1973 (3) TMI 79 - HC - Companies Law

Investigation of the affairs of a company Investigation of company s affairs in other cases Production

Summary

Issues Involved:
1. Legality of search warrants issued by the Chief Presidency Magistrate.
2. Authority of the Company Law Board to lodge a complaint with the Central Bureau of Investigation (CBI).
3. Alleged discrimination and violation of Article 14 of the Constitution.
4. Jurisdiction of the CBI to investigate offences under the Indian Penal Code (IPC) in relation to company affairs.
5. Whether the Companies Act is exhaustive and precludes the application of the Criminal Procedure Code (CrPC).

Detailed Analysis:

1. Legality of Search Warrants Issued by the Chief Presidency Magistrate:
The appellants challenged the search warrants issued by the Chief Presidency Magistrate, Egmore, Madras, arguing that the warrants were issued without proper grounds. The court found that the warrants were issued after the Magistrate examined Mr. Charanjiv Lall on oath and was satisfied that the documents were necessary for the investigation and would not be produced voluntarily by the company. The court held that the Magistrate was not required to record his reasons in writing and that the issuance of the search warrants was in accordance with Section 96 of the CrPC. Consequently, the court dismissed the writ appeals seeking to quash the search warrants.

2. Authority of the Company Law Board to Lodge a Complaint with the CBI:
The appellants contended that the Company Law Board, being a statutory authority, could only exercise powers conferred by the Companies Act and that the Act did not authorize it to lodge a complaint with the CBI for investigation under the CrPC. The court held that while the Companies Act is a self-contained code, it does not preclude the application of the CrPC for investigating cognizable offences under the IPC. The court found that the laying of information before the police by the Company Law Board was incidental to its statutory duties and did not contravene any provisions of the Companies Act.

3. Alleged Discrimination and Violation of Article 14 of the Constitution:
The appellants argued that the Company Law Board's action in choosing to lodge a complaint with the CBI instead of ordering an investigation under Section 237 of the Companies Act was discriminatory and violated Article 14 of the Constitution. The court found that the procedures under the Companies Act and the CrPC are different and serve different purposes. The court held that the Central Government or the Company Law Board has the discretion to choose the appropriate procedure and that such discretion does not violate Article 14. The court dismissed this ground as untenable.

4. Jurisdiction of the CBI to Investigate Offences under the IPC in Relation to Company Affairs:
The appellants challenged the jurisdiction of the CBI to investigate offences under the IPC in relation to company affairs, arguing that the Companies Act provides an exhaustive procedure for such investigations. The court held that the Companies Act does not exclude the application of the CrPC for investigating cognizable offences under the IPC. The court found that the provisions of the Companies Act and the CrPC are not repugnant to each other and can coexist. The court upheld the jurisdiction of the CBI to investigate the offences.

5. Whether the Companies Act is Exhaustive and Precludes the Application of the CrPC:
The appellants argued that the Companies Act is exhaustive and precludes the application of the CrPC for investigating offences in relation to company affairs. The court held that the Companies Act does not contain any provisions that would exclude the application of the CrPC. The court found that the Act is not exhaustive in the matter of investigating cognizable offences under the IPC and that the CrPC applies to such investigations. The court dismissed the contention that the Companies Act precludes the application of the CrPC.

Conclusion:
The court dismissed all the writ appeals, upholding the legality of the search warrants, the authority of the Company Law Board to lodge a complaint with the CBI, the jurisdiction of the CBI to investigate offences under the IPC, and the application of the CrPC in relation to company affairs. The court found no grounds for issuing writs of certiorari or mandamus and held that the actions of the Central Government, the Company Law Board, and the CBI were in accordance with law.