TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1589
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....shed 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 the Supreme Court in SLP, it does not mean ....
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....egations 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 similar relief is being claimed in this petition,....
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....igh 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 by respondent no. 2 alleges issuance of the cheques by the appellant as Director on 15.02.2001 ....
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....t 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 application of the first respondent because, despite the rejection of the earlier application of the first ....
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....dent 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, Hoshiar Singh v. State [AIR 1958 Punj 312 : 60 Punj LR 438 : 1958 Cri LJ 1093] and Namdeo Sindhi v. State [AIR 1958 Ori 20 : 1958 Cri LJ 67 : ILR 57....
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....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 making the subsequent application was to review or revise the order made by it on the earlier application. Section 561-A preserves the inherent pow....
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....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 opinion and it has no legal sanctity prima facie. The Court at that time refused to enter into the factual aspect of the matter and observed that it can be unveile....
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....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 registered under the respective provision which is available under the Act of 2013 then there was no reason to register an offence under Section 447 of the Act of 2013, especially, when allegations and material collecte....
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.... 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 explanatory statement to the notice for the relevant general meeting shall disclose the full particulars of the loans given, or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recip....
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....ch 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 prescribed procedure for granting loan and investment by the company is done, the Section itself provides mechanism to punish the defaulter and penal provision i.e. sub section 13 of section 186 is very specific. It is also apt to reproduce Section 186 of Act of 2013, which reads as under :- "186. Loan and investment by company.- (1) Without prejudice to the provisions contained in th....
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....e 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 amount for which guarantee or security so far provided to or in all other bodies corporate, alongwith the investments, loans, guarantee or security proposed to be made or given does not exceed the limit as specified in subsection (2), and there is no default in repayment of loan instalments or payment of interest thereon as per the terms and conditions of such loan to the public financial institution. (6) No company, which is registered under Section 12 of the Securities and Exchange Boar....
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....ll 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 to be principally engaged in the business of acquisition of shares, debentures or other securities, if its assets in the form of investment in shares, debentures or other securities constitute not less than fifty per cent of its total assets, or if its income derived from investment business constitutes not less than fifty per cent as a proportion of its gross income;] (b) the expression "infrastructure facilities" means the facilities specified in Schedule VI" 17. Section 188 of the Act of 2013 also permits related party transactions. That provision is also material so far the alleged transactions ....
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....he 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 remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise; (b) the expression "arm's length transaction" means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest. (2) Every contract or arrangement entered into under sub-section (1) shall be referred to in the Board's report to the shareholders alongwith the justification for entering into such contract or arrangement. (3) Where any contract or arrangement is entered into by a director or any other employee, without obtaining the consent of the Board or approval by a [resolution] in the general meeting under sub-section (1) and if it is not ratified by the Boar....
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....r 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 company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss; (ii) "wrongful gain" means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) "wrongful loss" means the loss by unlawful means of property to which the person losing is legally entitled. 19. Learned counsel for the petitioner has also pointed out that the element of fraud was introduced first time in the year 2013 and fraud itself has been defined with the explanation attached with proviso of Section 447 but looking to the alleged irregularity, offence of fraud is not made out and secondly for the transaction which took place prior to 2013, retrospective application under Section 447 cannot be made. 20. Shri Pushpendra Yadav, learned co....
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....xercise 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 following manner:- (i) So far as the submission about maintainability of the petition is concerned, this court has already observed in foregoing paragraphs that the petition is maintainable. (ii) As far as applicability of the provisions of Section 447 of Act, 2013 is concerned, I am not convinced with the submission made at the behest of the respondent that it is a continuous offence even after the year 2013 and therefore Section 447 has rightly been applied. From the allegations made, it is clear that the Investigating Officer did take note of transactions made from 30.11.2000 to 25.07.2006 and also the transactions of Financial Year 2003-04 and Financial Year 2005-06 and further transactions made upto the year 2017-18. The allegations made in the FIR do confirm that it is not a continuous offence inasmuch as the transactions made in different years. The d....
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....der : "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 offence means 'type of crime which is committed over a span of time'. As to period of statute of limitation in a continuing offence, the last act of the offence controls for commencement of the period. 'A continuing offence, such that only the last act thereof within the period of the statute of limitations need be alleged in the indictment or information, is one which may consist of separate acts or a course of conduct but which arises from that singleness of thought, purpose or action which may be deemed a single impulse'. So also a 'continuous crime' means 'one consisting of a continuous series of acts, which endures after the period of consummation, as, the offence of carrying concealed weapons. In the case of instantaneous crimes, the statute of limitation begins to run with the consummation, while in the case of continuous crimes it only begins with the cessation of the criminal conduct or act.'" O....
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....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 have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basis of every legal rule as was observed in L'Office Cherifien des Phosphates v. Yamashita Shinnihon Steamship Co. Ltd. [(1994) 1 AC 486 : (1994) 2 WLR 39 : (1994) 1 All ER 20 (HL)] Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless....