TaxTMI 
TaxTMI 
2021 (12) TMI 249
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.... Learned Senior Advocate has advanced his arguments on behalf of the petitioners praying for grant of interim relief to the effect that respondent no.1, 2 and 3 may be restrained from arresting the petitioners in connection with the impugned First Information Report No.0898 of 2021 lodged on 15.11.2021, under sections 409, 420, 467, 468 & 471 of I.P.C., Police Station-Gomti Nagar, District-Lucknow East (Police Commissionerate Lucknow). These proceedings have been instituted under Article 226 of the Constitution of India with the prayer to quash the impugned First Information Report. The grounds urged by the petitioners challenging the impugned First Information Report are inter alia that the allegations contained in the impugned First Information Report primarily relate to proceedings and disputes which are said to have arisen in relation to administration of a company and such dispute is pending consideration/adjudication before the National Company Law Tribunal, Allahabad (hereinafter referred to as "NCLT") and as such the dispute between the parties is purely civil in nature in relation to business transactions of the company and in fact it has been attempted to give the disput....
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.... before the NCLT and the criminal prosecution launched by filing the impugned First Information Report is thus mala fide and accordingly the F.I.R. and any proceedings drawn pursuant thereto are liable to be quashed. On the other hand, learned Additional Government Advocate representing the State-respondents placing reliance on a judgment of High Court of Delhi dated 24.03.2005 rendered in the case of S. P. Gupta and others vs. State (NCT of Delhi) and others, Writ Petition (Criminal) No.1163 of 2003 and Criminal M 995 of 2003 has submitted that the provisions of the Companies Act do not create any bar against an investigation by the police authorities if any cognizable offence punishable under the Indian Penal Code is said to have been committed even in connection with the affairs of the company. In view of this, the submission made by the learned State Counsel is that there is no illegality in proceeding with the investigation against the petitioners pursuant to the impugned First Information Report. Learned counsel representing the complainant has also opposed the prayers made in this petition and has submitted that the ingredients of the offences under the Companies Act and I....
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....etition filed by the complainant before the Company Law Tribunal at Allahabad under the Companies Act, 2013, allegations against the petitioners are that they have willfully mismanaged the affairs of the company with a view to extend unlawful benefits to themselves in their fraudulent enterprises in appropriating ill gotten wealth at the expense of the company. It has also been averred by the complainant that the petitioners have perpetrated serious criminal offences including fraud, forgery, criminal breach of trust which are punishable under the Indian Penal Code as well as under the Companies Act. The assertion made in the company petition also includes that the petitioners have willfully and fraudulently misappropriated the monies on one or the other fraudulent pretext. It has also been averred in the petition that the petitioners have been indulging in repetitive fraud in appropriating company funds illegally for their benefits and enrichment at the expense of the company. With the aforesaid assertions/allegations in the petition, several prayers have been made by the complainant before the NCLT which include the prayer that the NCLT may declare that the petitioners have commi....
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....est of any department of the Central Government or the State Government. Sub-section (2) of Section 212 clearly provides that in case any investigation has been assigned to the SFIO, no other investigating agency shall proceed with the investigation. Chapter XXVIII of the Act, 2013 contains provisions regarding Special Courts for trying the offences under the Act. Second proviso appended to Section 212 (6) of the Act, 2013 provides that it is the Special Courts which shall take cognizance of any offence upon the complaint in writing made by the Director, SFIO or any officer of Central Government authorized by general or special order. Sub-section (14) of Section 212 empowers the Central Government on receipt of the investigation report to initiate prosecution against the company by SFIO. It is also noticeable that sub-section (2) of Section 436 clearly empowers the special court to try any offence other than the offence under the Companies Act with which an accused may be charged at the same trial. Section 447 of the Act, 2013 provides for punishment for fraud. Thus, from the scheme of Companies Act, 2013 as discussed above, if a member of a company or shareholder or a Director h....
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.... fraud upon the company and that they are officers in default and hence are liable for punishment under Sections 240, 241, 447, 451, 452, 454A of the Companies Act. Hon'ble High Court of Madras in the case of Doraisamy and another (supra) on almost similar facts quashed the FIR and the said judgment has been affirmed by the Hon'ble Supreme Court with the caveat that quashing of FIR will not impact any action which may be permissible under the Companies Act. We also notice that the judgment in the case of S.P. Gupta and others (supra), delivered by Hon'ble High Court of Delhi is based on the provisions of old Companies Act, namely, Companies Act 1956 whereas the judgment in the case of Doraisamy and another (supra), as discussed above, is based on the provisions of Companies Act, 2013. Thus, we are of the prima facie opinion that once the Companies Act, 2013 has come into force, mismanagement of the affairs of a company or even allegations of fraud is to be investigated in terms of the procedure contemplated in the Companies Act, 2013. SFIO is the authority to conduct the investigation and special court established under Section 435 of the Act , 2013 is the competent court to try....