TMI Blog2018 (6) TMI 1727X X X X Extracts X X X X X X X X Extracts X X X X ..... to be fairly excused / relieved from the charge or charges levelled against them - One cannot ignore a very vital fact that Section 633(2) of the Companies Act, 1956 confers a larger / wider ambit to the Hon'ble High Court to grant an 'Apprehended' / 'Anticipatory relief' in regard to the Apprehended / Anticipatory criminal proceedings also. As per Section 633(2) of the Companies Act, 1956 the power to grant relief to the Hon'ble High Court, is a discretionary power and the same should be exercised by the Court only where it is satisfied that the concerned person had acted honestly and reasonably and that considering the circumstances of a given case, he should be excused. The only issue for consideration under Section 633(1) or (2) is that whether a person had acted in good faith [honestly] and whether he had any reason to escape from the liability. A glimpse of Section 633(1) of the Companies Act, 1956 unerringly points out that in the criminal proceedings, the Court shall have no power to give relieve from any civil liability, which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust - Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power under Section 633(2) is in addition to the power already available to the High Court under Section 633(1) and also under several other provisions of the Code. Such an additional power cannot be taken to mean the imposition of a restraint or limitation on the jurisdiction of the High Court to grant relief in pending proceedings. In other words, the conferment of an additional power under sub-section (2), to grant relief even in respect of anticipated proceedings, cannot be taken to mean that the power vested in sub-section (1) is taken away. Therefore, with great respect to the learned Judges of several High Courts, I am of the considered view that Section 633(2) does not limit the jurisdiction and powers of the High Court only to apprehended proceedings . This is an additional power available to the High Court in view of the larger jurisdiction exercised by the High Court in respect of the several matters prescribed under the Companies Act. and ultimately, not sustained the preliminary objection raised by the Appellant/Applicant as regards the 'Maintainability' of the main proceedings and dismissed the application. Furthermore, the Learned Single Judge gave th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 633(1), which specifically sets out that 'Power is vested only on the Court hearing the case', meaning the Court where the proceeding is pending. 6. The Learned Counsel for the Appellant contends that the Learned Single Judge had failed to appreciate that the only question that was to be determined by the Hon'ble High Court as to whether it could exercise such power in respect of a proceeding pending not before it, but, at the Magistrate's Court and the issue before it was not whether the High Court can exercise powers under Section 633(1) of the Companies Act, 1956 to relieve a person on liability in a proceeding pending before it. 7. Continuing further, the Learned Counsel for the Appellant proceeds to point out that the Order of the Learned Single Judge in coming to a conclusion that the High Court can exercise powers under Section 633(1) of the Companies Act, 1956 to relieve a person from his liability in proceeding already pending before a Magistrate Court is even directly contrary to the ratio determined at Paragraph No. 44 of the Impugned Order in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 dated 23.10.2013 wherein it is held that the Power under Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that it could not exercise the power under Section 633(1) of the Companies Act in respect of prosecution pending before it directly when the case of the Appellant is only that in the present case the proceeding is pending on the file of the Learned Additional Chief Metropolitan Magistrate [EO1], Egmore and hence the 'High Court' is not the Court before which the proceeding is pending and in such a case, the High Court cannot exercise its powers under Section 633[1] of the Companies Act as that the power is vested in such a case where the proceeding is pending. 12. The Learned Counsel for the Appellant submits that Section 633(2) of the Companies Act, 1956 can be pressed into service of the Companies Act only on 'Apprehension' and once the prosecution was initiated, it is for the concerned accused to secure the relief from the Court hearing the matter. 13. The Learned Counsel for the Appellant contends that the present Original Side Appeal filed by the Appellant is perfectly maintainable because of the reason that the Impugned Order dated 23.10.2013 passed in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 amounts to the term 'Judgment' within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company or where the company is in liquidation by the liquidator or a creditor or a contributory and not a penal proceeding contemplated by sections such as Section 162. The dictionary meaning of the word claim is undoubtedly an assertion of a right to something and a relief provided by statute. I have also been pointed out several sections of the Act where the Legislature has used the word claim such as Sections 101, 104, 429, 474 and 529 and it is clear from these sections that the meaning that can be attached to the word claim used in these sections must mean a demand or an assertion to a civil right. It was also urged that the Legislature could not have intended to include in the word claim in Sub-section (2) of Section 633 proceeding of a penal mature for otherwise the Legislature would have used the word proceeding rather than the word claim . It was further urged that inasmuch as the Legislature has given relief from criminal proceedings by separate sections in the Act such as Sections 63, 69(5), 70(5), 75(4), 207, 209, 210, 211, 217 and 393(4), the Legislature could not have contemplated of including proceedings of a penal nature in the word claim in Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glish Act of 1929. That section came up for consideration in at least two decisions pointed out to me. In re Barry and Stains Linoleum Ltd., (1934) 1 Ch 227 a director failed to obtain his qualification shares within the time fixed thinking that he had them at the date of his appointment, and having either overlooked or forgotten the definition of qualification shares in the company's articles of association. At the end of the time he ceased, in accordance with Sub-section (3) of Section 141 of the Companies Act, 1929 to be a director, but continued to act and to receive remuneration as a director, thus incurring penalties under Sub-section (5). Later he was re-appointed by the board pursuant to the company's articles of association, retired, and was re-elected by the shareholders. He applied to the Court under Sub-section (2) of Section 372 for relief against any liability which he had incurred by acting and receiving remuneration as a director after he had ceased to be a director. It is clear from the facts set out in the report that the petition was for relief not in respect of a pending proceeding but against an apprehended liability for penalty. It was in fact contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following: 10. The terms of Section 633 and the way in which it has been framed appear to support the contention of the learned counsel for the Registrar. Sub-section (1) of Section 633 which confers jurisdiction for granting relief on the Court before which a proceeding is pending appears to have been very widely worded. It covers all kinds of proceedings and relief under it can be granted in respect of every kind of liability--penal as well as civil. That sub-section can, however, apply only when the proceedings become pending because it is only that Court in which the proceedings are pending which has power to grant relief under that subsection. 11. Sub-section (2) of the section does not appear to be so wide. In the very beginning of that sub-section we find the words has reason to apprehend that any claim will or might be made against him . Thus We find that instead of the word 'liability' which has been used in the preceding subsection the Legislature has used the word claim in Subsection (2). The two words do not appear to be co-extensive in their meaning. Liability appears to be of wider connotation as it includes civil as well as penal liability. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 934) 150 LT 254 (supra), Maugham J., had before him a petition under Section 372 of the English Companies Act of 1929 which corresponds to Section 633 of the Indian Companies Act of 1956. A certain director of the company in that case had acted as a director and performed the duties of that officer without possessing the required qualifications. During the period in which he had so acted he had received 1,000/- per annum as remuneration in accordance with the provisions of the Articles of Association of the company. By acting as a director without possessing the necessary qualifications he had also made himself liable to a fine not exceeding 5/- for every day on which he had acted in that way under Sub-section (5) of Section 141 of the Companies Act of 1929. He therefore moved the High Court for being relieved of his liabilities and prayed that he be relieved not only of the liability for fines and penalties which he might have incurred under Section 141 but also of any liability which he might be under to the company in respect of his act or default. The counsel for the director contended that S, 372 of the Act empowered the Court to relieve the director of both the kinds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -holders. In this case therefore the learned Judge practically assumed that under Sub-section (1) of Section 372 he had jurisdiction to grant relief against a possible prosecution. He also overlooked that under Sub-section (1) of Section 372 under which he was granting relief jurisdiction to grant relief vested only in the Court before which the proceedings were pending and no proceedings under Section 141 were pending in this Court. 18. The Learned Counsel for the Appellant seeks in aid of Re: Muktsar Electric Supply Co., Ltd., in Liquidation V. State reported in 1966 36 Comp Cases 144 P H, wherein at Paragraph No. 16, it is mentioned as under: 16. In In re Gilt Edge Safety Glass Limited, [1940] Ch. 495 petitions were presented under Section 372 by two directors of a company, who had inadvertently continued to act as directors after they had, owing to a reduction of capital, ceased to hold qualifying shares of the minimum value required by the articles of association of the company. Actually, summary proceedings before the Magistrates had been commenced against them under Section 141(1) of the English Companies Act, 1929. It was held that Section 372(1) made the court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Act, Section 633(2) of the Act empowers the Court to grant relief in certain cases of negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company. Section 2(11) of the Act defines the Court with reference to any offence under the Act. The Court means the Court of the Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence and with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that company as provided in section 10. Primarily, therefore, with respect to negligence, default, breach of duty, misfeasance or breach of trust by an officer of a company, the Court is a Criminal Court and that is the Court which is referred to in sub-section (1) of section 633 of the Act which has the jurisdiction to grant relief in the cases mentioned. However, if any such officer against whom proceedings have not been instituted in a Criminal Court has reason to apprehend that any proceedings might be brought against him may also apply for relief and in the case of such app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust or otherwise liable on account of any default or breach of the Company has nevertheless acted honestly and reasonably and that having regard to all the circumstances of the case, including those connected with his appointment , he ought fairly to be excused. The object of the section appears to be to provide against undue hardship in deserving causes and to give relief from liability to persons who, though liable in law, ought to be excused rather than be allowed to be subjected to legal proceedings. apart from that in the aforesaid decision at Paragraph Nos. 5 and 6, it is mentioned as under: 5. It is true that when a person agrees to be appointed to the Board of Directors of a Company he is expected to exercise legitimate control over the management and the affairs of the Company and be conscious of his responsibility as such Director. It is also beyond doubt that when persons, who have distinguished themselves in various fields such as law, audit, management, financial management or who otherwise represent special interests on Boards such as the representatives of financial institutions. Government or Semi-Government bodies are appointed to the Boards it certainl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial category of directors from consequences of default and breaches of the Company, judicial moderation is necessary in the administration of Section 633 of the Act so as to ensure that such categories of Directors are not subjected to the harassment of legal proceedings for breaches and defaults of a Company, which may at times be rather protracted. It would be proper in such cases to relieve such directors of consequences of the defaults and the breaches unless they are directly involved in the acts or omission complained of or have otherwise not acted honestly or reasonably or have financial involvement in the company. 6. Having regard, therefore, to the fact that the petitioner has been a Director of the Company, as indeed of a number of other Companies, by virtue of being a solicitor and did not participate in the management of the Company and had no financial involvement in it, I would relieve the petitioner of the liability arising out of breaches and defaults on the basis of which the petitioner apprehends proceedings. 21. The Learned Counsel for the Appellant points out the Decision of Sri Krishna Parshad and Others V. Registrar of Companies reported in 1978 [48] Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the High Court is after a proceeding has been actually initiated in a criminal court. I may also indicate that the other court covered by Section 633(1) need not necessarily be a criminal court because there may very well be a civil proceeding, criminal proceeding or even revenue proceeding in respect of which Section 633(1) may apply. In all such cases if a proceeding is anticipated, the officer concerned can move the High Court at an early stage and get relief in a suitable case. This has the great advantage of avoiding that other proceeding if the High Court grants relief. If that other proceeding has commenced then the officer concerned has no other course open but to apply to the relevant court under Section 633(1) to say that whatever negligence, default, breach of trust, misfeasance breach of duty or any other default complained of there may be, he, in fact, acted reasonably and honestly keeping in view the circumstances of the case. The court can then grant relief. Thus, the section as it were, operates in two stages. The High Court can grant anticipatory relief and if a case is actually initiated, only the court before which the complaint or trial is going on can gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the petitioners and filing the complaints. 6. Mr. K. S. Bindra, appearing from the side of the intervene, has vehemently contended that these circulars have no binding character and in any case they could not be considered to have any legitimacy after the coming into force of the new Code of Criminal Procedure, 1973. He has made reference to the new provisions of the law of limitation introduced and has pointed out that any delay in the filing of the complaints by the Registrar would have resulted in the cases getting barred by time and the person holding offices of the company who had committed misfeasance and other illegal acts escaping due punishment. It is pointed out that the punishments awardable under the complaints already lodged could be up to one year and the limitation for commencing any such prosecution under section 466, Cr. PC, is one year from the date of the occurrence or the knowledge of the complaint. However, section 470(2), Cr. PC, given protection to the complainants in such circumstances inasmuch as the time during which the institution of the prosecution lies stayed by any order has to be excluded. From the side of the petitioners it has rather been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trust had been brought under Sub-Section(1), (3) No court shall grant any relief to any officer under Sub-section (1) or Sub-section(2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted. 20. A perusal of the various provisions of the Act reveals that it imposes a number of obligations upon the officers of a company. It also makes provisions for initiating, before a court of law, proceedings against the officers of the company for negligence, default, breach of duty, misfeasance or breach of trust. The object underlying Section 633 of the Act obviously is to avoid hardship to officers of the company in deserving cases and to relieve them of their liability in cases where they are technically guilty if they are able to convince the court that they had been acting honestly and reasonably and that having regard to the circumstances of the case, they, in all fairness, ought to be excused from the charge or charges made against them. This section enables the concerned officer to apply to the court for making an order relieving him of the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vol 48 Company cases, 397. The counsel for the Department has not pointed out any ruling to the contrary. 12. For the purposes of deciding the present application it is not necessary for me to express any opinion on the interpretation of or to go into the questions relating to the construction of Section 370 of the Companies Act. Such questions can be more appropriately dealt with by the Court which will be seized of the matter if any proceedings are initiated against the company after going into evidence and considering other material that may be placed before that Court. 13. For the purpose of present case, this Court is mainly concerned with the question as to whether the said Directors and the Secretary of the company who have petitioned to this Court have acted honestly and reasonably having regard to all the circumstances of the case and as to whether they in the given circumstances apprehend that any proceedings are likely to be brought against them in respect of the alleged default, breach of duty etc. As already held herein-above that in the circumstances of the case, the apprehension of the said Directors cannot be staled to be baseless. I have also held above that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for such relief and High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust, had been brought under sub-section (1). 11. Reading the section there is hardly any doubt that the power of the High Court to entertain the petition is only to be exercised when there is mere apprehension that any proceeding will or might be brought against the officer. The moment in fact any proceedings are initiated before the learned Magistrate, it will be the learned Magistrate alone who would be competent to grant the relief under Section 633(1) of the Companies Act, 12. I do not find any force in the submission of Shri Bharucha that in as much as there is a delay in filing the complaint; no lawful cognisance could have been taken of the complaint. Firstly it must be appreciated that Section 633 does not talk of 'taking cognisance' as such. It r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst undue hardship, in deserving cases. The purpose is to give relief from liability to persons who though technically guilty of negligence, default, breach of duty etc, are able to convince the conscious of the Court that they have acted honestly and reasonably and thus having regard to the circumstances of the case they ought fairly to be excused from the charges against them. 15. In P.S. Bedi v. Registrar of Company, Delhi 1985 2 Company Law Journal 122 DE Act this court has taken the view that:- Even when the Registrar of Companies filed a criminal plaint despite notice of petition for relief under Section 633(2) of the Act, the petition was maintainable and could be disposed of by the Court with appropriate order. 16. The application can be filed even when action is apprehended. No action had been initiated till the filing of the present petition. While issuing notice, this Court directed maintenance of status quo which order is still operative. Therefore, it cannot be said that the present petition is not maintainable. Of course, while exercising its discretion, the court has to keep in mind that the same should not be exercised in favor of a Director who has gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minal court to relieve an alleged offender. The power to relieve includes the power to discharge an alleged offender when no cause of action against him is disclosed. The said provisions of the Act conferred a power upon the High Court to exonerate the accused if it appeared to it that he may be liable but had acted honestly and reasonably and furthermore, having regard the circumstances he ought to be excused [See section 633(1) of the Act]. Now, this power given to the High Court is part of the power given to it to relieve an accused. Such discretion is also vested in the criminal court to relieve an offender, if similar circumstances exist. In passing that judgment I had relied upon two decisions of our court in SBI Home Finance Ltd. - v - Regional Director, Department of Company Affairs, reported in (2007)138 Company Cases 106(Cal) and Chandra Kumar Dhanuka Ors. - v - Registrar of Companies, reported in (2008) 141 Company Cases 101. 20. I read the following passage from the said unreported judgment delivered by me on 5th April,2011, in the case of Bithal D Mundra Ors. - v- The Registrar Of Companies, West Bengal (Supra) : Section 633(1) relates to the powers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the trial and not an isolated power. Therefore, the High Court is also invested with similar powers. First, to ascertain whether there is cause for proceeding with the complaint and then to consider whether the accused should be exonerated [see SBI Home Finance Ltd. - v - Regional Director, Department of Company Affairs, reported in (2007)138 Company Cases 106(Cal), see also Chandra Kumar Dhanuka Ors. - v - Registrar of Companies, reported in (2008) 141 Company Cases 101] 21. I would elucidate upon my above judgment by clarifying that the power to relieve, includes the power to dismiss the complaint and to discharge the accused. This power can be exercised before exercising the power to exonerate the accused exoneration is ordered after the Court is satisfied that the accused is likely to be guilty. The High Court has no power to try and sentence the accused, in my opinion. 22. Furthermore, when a S. 633(2) application is pending in the High Court, within the period of limitation, the Central Government should seek an injunction under Section 470(2) of the Code of Criminal Procedure, instead of allowing limitation to set in, particularly so, when it follows the pract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed an order on April 30, 1993, not to take any final decision in the matter of launching prosecution. The said order was received by the Registrar of Companies only on June 7, 1993, and, therefore, the respondent-Registrar of Companies was not aware of the same till that day. This situation makes it clear that on the date on which this company petition was made, the cause for moving the court under section 633 of the Act did exist, and, therefore, the petition cannot be dismissed merely on the ground that subsequent to the filling of the petition, the prosecution had been launched. 28. Adverting now to the liability of the petitioners to be prosecuted under section 63 of the Act, the main ingredient of the provision is that every person who authorised the issue of the prospectus is liable to be punished with imprisonment and fine if it is shown and established that the prospectus included any untrue statement. The above discussion throws ample light on the proposition whether the statement with regard to two and a half decades' experience included in the prospectus could be termed as an untrue statement, and we have already recorded a finding that it could not be termed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Regional Provident Fund Commissioner [1984] MPLJ 340; [1985] 66 FJR 66 (MP). Learned counsel, therefore, submitted that as the prosecutions have already been lodged against the petitioner also, he is not entitled to get any relief from this court and he is at liberty to raise any defence that may be available to him before the criminal court in which prosecutions have already been filed. 13. Learned counsel for respondent No. 3 submitted that a criminal case before the Employees' Insurance Court under the Employees' State Insurance Act has already been filed against the petitioner also bearing No. 15 of 1982 for the earlier period. Learned counsel further submitted that under Section 2(15), (17) of the Employees' State Insurance Act, the petitioner is an occupier as defined therein being admittedly a director of the respondent-company. Learned counsel further submitted that the questions raised by the petitioner in this court are debatable questions of fact and whether the petitioner can be said to be the principal employer or not has to be decided by the Employees Insurance Court on the basis of the evidence adduced before it and, therefore, the petitioner is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been lodged against the petitioner also with a view to only harass him as alleged by him because it cannot be disputed that the petitioner being a director of the company is also an occupier. Therefore, he is at liberty to take whatever defences are available to him before those courts and consequently I do not find any valid ground to allow this petition, as the judgment of the Delhi High Court, on which learned counsel for the petitioner has placed reliance, has only made certain observations regarding such directors. (viii) In the decision Farouk Irani and Another V. Board for Industrial and Financial Reconstruction, 2002 [110] Company Cases at page 64, it is observed as under : Under Section 633(2), this Court has the power to grant relief as a trial court, provided the conditions laid down under Section 633(1) are satisfied and the offence/s being, (a) the lapse or offence alleged must be one of the kinds mentioned in Section 633(1). (b) The applicant must be shown to have acted honestly and reasonably. (c) The court is in a position to conclude or render the finding with regard to all the circumstances of the case, that the officer ought to be excused fairly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be let in without reference to any observations or findings, if any, recorded by this Court for the purpose of this petition. (ix) In the decision M. Meyyappan V. Registrar of Companies, 2012 (112) Company Cases 450 [Madras] at Paragraph Nos. 13 and 15, it is observed as under : 13. Learned counsel for the petitioner has relied on the following decisions in support of his claim that by virtue of the above-referred provisions this court in a appropriate case relieve the person concerned from the prosecution : (1) In the case of Muktsar Electric Supply Co. Ltd., In re (In Liquidation) [1966] 36 Comp Cas 144 (Punj); (2) East India Hotels Ltd., In re [1980] 50 Comp Cas 381 (Cal); (3) G.M. Mohan v. Registrar of Companies [1984] 56 Comp Cas 265 (Karn); and (4) P. Vaman Rao v. Secretary to Government [1998] 93 Comp Cas 486 (AP). 14. Almost in similar circumstances and while considering Section 633(2) of the Act, the courts have granted the relief as claimed. After going through the factual details in those cases and the statutory provisions referred to therein, I am in respectful agreement with the conclusion arrived at therein and I am of the view that these decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dated 23.10.2013 passed in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013. 28. The Learned Counsel for the Respondents points out that the issue that crops up for rumination is that whether the Hon'ble High Court is barred from entertaining a Petition under Section 633(2) of the Companies Act by an Officer of a Company against whom any proceeding that is brought before any Court. In this regard, the Learned Counsel for the Respondents emphatically projects an argument that the power conferred under Section 633 of the Companies Act upon the High Court is an additional power and cannot be read in a restricted manner. 29. The Learned Counsel for the Respondents submits that the Learned Single Judge had extensively analysed various provisions of the Companies Act, 1956 and came to the resultant conclusion that the power granted to the High Court is in addition to the powers already available with the High Court with an exempt/relief persons. 30. The Learned Counsel for the Respondents takes a plea that the Learned Magistrate of a Criminal Court has a power to relieve a person [persons] under Section 633(1) of the Companies Act and that the High Court can relieve the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t' within the meaning of Clause 15 of the Letters Patent and in short, the impugned order does not affect any rights of the Appellant adversely. Furthermore, the Appellant is wary of facing a contest in C.P. No. 297 of 2013 and there are Respondents including the Registrar of Companies and added further, the Appellant does not mention in which status/capacity he claims to be an aggrieved. Besides the above, the Appellant is not a Share Holder or Contributory as per order in TCP No. 101 of 2016 in C.P. No. 62 of 2012 dated 22.06.2018 passed by the National Company Law Tribunal, Division Bench, Chennai Branch between M/s. Vis-Ram Financial Services Pvt., Ltd., V. M/s. Metafilms India Limited and 33 Others. 32. The Learned Counsel for the Respondents by referring to Section 621 of the Companies Act, 1956 contends that the ingredients of said Section restricts the power of the Court to take cognizance of an offence against the Companies Act, 1956 in respect of written complaints by certain category of persons, alone, viz., Shareholder, Registrar of Companies, Contributory or SEBI. In short, it is the plea of the Respondents that the Appellant with malice and vexations intent / l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the Learned Counsel, later the Respondents had filed C.P. No. 297 of 2013 before this Court [under Section 633 of the Companies Act, 1956 r/w Rule 9, 11 of the Company Court Rules, 1958] against the present Appellant [who figured as 1st Respondent one R. Subramanian, as 2nd Respondent and the Registrar of Companies, Chennai, viz., 3rd Respondent. As a matter of fact, the Respondents [Petitioners in C.P. No. 297 of 2013] prayed for passing of an order by this Court to relieve them wholly from the alleged acts of default and liability complained by the 1st Respondent [Appellant] in C.C. No. 107 of 2013 pending on the file of the Learned Additional Chief Metropolitan Magistrate, EO1, Egmore, Chennai. 37. It appears that the Respondents [Petitioners in C.P. No. 297 of 2013] had obtained an order of Stay of the Criminal Proceedings in Comp. A. Nos. 995 and 996 of 2013 on 19.09.2013. It comes to be known that the Appellant filed C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 before this Court praying for passing of an order by this Court to dismiss the C.P. No. 297 of 2013 in 'Limine as Not Maintainable' filed by the Respondents, (As Petitioners), both on admitted facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 62 of 2012 [between M/s. Vis-Ram Financial Services Pvt., Ltd., Limited V. M/s. Metafilms India Limited and 33 Others] wherein and where under it is observed as under: The Petitioner is not a member of the Respondent Company. Except providing letter of allotment, no share certificate has been produced. Letter of allotment is purportedly issued on 28.07.1997. No steps or claim ever made for the share certificates since 1997. The petitioner has never asserted his right as shareholder for 15 years. The petition is barred by limitation. The petitioner is pawn in the hands of R. Subramaniam who has been engaged in series of disputes and the present petition is one more attempt to harass the applicants. The petition is abuse of process. Having failed to obtain orders through various parties like Thamaraiparani Investments Ltd., Citrex Products Ltd., represented by Rathinakumar etc., R. Subramaniam is filing the present petition through Vis Ram Financial Service Limited and ultimately, the Tribunal opined that the Petitioner [Appellant] were not entitled to claim any relief under any relief under the Company Act, especially, under Sections 111, 111A, 235(2), 397/398 r/w Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef of civil liability is claimed under Section 633(2) of the Act, in all these cases, notice is to be given to the Registrar of Companies, as per Section 633(3) of the Act. The power to relieve is in the hands of the Court, when it is convinced that an individual had acted reasonably and honestly, as per Division Bench Decision D. Doss V. C.P. Connell (1937) 7 Company Cases at Page 429. The subjective satisfaction of the Court in granting relief in a given case must be reached after a careful and meticulous rumination of the entire subject matter in issue to the effect that the person concerned had acted honestly and reasonably and that by taking note of all circumstances of the case, he must be excused. In short, the power under Section 633 of the Companies Act, 1956 is not be exercised in a casual and caveliar and loose fashion, mainly resting upon the pleadings or mechanical averments in the Petition or an Affidavit. Further, in the decision S.P. Punj V. Registrar of Companies reported in [1991] 71 Company cases at page 509 (Delhi), the High Court has the power to grant the relief under Section 633(2) of the Companies Act. A Panoramic Spectrum of Case Laws : 46. To put it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her words you are to look upon a criminal prosecution as a claim that the offender be punished in accordance with law. The wording of sub-section(I) and (2) of section 633 of the Act is, for the present purpose, identical with the wording of sub-sections(I) and (2) of section 372 of the English Act of 1929, and with reference to sub-section(2) of that Act, it was held in Barry and Staines Linoleum Limited, In re (1934) I Ch. 227; (1934) 4 Company Cases 196. I therefore hold that sub-section(2) of Section 633 is wide enough for this Court to grant relief against an apprehended criminal prosecution... 48. Further, in the decision in the matter of Muktsar Electric Supply Co., Ltd., reported in 1966 (Vol. 36) the Company Cases at page 144, at Special Pages 156 and 157, it is observed as under: Actually, summary proceedings before the Magistrates had been commenced against them under Section 141(1) of the English Companies Act, 1929. It was held that Section 372(1) made the court which heard the case the only court which had jurisdiction to give relief in respect of the proceedings which had already been commenced and that with regard to the claim under Section 372(2) the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief can be granted against possible criminal prosecution under sub-section(2) of section 633 of the Act of 1956 or Section 281(2) of the Act, as under Section 372(2) of the English Act. 49. It may be useful to refer to the decision of this Court Y. Venkanna Chowdry [died] and another V. G. Lakshmidevaamma and 20 others reported in 1994 1 L.W. at Page 112 and at Special Page 113, wherein at Paragraph Nos. 18 and 19, it is mentioned as under: 18. We have seen from the facts and of the adjudications that have been made in the process of preparation of the final decree including the impugned order under which all issues as to the objections of defendants 7, 8, 10 and 19 in particular have been disposed of except that the total amount realised from the two pictures by the first defendant and the rate of interest are left to be determined, for which purpose, the learned trial Judge has accounted the statement given on behalf of the contending defendants on the total realisation of the pictures as reflected in Exhibits C-62 and C-63 and on the interest permitted a statement on the outstanding amount due with effect from 29-6-1963 at the rate of 12% with yearly rests till the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by Order 43. Rule 1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote. The second of the types of judgment enlisted in the judgment of the Supreme Court are of two forms : (1) Where the trial judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable, and (2) where the trial judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit, etc. in the latter category, the Supreme Court has pointed out. such an order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger bench. 19. The court has gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the pages to come to the schedule to be balance-sheet in order to ascertain the financial status of the company... Upon an application being filed under Section 633(2) of the Act, the High Court assumes the power and jurisdiction as the court before which the proceedings threatened to be instituted may have been brought. In such a case, the criminal court would have the jurisdiction to acquit the accused, to exonerate the accused or to find him guilty and to sentence him. Section 633(2) does not merely give the discretion to the High Court to pardon a person upon his admission of negligence or breach of trust or misfeasance or default or breach of duty. Upon the High Court coming to the conclusion that the apprehension referred to in the opening words of sub-section(2) was genuine, the High Court, willy-nilly becomes the criminal court in which the complaint against the petitioner may have been brought. The jurisdiction of the High Court in such a case is not limited to pardon the defaulter upon default being admitted or being found. The High Court in such a case may acquit or exonerate the petitioner upon arriving at a conclusion that there was no offence committed. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that officer... had been brought under Sub-Section (1) makes it clear that the High Court in exercise of powers under Sub-section (2) will have the same powers as the court receiving the criminal proceedings. Such expression does not imply that the High Court will exercise only such powers under Sub-Section(2) that the criminal court may, upon the criminal court finding the charged officer guilty. For the criminal court to relieve the charged officer, such court may or may not conclude that the charged officer is liable. There can be no other meaning to the expression 'he is or may be liable' found in Sub-section(1). If the criminal court can relieve a charged officer without coming to any conclusion that the charged officer is actually guilty or is liable for the offence, so can the High court. In taking into account the surrounding circumstances, the criminal court may form a tentative opinion, without a full-fledged trial, as to whether there may not have been any offence at all. In considering whether a charged officer should be relieved, and before conducting the trial at which guilt may be established, the surrounding circumstances that the criminal court can look in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon giving notice to others concerned and not the Registrar. Thus the mandatory requirement of sub-section(3) of S.633 can easily be bypassed. 54. Further, in the aforesaid decision at Pages 18 and 19 at Paragraph Nos. 23 and 24, it is observed as under: 23. Under the Companies Act of 1956 (similarly under the Old Act of 1913) various duties and liabilities have been im-posed; equally offences have been created for the non-performance of such duties. These offences are offences in relation to the performance of certain duties under the Act. the various offences are mentioned under Sections 59, 62, 63, 68, 142, 162, 207, 218, 272, 374, 420, 423, 538 to 545 606. 24. The expression 'any proceeding' occurring under Section 633 cannot be read out of context and treated in isolation. It must be construed in the light of the penal provisions. Otherwise what will happen is the penal clauses under the various other Acts would be rendered ineffective by application of Section 633. Again, if parliament intended Section 633 to have a coverage wider than the Act, it would have specifically provided for it as, otherwise, it is a sound rule of Construction to confine the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... might be made against him in regard to negligence, default, breach of duty misfeasance or breach of trust. Now, it is clear that whereas Sub-section (1) refers to proceedings already commenced, Sub-section (2) contemplates a claim which is anticipated as one which might be made in future. Under Sub-section (1) the important words are the Court hearing the case which obviously mean the Court before which a proceeding is pending. These words, therefore, mean that it would not be this Court which can grant relief under Sub-section (1) but the Court before whom the proceeding has commenced and is pending. Sub-section (2) on the other hand creates a fiction and provides that in respect of an apprehended claim this Court shall have the same power to grant relief as it would have had under this section if it had been the Court before which proceedings for negligence default, breach of duty, misfeasance or breach of trust had been brought. 5. The question then is what meaning should be attached to the word claim occurring in Sub-section (2) and whether the word claim would also include proceedings such as penal proceedings under Section 162 read with Section 220 of the Act. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction of the word claim in Section 633(2) . Further, in the aforesaid decision at Special Page 247 wherein at Paragraph No. 10 it is observed as follows: 10. As already pointed out, the important words in Sub-section (2) of Section 633 are the Court ..... shall have the same power to relieve him as it would have had under this section if it had been a Court before which proceedings against that person for negligence ..... had been brought. These words, in my view mean proceedings described in Sub-section (1) including proceedings involving fines and penalties in respect of which, if already commenced only the Court which they are pending has the authority to grant relief but which if not pending or already commenced it would be this Court which would have jurisdiction to grant as if it had been a Court before which proceedings had been brought. In this view I have no difficulty in holding that I have the jurisdiction to grant relief under Sub-section (2) of Section 633 in respect of a proceeding which the petitioners apprehend might be adopted against them for their omission to file the balance sheet and profit and loss account for the year 1955-56. 57. A glimps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal is not traversing upon the merits of the controversies / disputes between the parties and also not expressing any opinion on the merits of the controversies in pending Company Petition No. 297 of 2013, on the file of this Court. 58. Also, this Court points out that the decisions of various High Court cited on behalf of the Appellant in the present O.S.A. No. 393 of 2013 where the criminal prosecutions were initiated by Registrar of Companies/Statutory Authority after issuance of show cause notices to the concerned person(s) and thereby making them aware / bringing it to their knowledge well in advance about the anticipated / apprehended / prospective/contemplated proceedings. But in the present case on hand, the Appellant is the complainant in C.C. No. 107 of 2013 on the file of trial Court. 59. There is no Second Opinion of a very significant fact that the power under Section 633(2) of the Companies Act can be exercised by the High Court with great care, caution and circumspection based on the facts and circumstances of the given case, which float on the surface. 60. In view of the aforesaid qualitative and quantitative discussions, after carefully considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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