 10. Provisions of sub-section 2 provides that where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for such relief and High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding a....
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....Companies reported in (1990) 69 Com Cas 556 decided by a single Judge of Punjab and Haryana High Court." (iv) In the Judgment dated 17.12.2004 between Sh. R.K. Narayan and Others V. Registrar of Companies wherein at Paragraph Nos. 13 to 18, it is observed as under: "13. What follows from the conjoint reading of sub sections (1) and (2) of Section 633 is; a) In any proceedings for negligence/default/beach of duty, misfeasance or beach of trust against an officer of the company, it would be a valid defense that he has acted honestly and reasonably and that having regard to all the circumstances of the case he should be excused from the liability. b) Such exercise can be done even by this Court and person need not be relegated to the Court where the proceedings are filed. 14. It is a unique provision introduced in the Act with the objective to provide relief against undue hardship, in deserving cases. The purpose is to give relief from liability to persons who though technically guilty of negligence, default, breach of duty etc, are able to convince the conscious of the Court that they have acted honestly and reasonably and thus having rega....
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....ny, it appears to the Court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit: [Provided that in a criminal proceeding under this sub- section, the Court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.]" 19. In my unreported judgment delivered on 5th April,2011, in C.P. No. 8 of 2010 and C.A. No. 5 of 2010, Bithal D Mundra & Ors. - v- The Registrar Of Companies, West Bengal, I held that the High Court under Section 633(1) and 633(2) had the same power as the criminal court to relieve an alleged offender. The power to relieve includes the power to discharge an alleged offender when no cause of action against him is disclosed. The said provisions of the Act conferred a power upo....
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.... is to discharge the accused. When a prima facie case has been established against him, the trial proceeds by framing of charges and so on. If the charge cannot be established at the trial the accused is acquitted. These are the elementary principles of our criminal procedure. A very relevant consideration in initiating criminal proceedings is the law of limitation. Section 468 of the Code enacts that no court is to take cognizance of an offence after expiry of the period of limitation. The court takes such cognizance when, inter alia, a complaint petition is filed before it under Section 190. Considering S. 468, the Magistrate has the power under Section 203 to dismiss the complaint on the ground of limitation. Therefore, the powers of the magistrate under Section 633(1) to exonerate the accused in case he is of the opinion that the accused is likely to have committed the offence but there are grounds for his exoneration are in my judgment in addition to his powers to take cognizance and proceed with the trial and not an isolated power. Therefore, the High Court is also invested with similar powers. First, to ascertain whether there is cause for proceeding with t....
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....Companies, 1997 (89) Comp Cases 147 (AP), wherein at Paragraph Nos. 27 and 28 it is observed as under: "27. It was argued on behalf of the respondent-Registrar of Companies that this court was deprived of its jurisdiction to entertain the petition under section 633(2) of the Act on account of the fact that the apprehension of launching prosecution against the petitioners had in fact become a reality, because the prosecution had already been launched against petitioners Nos. 2 to 10 by the time when the High Court's orders restraining the respondents-Registrar of Companies from launching prosecution was received. This arguments, however, does not hold goods, having regard to the fact that on the date on which the company petition was made, the petitioners legitimately carried an apprehension that the prosecution would be launched against them. If the launching of prosecution is an earlier event, it would frustrate the petitioners' right to move the court for orders under section 633(2) of the Act. In the present company petition, this High Court had passed an order on April 30, 1993, not to take any final decision in the matter of launching prosecution. The said ord....
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.... prosecuted for the alleged offence. In that view of the matter, therefore, not only are the petitioners entitled to protection under section 633(2) of the Act, but they can also not be treated as having incurred any liability for the offence punishable under section 63 of the Act. Therefore, the prosecution deserves to be quashed at the threshold." (vii) In the decision Y.B. Chatturvedi V. Hope Textile Limited and Others 1990 (68) Company cases 713 [M.P.] at Paragraph Nos. 12 to 15 it is observed as under: "12. Learned counsel for the said respondent also placed reliance on the decisions in Trisure India Ltd., In re : Richard Laurence Parish v. Registrar of Companies: [1983] 54 Comp Cas 197 (Bom), Suresh Tulsi-das Kilachand v. Collector of Bombay [1980] 2 LLJ 81 (Bom), Suresh Tulsidas Kilachand v. Collector of Bombay [1984] 64 FJR 399; [1984] Lab IC 1614, State of U.P. v. Lalaram Gupta [1974] Lab 1C 963 (All), Khetramohan Nayak v. Sri Sidha Kamal Nayana Ramanuj Das, AIR 1956 Orissa 206, B.M. Chatterjee v. State of West Bengal, AIR 1970 Cal 290 and Nathulal Govardhan v. Regional Provident Fund Commissioner [1984] MPLJ 340; [1985] 66 FJR 66 (MP). Learned counsel, t....
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....ian Penal Code, the same amounts to criminal breach of trust. 14. No reply has been filed on behalf of respondent No. 1, namely, Hope Textile Ltd. nor has any one appeared on their behalf at the hearing of this petition. 15. Thus, after hearing learned counsel and after going through the record as also the case-law cited, I am of opinion that there is no merit in this petition which deserves to be dismissed as prosecutions under the Employees' Provident Funds Act have already been filed against the petitioner as also under the Employees' State Insurance Act, and as the cases are already pending, it is not necessary for me to consider the pleas as also the grounds taken by the petitioner in support of his defence as it is not for this company court but it is for the courts where the prosecutions have already been lodged, which have to consider the same. Therefore, I am not expressing any opinion regarding the merits of those cases which are yet to be decided on merits after recording evidence thereon. That apart, there appears nothing on record to indicate that prosecutions have been lodged against the petitioner also with a view to only harass him as alleg....
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....mes to the conclusion that the applicants have acted honestly or reasonably, this Court will not be justified in going to the rescue of the applicants. The only other alternative open to the applicants is to contest the proceedings before the judicial magistrate before whom the complaint is instituted. The material question for consideration is whether the applicants have acted honestly or in good faith or whether the applicants have any justifiable reason to escape from liability, in such cases, criminal intention is irrelevant as has been held by this Court in Amara Pictures (P.) Ltd., In re [1970] 40 Comp. Cas. 130. On a consideration of the show-cause notice read with the inspection report, this is not a fit case where this Court would be justified to relieve the petitioners by exercising its discretionary jurisdiction under Section 633. It is made clear that any observation or finding recorded in this order is only for the limited purpose of this company petition and the criminal court before whom the complaints may be made, against the petitioners herein, shall decide the complaints on the merits and on the evidence that may be let in without reference to an....
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....soned order passed by the Learned Single Judge and further that the Company Petition in C.P. No. 297 of 2013 was held to be maintainable and in fact, the Learned Single Judge had permitted the Appellant to contest the main C.P. No. 297 of 2013 on merits. 26. It is represented by the Learned Counsel for the Respondents that the offence complained off is an offence under the Companies Act, 1956 and in fact, Section 10 of the said Act under the caption 'Jurisdiction of Courts' reads as under: "(a) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate so that High Court in pursuance of sub Section(2); and (b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district." 27. It is also represented on behalf of the Respondents that the other Respondents and the Registrar of Companies in Company Petition have not preferred a....
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....icer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub- section (1) of Section 633 of the Companies Act. 36. The learned Single Judge found merit in the contention taken by the appellant that he had actually no access to the records. The learned Judge also indicated a doubt as to whether the Official Liquidator has discharged his obligation of proving the offence. When it is made out, that the Official Liquidator himself has not discharged his obligation, the question of convicting the appellant does not arise. Since the learned Judge has found merit in the contention raised by the appellant that he has no access to the records and entertained a doubt with regard to the discharge of obligation by the Official Liquidator, necessarily the benefit of doubt should have been given to the appellant. Section 633 gives wide powers to the Court to grant relief in appropriate cases, provided the Court is convinced that the accused acted honestly and reasonably." 31. The Learned Counsel for the Respondents submits that the Impugned order dated 23.10.2013 passed in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 passed by the Learned S....
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....n the present case, the Order dated 23.10.2013 in Company Application No. 1072 of 2013 in Company Petition No. 297 of 2013 (filed by the Appellant, as Complainant) passed by the Learned Single Judge, whereby and where under, the Appellant's Preliminary objection was not sustained affects the prime and valuable right of the Appellant materially and directly and causes prejudice or inconvenience to it. Therefore, the said Order, in reality, is a 'Judgment' for the purpose of Clause 15 under the Letters Patent, in the considered opinion of this Court. Viewed in that perspective present Original Side Appeal filed by the Appellant is 'Maintainable'. 35. It is not in dispute that the Appellant had filed a private complaint under Section 200 of Cr.P.C., [for an offence under Section 628 of the Companies Act 1 of 1956] on the file of the Learned Additional Chief Metropolitan Magistrate, (EO1), Egmore, Chennai as against the Respondents 1 and 2 and another G. Sivaprakash, Chartered Accountant, Chennai--30, which was taken up on file by the Learned Additional Chief Metropolitan Magistrate, EO1, Egmore. 36. The Respondents 1 and 2 in the present Appeal upon receipt o....
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.... will lie only when the proceedings have not been initiated. 39. In the instant case, the C.C. No. 107 of 2013 filed by the Appellant, as Complainant, before the trial Court was taken on record and according to the Appellant, if the Respondents are desirous of seeking any relief under Section 633 of the Companies Act, their only option is to approach the trial Court where the C.C. No. 107 of 2013 is pending. The Appellant in C.C. No. 107 of 2013, as Complainant had averred that the Share Certificate issued in the form of Letters of Allotment are as per Section 84 of the Companies Act, constituting the prima facie evidence of ownership of the said shares. The Appellant had filed the Complaint under Section 200 of Cr.P.C., in C.C. No. 107 of 2013 for an offence under Section 628 of the Companies Act 1 of 1956. 40. Be it noted, that by virtue of the Companies [Second Amendment] Act, 2002, the Civil Courts to a vast extent were deprived of their jurisdiction because of the formation of National Law Tribunal and National Company Law Appellate Tribunal. Apart from that, it is seen from the Order dated 22.06.2018 in T.C.P. No. 101 of 2010 passed by the National Company Law Tribunal ....
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.... Companies Act, 1956 confers a larger / wider ambit to the Hon'ble High Court to grant an 'Apprehended' / 'Anticipatory relief' in regard to the Apprehended / Anticipatory criminal proceedings also, as per decision in Re, S.P. Chopra and Company (1966) 1 Company Law Journal page 214 and (1966) 36 Company Cases 144 (Punj) Muktsar Electric Supply Co., Ltd., 44. As per Section 633(2) of the Companies Act, 1956 the power to grant relief to the Hon'ble High Court, is a discretionary power and the same should be exercised by the Court only where it is satisfied that the concerned person had acted honestly and reasonably and that considering the circumstances of a given case, he should be excused. The only issue for consideration under Section 633(1) or (2) is that whether a person had acted in good faith [honestly] and whether he had any reason to escape from the liability. 45. It is to be pointed out that in the decision Progressive Aluminium Limited V. Registrar of Companies reported in (1997) 4 Company Law Journal at Page 215(AP), it is held that the prosecution was not a bar to the continuation of the Relief Petition. Also that, as per Section 633(3) of ....
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....decision of Bank of Deccan Limited, In re, it is observed and held that at Special Page 285, as under: "...Sub-Section (I) of Section 633 refers to any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, and the word "proceeding" there is undoubtedly wide enough to cover a criminal prosecution. But under that sub-section it is for the court before which the proceeding is pending and not for this Court to grant relief. This Court can grant relief only under sub-Section(2) and here the word used is "Claim" and not "proceeding", a word which at first sight certainly seems inappropriate if it is to comprehend a criminal prosecution. But reading the two sub-sections together, it is obvious that the scope of Sub-Section (2) is co-extensive with that of sub-section (I), and no intention is apparent to confine the scope of Sub-section(2) to those only of the proceedings covered by sub-section (I) that can properly be designated as claims. It would therefore follow that if the word "proceeding" in sub section(I) is wide enough to cover a criminal prosecution, the word "claim" in sub-section(2) must be construed as havi....
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....nsidered by the Kerala High Court In In re Bank of Deccan Ltd., (1960) 30 Company Cases 284. Following the English cases as well as the Orissa decision, it has been held that under sub-section(1) it is for the court before which the proceedings are pending to grant relief but the High Court can grant relief under Sub-Section is wide enough to cover criminal prosecution. The word "claim" in sub-section(2) must be construed as having been used in a special sense so as to include also criminal prosecution. The High Court has, therefore, power under section 633(2) to grant relief against an apprehended prosecution. The learned Advocate-General has relied on Thakur Dan Singh Bist V. Registrar of Companies (1960) 30 Comp. Cases 405 in which a contrary opinion has been expressed with regard to the scope of Section 633(2) of the Act of 1956. According to A.P. Srivastava J., sub-section (1) is wide enough to cover all kinds of liabilities, both penal and civil, but sub-section(2) applies only to apprehended claims, i.e., claims for civil liability, and does not cover penal liabilities or prosecutions. I have carefully perused this judgment but with great respect, I am unable to agr....
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....not be physically imported into the definition of the word "judgment" as used in cl. 15 of the Letters patent because the Letters Patent he advisedly not used the term 'order' or decree anywhere. The intention, therefore, of the givers of the Letters Patent was that the word 'judgment' should receive a much wider and more liberal interpretation than the word "judgment" used in the Code of Civil Procedure." That, however, does not mean, the Supreme Court cautions, "At the same, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent. It seems to us that the word "Judgment" undoubtedly a concept of finality in a broader and not a narrower sense." Thereafter, the court has stated that there can be judgments of three kinds; a final judgment, a preliminary judgment and an intermediary or Interlocutory judgment, the later being such orders which contain the quality of finality such as orders specified in clauses (1) to (w) of Order 43 Rule 1 of the Code of Civil Procedure, which are judgments within the meaning of the Let....
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....Jit Singh, (19X4) 1 SCC 358 has also been noticed to say that every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned and that similarly, orders passed by the trial Judge deciding question of admissibility or relevancy of a document also cannot be treated' as judgments because the grievance on this score can be corrected by the appellate court in appeal against the final judgment". 50. It is to be relevantly pointed out by this Court that in the decision of S.B.I. Home Finance Limited, In Re (2007) 138 Comp Cases 106 [Calcutta]; (2007) 77 CLA 283, it is held as under: " There is, in my view, no misdeclaration that would attract the penalty under Section 628 of the Act. I do not see any false or misleading statement having been made. Notwithstanding the show cause notice not having relied on the second limb of Section 628 inasmuch as the same has been urged, I take that into consideration. In the context of the report, there is no material concealment of information by such statement. In ....
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....lso invested with similar powers, first to ascertain whether there is cause for proceeding with the complaint and then to consider whether the accused should be exonerated. A relevant consideration in initiating criminal proceedings is the law of limitation. Section 468 of the Code of Criminal Procedure, 1973, enacts that no court is to take cognizance of an offence after expiry of the period of limitation. The court takes such cognizance when, inter alia, a complaint is filed before it under section 190 of the Code. Considering section 468, the Magistrate has the power under Section 203 to dismiss the complaint on the ground of limitation." 52. In the decision of Chandra Kumar Dhanuka and Ors. V Registrar of Companies reported in (2008) 141 Company Cases 101 (Cal) at Paragraph Nos. 4 and 5, it is held as under: 4. Sub-Section(2) confers on the High Court the same power as the criminal court in granting relief to the petitioning officer who apprehends that proceedings might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust. Sub-Section (2), in its closing part, identifies the criminal court and provides that the....
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....under:- "Under Section 633 of the Companies Act relief cannot be extended in respect of any liability under any Act other than the Companies Act. The expression 'any proceeding in Section 633 cannot be read out of context and treated in isolation. It must be construed in the light of the penal provisions. Otherwise the penal clauses under the various other acts would be rendered ineffective by application of Section 633. Again, if parliament intended S.633 to have a coverage wider than the act, it would have specifically provided for it as, otherwise, it is a sound rule of construction to confine the provisions of a statute to itself. The powers under Sub-s (2) of S.633 must be restricted in respect of proceedings arising out of the violation of the Companies Act. Sub-Section(2) cannot apply to proceedings instituted against the officer of the company to enforce the liability arising out of violation of provisions of other statutes. Under sub-s.(3) it is mandatory for the court to give notice to the Registrar of Companies or such other person, if any, as it thinks necessary. Therefore, if S.633 is interpreted as to include proceedings under Acts other than the Companie....
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.... or even a cursory perusal of the balance sheet cannot and may not bring to the knowledge of the Registrar and his officials information about the commission of the offence. Detailed consideration and application of mind appears to be necessary and the law appears to have alertly taken note of this contingency when it stipulated that the period of limitation under Section 469 will start running only when commission of the offence is known to the person aggrieved. Discussions: 56. It is to be relevantly pointed out that in terms of ingredients of Section 633 of the Companies Act, 1956, the Criminal and the Civil Court can accord relief to the affected persons. Indeed, the decision of In re Tolaram Jalan and Others reported in AIR 1959 Bombay 245 at Special Page 246 wherein at Paragraph Nos. 4 and 6, it is observed as under: "4. Section 633 under which the relief is sought is identical with Section 372 of the English Companies Act of 1929. Sub-section (1) of Section (1) of Section 633 contemplates proceedings for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company and gives power to the Court hearing the case in certain c....
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....gislature would have used the word "proceeding" rather than the word "claim". It was further urged that inasmuch as the Legislature has given relief from criminal proceedings by separate sections in the Act such as Sections 63, 69(5), 70(5), 75(4), 207, 209, 210, 211, 217 and 393(4), the Legislature could not have contemplated of including proceedings of a penal nature in the word "claim" in Subsection (2). It was therefore contended that the word "claim" cannot be interpreted as inclusive of proceedings described in Sub-section (1) of Section 633 and therefore no relief is provided against an anticipated proceeding under Section 633, the only relief provided being in respect of a pending proceeding and that too by the Court before which such a proceeding has commenced and is pending. But then so far as Sections 63,69(5) and other sections, which were pointed out to me to show that the Legislature has given relief in respect of criminal proceedings, are concerned, it is clear that what those sections and provisos thereto provide are by way of substantive defences to a director or an officer of a company charged under one of the penal sections of the Act. Those are not sections like....
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....ered view that they unhesitatingly speak of an Aggrieved/Affected person to apply to the High Court for seeking relief in respect of any negligence/default, misfeasance, etc., and this invocation of Section 633(2) can be pressed into service by the Aggrieved person[s], even after initiation/commencement of criminal proceedings by the concerned complainant. Even after receipt of the summons in a criminal complaint, the affected parties can approach the High Court and the filing of a Company Petition by them seeking necessary relief to relieve the concerned persons from civil liability is not a bar. To put it succinctly, the power conferred upon the Hon'ble High Court under Section 633(2) of the Companies Act, 1956 is an additional one showered by the Companies Act, 1956 and the said power of the High Court cannot be interpreted in a parochial / narrow / restricted sense. In short, the additional power, as per Section 633(2) of the Companies Act conferred upon the High Court to give relief in respect of 'Apprehended Proceedings' does not wipe out the powers envisaged under Section 633(1) of the Act. As such, the plea taken on behalf of the Appellant to the effect that the....