2001 (4) TMI 846 - HC - Companies Law

Summary

Issues:
1. Applicability of Act No. 44 of 1997 to the petitioners
2. Validity of the order passed by the court below

Analysis:
1. Applicability of Act No. 44 of 1997 to the petitioners:
The petitioners, A4 and A6, were charged under sections 120B, 409, and 420 of the Indian Penal Code, along with section 5. The case involved a criminal conspiracy to cheat the public by collecting deposits through various schemes. The Act in question aimed to protect public deposits in financial establishments. The petitioners argued that since the alleged offences occurred before the Act came into force, they should not be charged under section 5. However, the court held that the Act applied as it focused on defaults in repayment of deposits and interest, which occurred after the Act's commencement. The court emphasized that the Act aimed to safeguard depositors from fraudulent practices by financial institutions. The petitioners' liability would be determined during trial based on legal evidence, and the charges were deemed appropriate.

2. Validity of the order passed by the court below:
The petitioners contended that the Special Court lacked jurisdiction to try the case without committal and that the charges under section 5 were improper. They argued that the offences could be tried by a First Class Magistrate, allowing them the right of appeal to the Sessions Court. The petitioners also cited constitutional provisions to support their argument against retrospective application of the Act. However, the court upheld the lower court's decision, stating that the Act was applicable due to defaults occurring after its enactment. The court emphasized that the Act aimed to address fraudulent practices by financial establishments and protect depositors. The court rejected the petitioners' arguments based on previous case laws, highlighting the Act's intent to benefit depositors. Ultimately, the court dismissed the revision, affirming the charges against the petitioners under section 5 and other relevant sections of the Indian Penal Code, thereby upholding the lower court's order.

In conclusion, the judgment clarified the applicability of the Act to the petitioners based on the timing of the alleged defaults and emphasized the Act's purpose of safeguarding depositors. The court upheld the charges under section 5 and other sections of the Indian Penal Code, dismissing the petitioners' arguments against the lower court's order and affirming the jurisdiction of the Special Court to try the case without committal.