TaxTMI 
TaxTMI 
2015 (11) TMI 1889
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....any incurred loss to the extent of 122.00 Crores for the financial year 2012-13. It is contrary to the Section 205 of the Companies Act, 1956 and Section 123 of the Companies Act, 2013 (Hereinafter called as 'Act'). In the 49th AGM held on 13.09.2013, it was questioned by the share holders, but there was no suitable reply. Dividend warrant was sent. The complainant has sent protest to the Company Secretary through E-mail. He had returned the dividend mount to the Company Secretary through registered speed post. 1st accused is the company, 2nd accused is the Chairman and General Manager, Accused Nos. 3 to 14 & 16 are the Directors, Accused No. 15 is the Company Secretary and Accused No. 17 is the BGM of accused No. 1 are responsible to the alleged offence. 3. Learned Magistrate/Special Court (Economic Offences) Bengaluru, after recording sworn statement of the complainant, has taken cognizance for the offence punishable under Section 447 of the Act of 2013 and issued summons. 4. Sri. K.G. Raghavan, learned senior counsel appearing for the petitioners submits that on bare perusal of the complaint, it discloses that no offence is made out and no violation is committed agains....
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....rsued purely out of personal motive. Token cost of Rs. 5,000/- was also imposed while dismissing the petition. The act of petitioners is a malafide one in filing the present complaint. No sanction is taken for prosecuting the petitioners 1 to 14 and they are appointed by the President of India and are removable by the President of India. The provisions of Section 197 of Cr.P. apply and the sanction ought to have been taken to prosecute the petitioners. For the acts of the company, its directors or officers cannot be held liable for the absence of any averment in the complaint that they are involved in the alleged crime or unless Statute specifically provides for holding other vicariously responsible for the alleged act. The proceedings against the petitioners are pure abuse process of law and the same is liable to be quashed. 5. In reply, Sri. K.S. Periyaswamy, Party-in-person submits that there is no dispute to the fact that on 29.05.2013, the company informed the Stock Exchanges that the Board of Directors of the Company in the meeting held on 29.05.2013 have recommended dividend @ Rs. 2.50/- per share (25%) for the year 2012-13. As per 49th Annual Report 2012-13, Profit/Loss be....
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....any debt under this Act or other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable............." But fraud by itself is not defined in the Act of 1956 or 2013, neither IPC touches upon fraud directly. However, by various judicial pronouncements, having regard to the subject matter of the case therein, fraud is vividly defined. Dictionary meaning of Fraud is also of wide range. However, according to the complainant, violation of Section 125 of the Act of 1956/Section 123 of the Act of 2013 amounts to an offence punishable under Section 447 of the Act of 2013. Without coming out with the details of fraudulent acts, action is sought in respect of the offence of fraud. Fraud in common parlance as understood is deceit for the advantage of one and dis-advantage of the other. Though the complaint runs into pages, nowhere it is made out that participation of accused persons in the General Body meeting of 29.05.2013 amounts to fraud. The entire allegation centers around on the resolution whereby dividend is declared on the profit of the previous financial year. As per the complaint averments itself, it was a resolution arrived at in the ge....
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....oth cases after providing for depreciation in accordance with the provisions of sub-section (2) or against both; c) the Central Government may, if it thinks necessary so to do in the public interest, allow any company to declare or pay dividend for any financial year out of the profits of the company for that year or any previous financial year or years without providing for depreciation: Provided further that it shall not be necessary for a company to provide for depreciation as aforesaid where dividend for any financial year is declared or paid out of the profits of any previous financial year or years which falls or fall before the commencement of the Companies (Amendment) Act, 1960 (65 of 1960)." It is not the case of the complainant that the company had not earned profit in the previous year as shown by the petitioners. Undisputed documents would show that, proposed dividend of Rs. 10.41 Crores is declared from out of the profit of previous year not transferred to reserve. At the stage of arguments before this Court, the complainant is alleging that for declaring dividend out of the profit of the previous year, prior approval of the Central Government is necessary. Sectio....
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....islation by the Court. 10. The complainant is a dismissed employee of BEML. The Division Bench of this Court headed by the then Hon'ble Chief Justice, while dismissing the writ petition filed against BEML of which complainant had represented the petitioners as his counsel observed that litigation is purely pursued out of personal motives. The Apex Court in State of Haryana and Others v. Bhajan Lal and Others reported in 1992 Supp (1) SCC 335, listed 7 categories of cases by way of illustrations wherein power of the High Court under Article 226 of Constitution of India/482 of Cr.P.C. can be exercised either to prevent abuse of process of the Court or otherwise to secure the ends of justice. Following are the said illustrations: "(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused; (2) Where the allegations made in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(....
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....id down: "39.................. (i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. (ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the Company. (iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make the accused therein vicariously liable for offence commuted by the company along with the averments in the petition containing that the accused were in charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. (....