TaxTMI 
TaxTMI 
2024 (12) TMI 1589
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....tion 186(7) and the petitioner can be punished under Section 186(13) of the Act of 2013. The provision of Section 447 of the Act of 2013 was inserted in the Act itself by way of amendment made in the year 2013 and to the offence which was committed prior to enforcement of said provision, the same cannot be applied and the petitioner cannot be tried under the said offence because it is a settled principle of law that the provisions cannot be made applicable retrospectively and it has only prospective effect. He submits that even otherwise, if the allegations made in the complaint are considered to be true at their face value, the offence alleged to have been committed by the petitioner falls within the ambit of Section 185 of the Act of 2013, therefore, no offence can be registered under Section 447 alleging fraud against the petitioner because the whole allegations made in the complaint do not fall within the definition of fraud as has been prescribed in the proviso appended with Section 447 itself. He further submits that merely because the petitioner's earlier petition [M.Cr.C. challenging the proceedings] has been dismissed by the High Court and that order has been affirmed by t....
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....able. He further submits that as per the allegations made against the present petitioner, it is not only a violation of the provisions of Sub section-7 of Section 186, but the conduct of the petitioner moves beyond the said provision and it is nothing but a fraud as has been specified and prescribed under Section 447 of the Act of 2013, therefore, nothing wrong has been committed while registering the offence under Section 447 of the Act of 2013. He submits that when the Supreme Court, while dismissing the SLP, has already observed that the petitioner is at liberty to raise the objections before the trial Court, then there is no reason for filing the present petition and the petitioner can raise all these grounds before the trial Court. 4. Considering the submissions made by learned counsel for the parties and on perusal of record, the preliminary question with regard to maintainability of petition as has been raised by learned counsel for the respondent saying that earlier also a petition i.e. M.Cr.C. No. 41956 of 2023 was filed under Section 482 of Cr.P.C. in which quashing of complaint case registered as Complaint Case No. SC/12/2021 was sought to be quashed and sim....
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....on under Section 482 giving rise to the present proceedings. The High Court noticing the reliance on Form 32 issued by the Registrar of Companies, under the Companies Act, 1956, in proof of resignation by the appellant prior to the issuance of the cheques, issued notice, leading to the impugned order of dismissal subsequently. 4. Learned counsel for the appellant submitted that there was no bar to the maintainability of a second application under Section 482, Cr.P.C. in the peculiar facts and circumstances of the case, relying on Superintendent and Remembrancer of Legal Affairs, West Bengal vs. Mohan Singh and Ors., AIR 1975 SC 1002. 5. Learned counsel for respondent no. 2 relied upon order dated 06.05.2019 of this Court in Atul Shukla vs. The State of Madhya Pradesh and another (Criminal Appeal No. 837 of 2019) to contend that such an application was not maintainable. The cheques being post-dated, the appellant cannot escape its answerability. 6. We have considered the respective submissions on behalf of the parties and are of the opinion that the appeal deserves to be allowed for the reasons enumerated hereinafter. 7. The complaint filed b....
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.... High Court under Section 561-A to quash the proceeding. It is difficult to see how in these circumstances it could ever be contended that what the High Court was being asked to do by making the subsequent application was to review or revise the Order made by it on the earlier application. Section 561-A preserves the inherent power of the High Court to make such Orders as it deems fit to prevent abuse of the process of the Court or to secure the ends of justice and the High Court must, therefore, exercise its inherent powers having regard to the situation prevailing at the particular point of time when its inherent jurisdiction is sought to be invoked. The High Court was in the circumstances entitled to entertain the subsequent application of Respondents Nos. 1 and 2 and consider whether on the facts and circumstances then obtaining the continuance of the proceeding against the respondents constituted an abuse of the process of the Court or its quashing was necessary to secure the ends of justice. The facts and circumstances obtaining at the time of the subsequent application of respondents Nos. 1 and 2 were clearly different from what they were at the time of the earlier....
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....her reliance has been placed by learned counsel for the petitioner on a decision of Supreme Court reported in (1975) 3 SCC 706, Superintendent and Remembrancer of Legal Affairs, West Bengal vs. Mohan Singh and others wherein the Supreme Court has considered the issue of entertaining the second application in a changed set of circumstances under Section 482 of Cr.P.C. and observed as under :- "2. The main question debated before us was whether the High Court had jurisdiction to make the order dated April 7, 1970 quashing the proceeding against Respondents 1, 2 and 3 when on an earlier application made by the first respondent, the High Court had by its order dated December 12, 1968 refused to quash the proceeding. Mr Chatterjee on behalf of the State strenuously contended that the High Court was not competent to entertain the subsequent application of Respondents 1 and 2 and make the order dated April 7, 1970 quashing the proceeding, because that was tantamount to a review of its earlier order by the High Court, which was outside the jurisdiction of the High Court to do. He relied on two decisions of the Punjab and Orissa High Courts in support of his contention, namely, Hos....
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.... (1970) 1 Punj 177] and Ramvallabh Jha v. State of Bihar [AIR 1962 Pat 417 : (1962) 2 Cri LJ 625 : 1962 BLJR 553]. It is, however, not necessary for us to examine the true effect of these observations as they have no application because the present case is not one where the High Court was invited to revise or review an earlier order made by it in exercise of its revisional jurisdiction finally disposing of a criminal proceeding. Here, the situation is wholly different. The earlier application which was rejected by the High Court was an application under Section 561-A of the Code of Criminal Procedure to quash the proceeding and the High Court rejected it on the ground that the evidence was yet to be led and it was not desirable to interfere with the proceeding at that stage. But, thereafter, the criminal case dragged on for a period of about one and a half years without any progress at all and it was in these circumstances that Respondents 1 and 2 were constrained to make a fresh application to the High Court under Section 561-A to quash the proceeding. It is difficult to see how in these circumstances, it could ever be contended that what the High Court was being asked to do by ma....
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....acts so justify. Needless to say that as and when any appropriate application under the Code is preferred by the petitioner, the same shall be dealt with purely on its own merits without being influenced by the dismissal of the instant writ petition." 10. Thus, considering the submissions made by learned counsel for the petitioner in response to the objection raised by learned counsel for the respondent and looking to the legal position as has been enumerated above and also on perusal of earlier order of High Court, it is clear that the present petitioner was not a party in the said petition and he was not the petitioner in the same. 11. From the order and the facts considered therein, it is clear that the quashing of the complaint case was solely on the ground that the ex post facto application of penal provision is proper or not. The High Court while dismissing the petition observed that at the relevant point of time, it was not proper for the Court to enter into the factual aspect of the matter because Court was of the opinion that prima facie only on the basis of inter-departmental communication, if any summary is prepared, that summary note cannot be considered the opini....
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....is of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of 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. (7) 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." 14. As per the counsel for the petitioner, it is a case in which allegations made against the present petitioner, though available on record but do not constitute any offence under the provision for which offence has been registered. It is also submitted by the learned counsel for the petitioner that when the allegations made against the petitioner and material collected by the prosecution, a specific offence could have been regist....
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....gful loss to the shareholders/company which tantamount to fraud. Thus, there appears violation of Section 447 of the Companies Act, 2013." 15. From the aforesaid alleged irregularities, it is clear that the provision of Section 185 of Act of 2013 is available under which it is permissible to give loan to the directors. Section 185 of Act of 2013 reads as under :- "185. Loans to directors, etc. - (1) No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by,- (a) any director of company, or of a company which is its holding company or any partner or relative of any such director; or (b) any firm in which any such director or relative is a partner. (2) A company may advance any loan including any loan represented by a book debt, or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested, subject to the condition that- (a) a special resolution is passed by the company in general meeting: Provided that the ....
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....or a guarantee or security is given or provided or utilised in contravention of the provisions of this section,- (i) the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees; (ii) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees; and (iii) the director or the other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person, shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees, or with both." 16. Further, the Act itself provides and made permissible for the company to provide loan and make investment. As such, Section 186 also provides the rate of interest on which loan can be granted and as pointed out by learned counsel for the petitioner that if any violation and contravention of the pres....
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.... by a holding company, by way of subscription, purchase or otherwise of, the securities of its wholly owned subsidiary company, the requirement of this sub-section shall not apply: Provided further that the company shall disclose the details of such loans or guarantee or security or acquisition in the financial statement as provided under sub-section (4).] (4) The company shall disclose to the members in the financial statement the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security. (5) No investment shall be made or loan or guarantee or security given by the company unless the resolution sanctioning it is passed at a meeting of the Board with the consent of all the directors present at the meeting and the prior approval of the public financial institution concerned where any term loan is subsisting, is obtained: Provided that prior approval of a public financial institution shall not be required where the aggregate of the loans and investments so far made, the amoun....
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.... (ii) made in shares allotted in pursuance of clause (a) of sub-section (1) of Section 62 or in shares allotted in pursuance of rights issues made by a body corporate; (iii) made, in respect of investment or lending activities, by a non-banking financial company registered under Chapter III-B of the Reserve Bank of India Act, 1934 (2 of 1934) and whose principal business is acquisition of securities.] (12) The Central Government may make rules for the purposes of this section. (13) If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. Explanation.-For the purposes of this section,- (a) the expression "investment company" means a company whose principal business is the acquisition of shares, debentures or other securities [and a company will be deemed ....
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....shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm's length basis: [Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.] Explanation.- In this sub-section,- (a) the expression "office or place of profit" means any office or place- (i) where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise; (ii) where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the company anything by way of remuner....
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....uilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. [Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to [fifty lakh rupees] or with both.] Explanation.-For the purposes of this section- (i) "fraud" in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the ....
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....he Court also observed that Article 20(1) of the Constitution of India provides so and prescribes as under :- "20. Protection in respect of conviction for offences.- (1) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence." 22. Notably, the pyramid of submissions made on behalf of the respondent is based on three pillars. Primarily about the maintainability of the petition; secondarily, about the applicability of Section 447 on the basis of continuous offence and transactions made as per the complaint even after enforcement of the Act, 2013 and tertiary, that at this stage this court should not exercise the powers enshrined under Section 482 of CrPC and should be left for the trial court. 23. For fathoming the depth of above threefold submissions, on the face of record and legal position already set at rest, which would definitely navigate the path, I find it apposite to deal with the submissions one-by-one in the follo....
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....r of the act responsible and liable for the continuation of the said injury. In case a wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the said act may continue. If the wrongful act is of such character that the injury caused by it itself continues, then the said act constitutes a continuing wrong. The distinction between the two wrongs therefore depends upon the effect of the injury. In the said case, the Court dealt with a case of a wrongful act of forcible ouster, and held that the resulting injury caused was complete at the date of the ouster itself, and therefore there was no scope for the application of Section 23 of the Limitation Act in relation to the said case. 25. In Gokak Patel Volkart Ltd. v. Dundayya Gurushiddaiah Hiremath [(1991) 2 SCC 141 : 1991 SCC (Cri) 315] this Court dealt with the issue and held as under : "7. ... According to Black's Law Dictionary, [5th Edn. (Special Deluxe)], 'continuing' means 'enduring; not terminated by a single act or fact; subsisting for a definite period or intended to cover or apply to successive similar obligations or occurrences'. Continuing of....
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....inds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-à-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans ....