TaxTMI 
TaxTMI 
2021 (1) TMI 854
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.... to the complainant i.e. the respondent herein by fixing the date for its appearance and to proceed with the matter further, which order is produced as ANNEXURE-A; b) Issue such other writ, order or direction as deemed fit in the circumstances of the case, in the interest of justice and equity. 2. The petitioners in W.P.No.10142/2020 are before this Court seeking for the following reliefs: a) Issue an order, direction or writ in the nature of certiorari or any other appropriate writ or order setting aside the order dated 3.07.2020 passed by the LVIII Addl. City civil and Sessions Judge, Bangalore City in Criminal Revision Petition No.750/2017 on his file setting aside the order dated 03.07.2017 passed by the Special Court, Economic Offences, Bangalore city in PCR No.12/2017 and to further, directing the trial Court to restore PCR No.12/2017 to file and to issue notice to the complainant i.e. the respondent herein by fixing the date for its appearance and to proceed with the matter further, which order is produced as ANNEXURE-A; b) Issue such other writ, order or direction as deemed fit in the circumstances of the case, in the interest of justice and eq....
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....titioners are required to be prosecuted under Section 447 of the Companies Act for offences under Section 409 r/w 120-B of the IPC on the ground that petitioners No.1 to 3 were directors in Vidya Investment and Trading company Pvt. Ltd. (VITC), Regal Investment and Trading Company Pvt. Ltd. (Regal) and Napean Trading and Investment Company Pvt. Ltd. (Napean). 3.10. It is alleged that in the said three companies, there is no other shareholder other than the three companies themselves which were holding equity shares of the said companies, each of the companies holding shares in the other. Since all the shares in the companies were owned by the companies themselves, there is no other owner of the said companies and when they were wound up, there being no shareholder, the entire assets of the said companies had to vest in the state. However, the accused conspiring with each other committed fraud to take over the assets of the three companies which together had a net worth of Rs. 40,000/- crores. It is alleged that the petitioners had taken away Rs. 12,000/- crores of assets of the three companies by way of gifts made by the companies directly or indirectly to a private trust controlle....
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....by the Central Government to file the complaint, and on that ground dismissed the complaint. Crl.Revision Petitions No.749/2017 and 750/2017 3.14. Aggrieved by the orders passed in aforesaid PCR Nos.6/2017 and 7/2017, the complainant filed Crl.Revision Petitions No.749/2017 and 750/2017, respectively before the 58th Addl. City Civil and Sessions Judge, Bangalore which came to be disposed by separate orders dated 3.7.2020 allowing the said Revision Petitions. While doing so the revisional court held that the accused, the petitioners herein do not come within the definition of Officer defined under Section 2(59) of the Companies Act. Hence, the bar to take cognizance under Section 439(2) of Companies Act was not applicable and therefore, held that the order dated 3.07.2017 passed by the Special Court for Economic Offences was bad in law and set it aside with a direction to restore PCR No.6/2017 and PCR No. 12/2017 and to proceed with the matter. 4. It is aggrieved by the said orders dated 3.7.2020, the petitioners are before this Court. 5. On service of notice, the respondent has filed its statement of objections on 3.10.2020 in both matters. In the statement of object....
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....n 164(2) of the Companies Act and as such, they could not have filed the present complaint. 6.7. There are disputes between one Mr.R.Subramanian and Hasham Trading as regards the investment made by the petitioner Group in Companies belonging to said Sri.R.Subramanian. There is a proceeding filed against the said Sri.R.Subramanian and Subhiksha Trading Services Limited of which he is a director for dishonor of cheques, as also several other proceedings had been filed by the petitioner group, it is due to the same that the said R.Subramanian has sought to wreck vengeance on the petitioner group and has been filing one false complaint after another. 6.8. Several allegations have been made against the said R.Subramanian and his involvement in several offences which may not be germane to the present fact situation. 7. On the filing of the rejoinder, respondent has filed an application under Order VI Rule 16 of CPC to strike out the pleadings and documents produced by the petitioners in the rejoinder. In the said application, it is contended that: 7.1. The only question which is relevant to the matter is the scope of the bar of cognizance imposed under Section 439(2) of the A....
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.... 9.5. In view of the said proceedings initiated by Zash, various proceedings were commenced between the petitioner group and the group of Sri.R.Subramanian. 9.6. After going through all these factors and taking into consideration that there are serious allegations against Subhiksha group and said Sri.R.Subramanian, who is representing and or a part of the respondent, as also taking into consideration none of the objects of the respondent have been satisfied though a period of six years had been elapsed from the date of incorporation, the licence dated 22.6.2012 issued by the Registrar of Companies to the respondent was revoked. 9.7. The said respondent has been filing numerous matters against the petitioner and their group of companies making false allegations. 9.8. The respondent company was represented by its authorized signatory Sri.R.Subramanian in the Company Application filed in Co.P.No.182/2014 against the petitioners and others. 9.9. The entire litigation which has been initiated including the private complaint is to wreck vendetta on the petitioners and their group of companies. There are no bonafides in the same. 9.10. Though any person can initiate crim....
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.... the vires of the provisions of Sec 439(2) of the Act and have them declared illegal and void and ultra vires in respect of offences arising out violations of the Act on the following amongst other grounds which are taken in the alternative and without prejudice to one another." And the prayer sought for therein is as under: (a) Issue a writ of declaration that the provision of Section 439(2) of the Companies Act 2013 barring courts of law from taking cognisance of any complaint in respect of the Act from persons other than shareholders is unconstitutional oppressive excessive illegal and ultra vires and hence void. (b) Issue rule nisi in terms of prayers (a) above; (c) pass such other and further order/orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case." 9.13. Relying on the above, it is submitted that the respondent itself having challenged the requirements of Section 439(2) before the High Court of Judicature of Delhi cannot be permitted to argue contrary to what is stated in the said writ petition filed by the respondent. 9.14. On the above ground he submits that the order passed ....
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.... public servant from the harassment of frivolous or unsubstantiated allegations. The policy underlying Section 6 and similar sections, is that there should not be unnecessary harassment of public servant. (See C.R. Bansi v. State of Maharashtra [(1970) 3 SCC 537 : 1971 SCC (Cri) 143 : AIR 1971 SC 786 : (1971) 3 SCR 236] .) Existence thus of a valid sanction is a prerequisite to the taking of cognizance of the enumerated offences alleged to have been committed by a public servant. The bar is to the taking of cognizance of offence by the court. Therefore, when the court is called upon to take cognizance of such offences, it must enquire whether there is a valid sanction to prosecute the public servant for the offence alleged to have been committed by him as public servant. Undoubtedly, the accused must be a public servant when he is alleged to have committed the offence of which he is accused because Sections 161, 164, 165 IPC and Section 5(2) of the 1947 Act clearly spell out that the offences therein defined can be committed by a public servant. If it is contemplated to prosecute public servant who has committed such offences, when the court is called upon to take cognizance of the....
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.... did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority." And this view has been consistently followed in C.R. Bansi case [(1970) 3 SCC 537 : 1971 SCC (Cri) 143 : AIR 1971 SC 786 : (1971) 3 SCR 236] and K.S. Dharmadatan v. Central Government [(1979) 4 SCC 204 : 1979 SCC (Cri) 958 : (1979) 3 SCR 832 : 1979 Cri LJ 1127] . It therefore appears well-settled that the relevant date with reference to which a valid sanction is sine qua non for taking cognizance of an offence committed by a public servant as required by Section 6 is the date on which the court is called upon to take cognizance of the offence of which he is accused. 10.6. Kalicharan Mahapatra v. State of Orissa, (1998) 6 SCC 411 [para 7 and 14) 7. There is no indication anywhere in the above provisions that an offence committed by a public servant under the Act would vanish off from penal liability at the moment he demits his office as public servant. His being a public servant is necessary when he commits the offence in order to make him liable under the Act. He cannot commit any such offence after he demits his office. If the interpre....
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....ld have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed." 9. It seems to us that the person must be employed in connection with the affairs of the Union in sub-clause (a) and with the affairs of the State in sub-clause (b). The case of the appellant would be covered in sub-clause (a) because he had been employed in connection with the affairs of the Union. But the sub- section contemplates that the person must be employed in connection with the affairs of the Union and not that he was employed with the affairs of the Union. The policy underlying Section 6 and similar sections, is that there should not be unnecessary harassment of public servants. But if a person ceases to be a public servant the question of harassment does not arise. The fact that an appeal is pending does not make him a public servant. The appellant ceased to be a public servant when the order of dismissal was passed. There is no force in the contention of the learned counsel and the trial cannot be held to be bad for lack of sanction under Section 6 of the Act". 10.8. K.S. Dharmadatan v. Central Govt., (1979) 4 SCC 204 [para 5....
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....also to defame the counsel appearing for the respondent. Apart therefrom there are various allegations made in the said application against the counsel for the petitioner. 13.3. It is rather sad that there are allegations made as regards the Senior Counsel who is appearing in the matter. From the documents produced along with the petition and rejoinder it is seen that the Respondent is given to making allegations against whosoever appears against the respondent and /or passes an order against the Respondent. The Respondent has infact filed a criminal complaint against the officer who passed the orders under Section 8 of the Act of 2013, which was against the respondent. 13.4. Virtually the entire rejoinder viz., para 10, 17 to 37 are sought to be deleted and almost all the documents produced along with the rejoinder are requested to be ignored. The rejoinder consists of 37 paragraphs. In the said rejoinder, the prior litigation between the petitioner group and the representative of the respondent, both as authorized signatory as also a counsel have been detailed. The fact of the litigation between the petitioner group and respondent has also been detailed. 13.5. Para 10 of....
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....n it did not reach on account of paucity of time, it was however taken up for hearing on 22.12.2020 at the request of both the counsels. Thus, there cannot be said to be any delay on account of the rejoinder the matter was taken up for final disposal at the request of both the counsels on 22.12.2020, the rejoinder having been filed on 11.12.2020. 13.14. The contents of the rejoinder may be said to cause embarrassment to the respondent, but that cannot be the only reason for striking out of pleadings as also documents. 13.15. Further I am of the considered view that the filing of the rejoinder and production of documents would not cause any abuse of process of the court. 13.16. The averments made and the documents produced are in reply to the detailed objections filed by the respondents and these averments and documents would be required to be considered by this Court. 13.17. In view thereof I answer Point No.1 by holding that the application in IA No.2/2020 under Order VI Rule 16 of CPC is required to be dismissed and is so dismissed. 14. POINT NO.2: Whether Section 439(2) of Act of 2013 and Section 19(1) of Prevention of Corruption Act are in pari materia with each ....
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.... occasioned or resulted in a failure of justice the court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings. Explanation.--For the purposes of this section,-- (a) error includes competency of the authority to grant sanction; (b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature." 14.2. Section 439 of Companies Act is reproduced herein for easy reference: "439. Offences to be non-cognizable.-- (1) Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), every offence under this Act except the offences referred to in sub-section (6) of section 212 shall be deemed to be non-cognizable within the meaning of the said Code. (2) No court shall take cognizance of any offence under this Act which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder of the company, or of a person authorised by the C....
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.... complaint. 14.8. I Answer Point No.2 by holding that Act of 2013 being a Special enactment containing a specific embargo, the embargo is required to be given complete effect to by this Court. This Court cannot travel beyond the intention of the legislature and water down the requirements of Section 439. In view thereof, I am of the considered opinion that the finding of the Special Economic Court in its order dated 3.7.2017 was proper and correct. Section 19 of the Prevention of Corruption Act and Section 439 of Act of 2013 are not pari materia with each other. 15. ANSWER TO POINT NO.3: Whether any person can file a proceeding against the directors of a company and/or the company under Section 439(2) of the Act of 2013 ? 15.1. In view of the above finding in respect of point No.2, it is but required that to initiate proceeding under Section 439(2) and/or if before the Court taking cognizance such matter arises than the court can take cognisance only on a complaint in writing by the Registrar or shareholder of the company or a person authorised by the Central Government in that behalf. 15.2. I answer Point No. 3 by holding that apart from the named persons a complaint c....