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TMI Blog1960 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. I, Badri Narain, was its director from the very inception of the company. The accused No. 2 was appointed as director of the company on November 1, 1946. That the company advanced a loan of Rs. 1,800 to M/s. Badri Narain Hari Narain, Chomu, in the year 1955 in which the accused No. 1. was interested as a partner, in contravention of section 86D of the Indian Companies Act, 1913. The loan was granted on interest at the rate of 6 per cent. A part recovery was made and the balance of Rs. 550 was stated to be due to the company. As regards Nandlal, it was stated that the company advanced a loan of Rs. 2,ooo in the year 1948 to M/s. Chandalal Fatehlal, Chorau, in which accued No. 2 is interested as a member of Hindu undivided family in contravention of section 86D, Indian Companies Act, 1913. The loan was granted at the rate of 6 per cent, interest. There was a repayment for a the loan and Rs. 268-12-6 was stated to be due to the company. The two accused were charged with having wilfully contravened the provisions of section 86D of the Indian Companies Act, 1913, and it was prayed that they should be tried and convicted for these offences. Both the accused admitted that Vyapar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act there was no report made to the Central Government and no direction was obtained from the Central Government for launching the prosecution. The Deputy Government Advocate's answer to this contention is that in the first instance the petitioners never raised this objection during the course of the trial and in the absence of any objection it was not possible for the complainant to lead evidence to show that there was in fact a reference to the Central Government and that notice was duly served on the petitioners and that there was a direction of the Central Government for prosecution of the petitioners. Secondly, it was argued that the provisions of sections 237(6) and 455(6) are concerned with the administration of the company law and regulate the pre-trial action of the registrar or the liquidator. They cannot be treated to regulate the actions of the criminal courts either in the matter of taking cognizance or in the matter of the mode of trial. A non-compliance of these provisions, it was submitted by the Deputy Government Advocate, cannot vitiate the trial. In support of this contention the Deputy Government Advocate strongly relied upon an observation made in Sailendra N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith offences under the Penal Code, they must be regarded to so regulate in connection with offences under the company law. The general principles, the scheme and the language of the relevant provisions unmistakably point out that they are intended to regulate the actions of the registrar or liquidator or other authorities under the company law in connection with the administration of the company law and cannot be taken to regulate the trials by criminal courts. It follows that the trials completed by the criminal courts cannot be allowed to be vitiated on account of the prior non-compliance by the authorities under the Companies Act, of certain provisions made for their guidance in connection with the initiation of prosecutions and no judgment, order or sentence passed after trial should be reversed on account of error or irregularity committed in these pre-trial matters. It will be proper to treat them like irregularities committed in the course of investigation not affecting the validity of the trial. The objection on the ground of non-compliance with the relevant provisions of law is without force and must be rejected. The learned counsel for the petitioners then referred to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment to the transaction or enforce the repayment of the loan made, or in connection with which the guarantee was given or the security was provided, notwithstanding any agreement to the contrary." Sub-section (4) makes contravention of sub-section (3) punishable. Obviously sub-section (3) provides for the regularisation of old loans and guarantees or securities by enabling the companies to obtain approval of the Government after the promulgation of the new law within the time prescribed. It is contended on behalf of the petitioners that it is open to the companies to obtain approval of the Central Government for all old loans and guarantees after the promulgation of the new Act and thereby regularise them. They thereafter cannot be the subject matter of offences under the old law. The legislature has thus impliedly provided that omissions under the old law should not remain punishable after the new Act. Mr. Gupta's answer to this contention is that sub-section (3) is not intended to validate old transactions of loans and guarantees which were prohibited under the old law but provides for only those transactions which were valid under the old law but which have become invalid on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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