TMI Blog2023 (5) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall not be liable to be punished twice for the same offence. The word civil court appearing herein above could not be read as criminal court. If the intention of the Legislature was to exclude the provisions of Indian Penal Code, with regard to the offences investigated under Companies Act, then nothing had prevented the Legislature from making such a provision. Even otherwise, it is a well established principle of law that the exclusion of the jurisdiction of the Court has to be specific and cannot be inferred, and the provisions excluding the jurisdiction have to be construed strictly. Thus, in the considered opinion of this Court the word Civil Court , emerging in this section cannot be read as Criminal Court . Prima facie, there are specific allegations made by opposite party no. 2 in the FIR's lodged by him and the Investigating Officer having conducted investigation by collecting the material and recording the statements of the witnesses under Section 161 of the Cr.P.C. and considering the same, filed the charge sheet - The Court has to consider whether from allegations contains in FIR and material collected during the course of investigation prima facie any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gomti Nagar, Lucknow East by opposite party no.2 namely Prashant Singh against the applicants Vandana Yadav and Vivek Yadav alleging that the applicant Vandana Yadav was a Director of M/s Piscesia Power Transmission Pvt. Limited (hereinafter to be referred as P.P.T.P.L.) along with the informant and the lurement given by the applicant Vandana Yadav and her husband Vivek Yadav, the informant Prashant Singh had transferred Rs. 1,33,20,000/-in their company namely M/s Viva Infratech Private Limited wherein the informant was also a Director for sometime and the money, which was transferred by the informant, was pertaining to the purchase of a commercial plot at Ghaziabad Development Authority and the informant was having half share of the same and the applicants had also assured the informant that the registry of the plot would be executed in his favour also, but neither the sale deed was executed in his favour nor the money, which was given by the informant to the applicants was returned back and the same has been misappropriated. The investigating officer after investigation has submitted charge sheet against the applicants Vandana Yadav and Vivek Yadav under Sections 409, 420 I.P.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormant Prashant Singh is the Director and share holder of P.P.T.P.L. and the said company was established by him using his own means and capital and he is the founding Director and share holder of the company. It is also stated that the applicant Smt. Vandana Yadav was also a Director and share holder of the company. Initially the registered office of this company was at Vikas Nagar thereafter it was shifted to Vibhuti Khand, Gomti Nagar, Lucknow in the property owned by the informant. It is alleged that the applicants/accused persons in furtherance of a conspiracy has overtaken the management of the company, while only Rs. 28 lakhs were invested by Smt. Vandana Yadav in the year 2014 while rest of the capital was arranged by the informant and the accused persons in furtherance of the conspiracy has also included another business unit namely Ekai M/s Bigha Infraventure Private Limited without investing any capital and the accused/applicant Tushar Nagar, who is the chartered accountant, had obtained signature of the informant on blank papers and all accused persons have misappropriated the capital of the company and in furtherance of the same accused/applicants Vandana Yadav has syp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 Prashant Singh on 15.11.2021 at Police Station Gomti Nagar, Lucknow East against the accused persons namely Vandana Yadav, Vivek Yadav, Tushar Nagar and Manoj Kumar Singh alleging therein that the informant is the Director and share holder of P.P.T.P.L. and on an internal assessment made certain financial irregularities had emerged for which the former directors of the company namely Smt. Vandana Yadav, Vivek Yadav and the then chartered accountant Tushar Nagar were responsible, who in connivance with each other were causing huge loss to the company. It is also alleged that the informant had filed a petition before the National Company Law Tribunal, Allahabad. The company is working at various projects and payment of the same is being credited in account maintained at Dena Bank, Hazaratganj Branch, Lucknow and from this bank credit facility as well as bank guarantee has also been made available and with regard to that the personal properties of the informant are mortgaged, however, the accused Vivek Yadav in connivance with other accused persons has opened a new bank account at Bank of Maharashtra, Gomti Nagar Branch, Lucknow and requested that payment of the above mentioned p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge sheet by taking proceedings in accordance with law. 12. It is vehemently submitted that the First Information Reports pertaining to the above mentioned cases have been filed with evident malafide as the informant/opposite party no.2 failed to obtain desired relief from the National Company Law Criminal. 13. Elaborating further, it is submitted that all the First Information Reports lodged by the opposite party no.2 pertaining to which charge sheet has also been filed primarily relate to the disputes which are in relation to the administration of the Company and the dispute is admittedly pending for consideration before the National Company Law Tribunal, Allahabad is purely of civil in nature and the same has been given the colour of the criminal prosecution. 14. It is vehemently submitted that the informant/opposite party no.2 had earlier invoked the jurisdiction of N.C.L.T, Allahabad by filing a petition under the relevant provision of the Companies Act and when he did not get the desired order as prayed by him in those proceedings pending before the N.C.L.T., four First Information Reports have been lodged on the same day. 15. While referring to various documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of his submissions and written submissions have relied on following case laws:- 1. Doraisamy and another vs. State. 2. Sri Ramdas Motor Transport Ltd. vs. Tadi Adhinarayana Reddy [(1997) 5 SCC 446]. 3. State of Haryana Ors. vs. Bhajan Lal Ors. [1992 Supp(1) SCC 335]. 4. Vijay Kumar Ghai Ors. vs. State of West Bengal Ors. [ (2022) 7 SCC 124 ]. 5. Mitesh Kumar J. Sha vs. State of Karnataka 6. R. Nagender Yadav vs. The State of Telangana 7. Ramesh Dahyalal Shah vs. State of Maharashtra 8. Usha Chakraborty Anr. Vs State of West Bengal Anr. 9. Radheshyam Kejriwal vs. State of West Bengal Anr. (2011) 3SCC 581]. 10. Commercial Tax Officer, Rajasthan vs. Binani Cements Limited [(2014) 8 SCC 319 ]. 11. G. Sagar Suri Anr. vs. State of U.P. Ors. [ (2000) 2 SCC 636]. 12. Mehmood Ul Rehman vs. Khazir Mohammad Tunda Ors. [(2015) 12 SCC 420]. 13. Sanjay Jain Anr. vs. State of U.P. Anr. [ passed by the Hon'ble Allahabad HC, Order dated 09.05.2022 ( Application u/s 482 no. 25587 of 2021) ]. 14. L.I.C. of India vs. Escorts Ltd. Ors. [(1986) 1 SCC 264 ]. 15. Tata Consultancy Services Ltd. vs. Cyrus Investments pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Board. 25. It is also submitted that the accused persons have fraudulently acquired majority in the shareholding of the Company. The shares have been transferred without any proper valuation and the accused persons did not even pay the share money in full. 26. Learned counsel representing the informant/opposite party no.2 while referring to various documents and references of the case diary, submits that the accused persons have committed criminal breach of trust, cheating, forgery in order to defraud the company and the informant of a huge amount. 27. It is also submitted that the provision contained in the Companies Act, 2013 may not bar the institution of criminal proceedings or prosecution under various and relevant penal sections of Indian Penal Code. 28. While referring to the judgment of Doraisamy (supra) passed by the Madras High Court, it is submitted that the relevant provision of Companies Act may create a bar only with regard to the parallel proceedings of the civil court as contemplated under Section 430 of the Companies Act and the Companies Act nowhere creates on bar for proceedings of criminal prosecution and this issue has not been considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors.[ (2015) 11 SCC 145 ]. 26. K.D. Sharma vs. Steel Authority of India Ltd. ors. [ (2008) 12 SCC 481]. 27. Smt. Ramendri vs. State of U.P. anr. [ passed by the Hon'ble Allahabad High court in Application u/s 482 no. 5094 of 2021 ]. 31. It is submitted that if by the same set of facts criminal and civil rights are emerging the exercise of civil right shall not be a bar for criminal prosecution. 32. Learned counsel for informant/opposite party no.2 has also relied on the law laid down in Priti Sarraf and another Vs. NCT Delhi 33. While referring to the summoning order and cognizance taking order passed by the Chief Judicial Magistrate, Lucknow, it is vehemently submitted that at the stage of taking cognizance and issuance of summons detailed reasons and meticulous examination of the evidence/material collected by the Investigating Officer is not required. 34. It is also submitted that in Amit Kapoor Vs. Ramesh Chander anr. (2012)9 SCC 460, it is held by the Hon'ble Supreme Court that merely a civil dispute may arise from the same set of facts, the same ipso facto would not preclude an offender from criminal prosecution. 35. While referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the procedure in the Companies Act with regard to the investigation has been provided only pertaining to the technical financial irregularities committed by its office bearers in the management of the company, however, if a substantive penal offence has been committed by any of the office bearers of the company, the F.I.R. is to be recorded as it is mandatory for S.H.O. of any police station to lodge an F.I.R., which has been given mentioning the commission of cognizable offences. 38. It is also submitted that after thorough investigation the investigating officer has submitted charge sheets and the magistrate has also taken cognizance of the offences and therefore, keeping in view the fact that at the stage of taking cognizance and issuing process meticulous examination of evidences or material collected by the investigating officer is not required, no irregularity or illegality has been committed by the trial court either in taking cognizance of the offences or in issuing process against the applicants, as prima facie commission of cognizable offences is reflected. It is also contended on behalf of the informant/opposite party no.2 that the accused persons/applicants have co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies his mind to the allegations and thereafter takes judicial notice of the offence. This is the position whether the Magistrate takes cognizance of an offence on a complaint, or on a police report, or upon information of a person other than a police officer. Therefore, when a Magistrate takes cognizance of an offence upon a police report, prima facie he does so of the offence or offences disclosed in such report. In Kishun Singh and Ors. v. State of Bihar (1993) 2 SCC 16, the Court reiterated the position that when the Magistrate takes notice of the accusations and applies his mind to the allegations made in the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he is said to have taken cognizance of the offence. It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender. In S.K. Sinha, Chief Enforcement Officer v. Videocon International Limited and Ors. (2008) 2 SCC 492, it was held that Taking cognizance does not involve any formal action of any kind. It occurs as soon as a Magistrate app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable person to dismiss and condemn the factual basis of the accusations as false. (iii) Step three, whether the material relied upon by the accused, has not been refuted by the prosecution/complainant; and/or the material is such, that it cannot be justifiably refuted by the prosecution/complainant? (iv) Step four, whether proceeding with the trial would result in an abuse of process of the court, and would not serve the ends of justice? If the answer to all the steps is in the affirmative, judicial conscience of the High Court should persuade it to quash such criminal proceedings, in exercise of power vested in it under Section 482 of the Code of Criminal Procedure. Such exercise of power, besides doing justice to the accused, would save precious court time, which would otherwise be wasted in holding such a trial (as well as, proceedings arising therefrom) specially when, it is clear that the same would not conclude in the conviction of the accused. 42. In Ahmad Ali Quraishi and Ors. Vs. The State of Uttar Pradesh and Ors., Hon'ble Supreme Court while considering the scope of extra ordinary powers contained under section 482 CrPC held as under:- 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out a case against the Accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated Under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the Accused. (6) Where the 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 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 malafide 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. 12. This Court time and again has examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. The following was laid down in para 6: (SCC p. 94) 6. ... All courts, whether civil or criminal possess, in the absence of any express provision, has inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in course of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsa esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the Section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the Section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emn proceeding which cannot be allowed to be converted into an instrument of operation or harassment. When there are materials to indicate that a criminal proceeding is manifestly attended with mala fide and proceeding is maliciously instituted with an ulterior motive, the High Court will not hesitate in exercise of its jurisdiction Under Section 482 Code of Criminal Procedure to quash the proceeding under Category 7 as enumerated in State of Haryana v. Bhajan Lal, which is to the following effect: (SCC p. 379, para 102) 102. (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. 43. Perusal of the record in light of the law laid down by Hon'ble Supreme Court referred to herein-before would reveal that in nutshell the allegations against the applicants in the above mentioned four cases are to the tune that the informant/opposite party no.4 Prashant Singh and the applicant Vandana Yadav were Directors of M/s P.P.T.P.L. and on lurement given by Vandana Yadav and Vivek Yadav Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion reports and in the statement of prosecution witnesses may not be confined only with the management of the company and thus it could not be said that alleged offences on the basis of first information reports have been lodged by the opposite party no.2/informant are confined to the mismanagement of the company. 45. Thus the First Information Reports are not confined only to the allegations of mismanagement of the company and fraud committed during the course of such management. 46. Now coming to the submission that when specific procedure has been provided under Companies Act, 2013, the Criminal prosecution of the applicants under IPC would be barred. 47. I have gone through the Companies Act 2013, and have not found any provision, which ousts the applicability of the provisions of Indian Penal Code. 48. At this stage it is worthwhile to recall section 26 of the General Clauses Act, which reads as under ''26. Provision as to offences punishable under two or more enactments.-Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hat Singh and Ors., while considering the similar issue opined as under :- 15. The leading Indian authority in which the rule against double jeopardy came to be dealt with the interpreted by reference to Article 20(2) of the Constitution is the Constitution Bench decision in Maqbul Hussain v. State of Bombay 1983ECR1598D(SC) . If the offences are distinct, there is no question of the rule as to double jeopardy being extended and applied. In State of Bombay v. S.L. Apte and Anr., 1961CriLJ725 , the Constitution Bench held that the trial and conviction of the accused Under Section 409 IPC did not bar the trial and conviction for an offence Under Section 105 of Insurance Act because the two were distinct offences constituted or made up of different ingredients though the allegations in the two complaints made against the accused may be substantially the same. In Om Prakash Gupta v. State of UP, 1957CriLJ575 and The State of Madhya Pradesh v. Veereshwar Rao it was held that prosecution and conviction or acquittal Under Section 409 of IPC do not debar the accused being tried on a charge Under Section 5(2) of the Prevention of Corruption Act, 1947 because the two offences are not id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully, prima facie we are of the view that there is no complete and absolute bar in prosecuting persons under the Penal Code where the offences committed by persons are penal and cognizable offence.'' 56. Hon'ble single judge of Punjab And Haryana High Court in Dhanpreet Singh and Ors. vs. State of Punjab, while considering the similar question has relied on a judgment of Hon'ble Supreme Court in the case of State of Maharashtra Vs. Sayyad Hassan Sayyad Subhan, by judgment dated 20-9-2018, passed in Criminal Appeal No. 1195 of 2018 has held as under :- ''13. The argument of the petitioners that the prosecution of the petitioners could at best only be carried out under the Factories Act, 1948 is concerned, the same is found to be without any force also for the reason that Section 26 of the General Clauses Act deals with provisions when an offence is punishable in 2 or more enactments. The same is reproduced as under:- 26. Provision as to offences punishable under two or more enactments. Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court on the first point.'' 57. Hon'ble Supreme Court in Kanwar Pal Singh vs. The State of Uttar Pradesh and Ors. (18.12.2019-SC) : while considering the similar issue held as under :- Section 26 of the General Clauses Act permits prosecution for 'different offences' but bars prosecution and punishment twice for the 'same offence' under two or more enactments. The expression 'same offence' has been interpreted by this Court in numerous decisions viz., Maqbool Hussain v. State of Bombay AIR 1953 SC 325 with reference to the provisions of the Sea Customs Act and the Foreign Exchange Regulation Act, 1947; Om Parkash Gupta v. State of U.P. AIR 1957 SC 458 and State of Madhya Pradesh v. Veereshwar Rao Agnihotri AIR 1957 SC 592 with reference to Section 409 of the Indian Penal Code and Section 5(2) of the Prevention of Corruption Act; T.S. Baliah v. ITO AIR 1969 SC 701 with reference to Section 52 of the Income Tax Act, 1922 and Section 177 of the Indian Penal Code; Collector of Customs v. Vasantraj Bhagwanji Bhatia (1988) 3 SCC 467, with reference to the provisions of the Customs Act 1962 and the provisions of the Gold (Control) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the police alleging contravention of the said Act. In other words, the prohibition contained in Section 22 of the Act against prosecution of a person except on a complaint made by the officer is attracted only when such person is sought to be prosecuted for contravention of Section 4 of the Act and not for any act or omission which constitutes an offence under the Penal Code. 71. However, there may be a situation where a person without any lease or licence or any authority enters into river and extracts sand, gravel and other minerals and remove or transport those minerals in a clandestine manner with an intent to remove dishonestly those minerals from the possession of the State, is liable to be punished for committing such offence Under Sections 378 and 379 of the Penal Code. 72. From a close reading of the provisions of the MMDR Act and the offence defined Under Section 378 Indian Penal Code, it is manifest that the ingredients constituting the offence are different. The contravention of terms and conditions of mining lease or doing mining activity in violation of Section 4 of the Act is an offence punishable Under Section 21 of the MMDR Act, whereas disho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent enactments, but the bar is only with regard to the punishment of the offender twice for the same offence. Where an act or an omission constitutes an offence under two enactments, the offender may be prosecuted under either or both enactments but shall not be liable to be punished twice for the same offence. 59. At this stage Section 430 of Companies Act is also relevant which reads as under : ''430. Civil court not to have jurisdiction.-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal. 60. The word civil court appearing herein above could not be read as criminal court. If the intention of the Legislature was to exclude the provisions of Indian Penal Code, with regard to the offences investigated under Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifle proceedings by entering into merits of the contentions made on behalf of the accused. Criminal complaints could not be quashed only on the ground that, allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out , Criminal proceeding shall not be interdicted. 62. Hon'ble Supreme Court in State of Gujrat Vs Afroz Mohammed Hasanfatta reported in while considering the need of the magistrate to record reasons for taking of cognizance and issuance of summons in cases based on police report (Charge Sheet), while considering the difference in the cases instituted on complaint and the cases wherein charge sheet has been filed, framed point mentioned below and answered it as under:- While directing issuance of process to the Accused in case of taking cognizance of an offence based upon a police report Under Section 190(1)(b) Code of Criminal Procedure, whether it is mandatory for the court to record reasons for its satisfaction that there are sufficient grounds for proceeding against the Accused? 19. ................ in Raj Kumar Agarwal v. State of U.P. and Anr. 1999 Cr. LJ 4101, Justice B.K. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Criminal Procedure and held as under: 21. Under Section 190(1)(b) Code of Criminal Procedure, the Magistrate has the advantage of a police report and Under Section 190(1)(c) Code of Criminal Procedure, he has the information or knowledge of commission of an offence. But Under Section 190(1)(a) Code of Criminal Procedure, he has only a complaint before him. The Code hence specifies that a complaint of facts which constitute such offence . Therefore, if the complaint, on the face of it, does not disclose the commission of any offence, the Magistrate shall not take cognizance Under Section 190(1)(a) Code of Criminal Procedure. The complaint is simply to be rejected. 21. In summoning the Accused, it is not necessary for the Magistrate to examine the merits and demerits of the case and whether the materials collected is adequate for supporting the conviction. The court is not required to evaluate the evidence and its merits. The standard to be adopted for summoning the Accused Under Section 204 Code of Criminal Procedure is not the same at the time of framing the charge. For issuance of summons Under Section 204 Code of Criminal Procedure, the expression used is ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet is barred by law or where there is lack of jurisdiction or when the charge sheet is rejected or not taken on file, then the Magistrate is required to record his reasons for rejection of the charge sheet and for not taking on file. (Emphasis Mine) 63. Thus a distinction has been made by the Hon'ble Supreme Court between the cognizance taken on a complaint and on Charge Sheet, which has been filed in the court after investigation and had also been weighed by a superior officer of police. 64. In Skoda Auto Volkswagen India Private Limited v. The State of Uttar Pradesh, Hon'ble Supreme Court held as under :- 41. It is needless to point out that ever since the decision of the Privy Council in King Emperor v. Khwaja Nazir Ahmed AIR 1945 PC 18, the law is well settled that Courts would not thwart any investigation. It is only in cases where no cognizable offence or offence of any kind is disclosed in the first information report that the Court will not permit an investigation to go on. As cautioned by this Court in State of Haryana v. Bhajan Lal (1992) Supp. (1) SCC 335, the power of quashing should be exercised very sparingly and with circumspection and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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