9911796707
TMI Blog1973 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of writs of mandamus directing the first respondent therein, the Company Law Board, to withdraw the complaint lodged by it with the Central Bureau of Investigation and to refrain from prosecuting their investigation or taking any further action in the matter of the alleged violation of sections 420, 477 and 120-B of the Indian Penal Code in relation to the appellant-companies. The first appellants in these writ appeals, namely, the Indian Express (Madurai) Private Ltd., the Express Newspapers Private Ltd. and the Andhra Prabha Private Ltd., are the subsidiaries of the Indian Express Newspapers (Bombay) Private Ltd. The aforesaid group of companies owns, prints and publishes newspapers and periodicals from different centres in India, such as Madras, Madurai, Vijayawada, etc. The second appellant in these writ appeals is R. N. Goenka, who at all material times was and is still connected with the aforesaid companies as managing director, director or shareholder. During August-September, 1969, one Mr. N. H. Iyer, an officer of the Company Law Board, inspected the books of accounts of the Express Newspapers Private Ltd., Madras, and the Indian Express (Madurai) Private Ltd., u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions quoted in the report satisfied the requirements of section 237(b) of the Companies Act for ordering an investigation. After considering that report, the Company Law Board, instead of ordering an investigation under section 237(b) of the Companies Act, preferred on April 2, 1971, a complaint to the Director of the Central Bureau of Investigation and that complaint was registered on April 19, 1971, by the Central Bureau of Investigation for offences under sections 120-B, 420 and 477-A of the Indian Penal Code. On June 7, 1971, on the application of Sri Charanjiv Lall, Deputy-Superiadent of Police, CBI/SPE/STU, North Block, New Delhi, camping at Madras, praying for the issue of search warrants under section 96, Criminal Procedure Code, for searching various places including the office of Andhra Prabha Private Ltd., Express Estates, Mount Road, Madras, the office of M/s. Express Newspapers Private Ltd., Express Estates, Mount Road, Madras, the office of M/s. Express Newspapers (Bombay) Private Ltd., at Express Estates, Mount Road, Madras, and the office of the Indian Express (Madurai) Private Ltd., at the Express Estates, Mount Road, Madras, the Chief Presidency Magistrate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency of the police for making an investigation under the provisions of the Criminal Procedure Code, and prosecuting the offenders for offences committed by the officers of the company in relation to the affairs of the company, even though those offences would also be offences under the Indian Penal Code, and in laying the information before the police for them to investigate and prosecute, the Company Law Board had acted illegally or without jurisdiction in the sense that it had done an act which was impliedly prohibited and consequently the information laid before the Central Bureau of Investigation should be considered as non est and as a result thereof the registering of that information as a First Information Report by the Special Police Establishment and the subsequent action taken by the police during the course of their investigation such as the applying for and obtaining search warrants and searching the premises of the appellants, should be held to be without jurisdiction. These contentions did not find acceptance at the hands of the learned judge, Ramaprasada Rao J. Mr. M. K. Nambiar, on behalf of the appellants, has contended before us that the Companies Act being a sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional ground, in these appeals. But in view of the fact that this ground was not pressed before the learned judge, we are not permitting the appellants to raise that ground before us and C.M.Ps. Nos, 4262 and 4263/72 are, therefore, dismissed. The contention that the act of the Company Law Board in laying a complaint to the police is violative of article 14 of the Constitution was also not raised before the learned judge; but C.M.Ps. Nos. 4029 and 4030 of 1972 have been filed before us, seeking permission to raise that ground as an additional ground of appeal. Mr. Nambiar, the learned counsel for the appellants, has contended that this ground being a pure question of law can be raised at a late stage, even in appeal and where such a question of law is raised as an additional ground, it is in the discretion of the High Court either to allow it or not. In support of that contention of his, he has cited the decision of the Supreme Court in Chittoori Subbanna v. Kudappa Sublanna A.I.R. 1965 S.C. 1325, 1338. There it was held by the Supreme Court: "A pure question of law not dependent on the determination of any question of fact should be allowed to be raised for the first time in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated only under the provisions of the Companies Act and there is also no provision in the Companies Act relating to laying of information to the police and as such the laying of the complaint to the Central Bureau of Investigation by the Company Law Board was within the competence of the Company Law Board and was in accordance with law. He has pointed out that there is a vital difference between laying of the information before the police by the Company Law Board, followed by an investigation under the Criminal Procedure Code and an investigation into the affairs of a company by the Company Law Board under the provisions of the Companies Act followed by a prosecution under section 242 of the Companies Act and has argued that the scope of the aforesaid two procedures are different and, in the circumstances of this case, if thought fit, the Company Law Board was well within its right in laying the information before the police and the police who have not only a statutory right, but are also statutorily bound, to investigate into the information so received, have rightly carried on the investigation under the provisions of the Code of Criminal Procedure and the issue of the search war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the inherent nature of a Code is that it is exhaustive in regard to the matters specifically provided for in it. The Indian Companies Act is an Act to consolidate and amend the law relating to companies and certain other associations. "The purpose of a consolidating statute is to present the whole body of the statutory law on a subject in complete form, repealing the former statutes". (Halsbury's Laws of England, third edition, volume 36, page 366). The essence of a code is to be exhaustive on the matters in respect of which it declares the law and it is not the province of a judge to disregard or go outside the letter of the enactment according to its true construction. The whole scheme of the Companies Act is to ensure proper conduct of the affairs of companies in public interest, and the preservation of the image of the company in the eyes of the public, and in the interests of the members of the company and also the creditors to ensure that the affairs of the company are conducted in a proper manner and its transactions are above suspicion. It is to ensure this that the various provisions under the Companies Act have been devised and returns have been prescribed for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation or such books and papers discloses an unsatisfactory state of affairs or does not disclose a full and fair statement of any matter to which the document purports to relate, the Registrar shall report in writing the circumstances of the case to the Central Government. Sub-section (7) of section 234 further confers power on the Registrar to call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein, if it is represented to the Registrar on materials placed before him by any contributory or creditor or any other persons interested, that the business of the company is being carried on in fraud of its creditors or of persons dealing with the company or otherwise for a fraudulent or unlawful purpose. Then under section 235 of the Companies Act the Central Government is given the power and discretion to appoint one or more persons as inspectors to investigate the affairs of any company and to report thereon in such manner as the Central Government may direct,- (a)in the case of a company having a share capital, on the application either of not less than two hundred members or of members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naging director or as manager, who is, or was at the relevant time, either the managing agent or the secretaries and treasurers or the managing director or the manager of the company; or (ii)by any person who is, or was at the relevant time, an associate of the managing agent or secretaries and treasurers of the company; or (iii)by any person of whom the managing agent or secretaries and treasurers of the company is, or was at the relevant time, an associate; (c)any other body corporate which is, or has at any relevant time been, managed by the company or whose board of directors comprises of nominees of the company or is accustomed to act in accordance with the directions or instructions of- (i)the company; or (ii)any of the directors of the company; or (iii)any company any of whose directorships is held by the employees or nominees of those having the control and management of the first mentioned company; or (d)any person who is or has at any relevant time been the company's managing agent or secretaries and treasurers or managing director or manager or an associate of such managing agent or secretaries and treasurers, the inspector shall, subject to the provisions of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government in relation to the affairs of the company, etc. Power is conferred also by means of section 240A for the seizure of documents by the inspector. Then, under section 241, provision is made for making a report by the inspector on the conclusion of the investigation made under section 239. These provisions have been devised to enable the Central Government to keep a close watch over the affairs of the companies in the interests of the members of the company, the creditors, etc. Section 242 provides for the prosecution of any person who has, in relation to the company or in relation to any other body corporate, managing agent, secretaries and treasurers, or associate of a managing agent or secretaries and treasurers whose affairs have been investigated by virtue of section 239, been guilty of any offence for which he is criminally liable. The section says that on a consideration of the report made under section 241, the Central Government may, after taking such legal advice as it thinks fit, prosecute such person for the offence; and it shall be the duty of all officers and other employees and agents of the company, body corporate, etc., to give the Central Government all a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account, etc., of the company made under section 209(4). The report made by Mr. Puri after his inspection of the accounts, etc., under section 209(4) is, therefore, only an administrative report to apprise the Central Government of the state of affairs of the company. Mr. Puri, no doubt, recommended investigation under section 237; but the Central Government thought it fit and expedient to lay information before the police so that the police may investigate under the provisions of the Code of Criminal Procedure inasmuch as cognizable offences under the Indian Penal Code were disclosed, presumably because such an investigation by the police under the provisions of the Code of Criminal Procedure would be more effective. We can see nothing in the provisions of the Companies Act which would even by implication bar a recourse to the laying of the information before the police for the purpose of investigation and action under the Code of Criminal Procedure when there are reasonable grounds for believing that cognizable offences under the Indian Penal Code had been committed in relation to the affairs of the company. It cannot be said that the Companies Act is exhaustive even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(b) then that investigation would culminate in action being taken under section 242. There is nothing in the Companies Act which would either expressly or impliedly prohibit the Central Government from laying information to the police in lieu of ordering an investigation under section 237(b). Mr. Nambiar admitted that there is no express prohibition regarding investigation by police; but he contended that according to the principles of interpretation of statues there is an implied prohibition. We are unable to see any such implied prohibition on an interpretation of the relevant provisions of the Companies Act. In M. Vaidyanathan v. Sub-Divisional Magistrate, Erode [1957] 27 Comp. Cas. 97.103 ; A.I R. 1957 Mad. 65, a similar argument appears to have been advanced while challenging the act of the Registrar of Companies in making a complaint to the police against the officers of the company without availing himself of the powers vested in him by section 234 and other relevant provisions of the Act. It was observed in that decision that: "Section 242(1) of the Companies Act is only an enabling provision as the use of the word 'may' in the passage 'the Central Government may, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 237 exist. The section says that the Central Government may appoint one or more competent persons to investigate the affairs of a company and to report thereon if, in the opinion of the Central Government, there are circumstances suggesting fraud, misconduct, etc., in the affairs of the company. No obligation is, therefore, cast on the Central Government to follow the procedure starting with an investigation under section 237 and culminating in a prosecution under the provisions of section 242 and there is no provision which would prevent the Central Government from laying the information before the police if a cognizable offence under the Indian Penal Code is disclosed on an inspection made under section 209(4) or otherwise. The provisions of the Companies Act do not exclude any of the provisions of the Criminal Procedure Code in respect of laying of information before the police in regard to any investigation by the police into cognizable offences under the Indian Penal Code where such cognizable offences were committed in relation to the affairs of a company. In the absence of clear and unambiguous language, intention to alter the existing law should not be imputed to the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that its enactment will repeal an earlier Act by reason of its inconsistency with such earlier Act, the latter may be treated as repealed. Even where the later Act does not contain such express words, if the co-existence of the two sets of provisions is destructive of the object with which the later Act was passed, the court would treat the earlier provision as impliedly repealed.........But repeal by implication is not generally favoured by courts". Under section 5(1) of the Code of Criminal Procedure, all offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the Criminal Procedure Code. Section 5(2) states that all offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. Therefore, if, in relation to the affairs of a company, offences under the Indian Penal Code are disclosed, they shall be investigated, inquired into, tried and otherwise dealt with accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Any person can lay information before the police and if such information could be believed to be authentic and discloses cognizable offences, the police are bound to investigate into the same. Any individual can set the law in motion by laying information before the police or by preferring a complaint to the court. In the present case before us, the information laid before the police was signed by the Under-Secretary to the Government of India and on receipt of the information the police have registered the case and took up investigation into the case as they are empowered to do. When any individual can lay information before the police in respect of the commission of cognizable offences for the police to investigate, we are not able to see how any disability could attach to the information laid in this case, merely because under the provisions of the Companies Act no power is conferred on the Company Law Board or the Central Government to lay such information before the police. Mr. Nambiar has argued that, assuming that two courses were open to the Central Government or the Company Law Board, (1)to order an investigation into the affairs of the company under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, if it prosecutes under the provisions of section 242, such a prosecution would be on adequate grounds and for proper reasons. But then, in our opinion, the provisions of the Criminal Procedure Code provide ample safeguards for a fair investigation to be carried on. Though the Company Law Board may consist of experts in regard to company matters, so far as investigations into offences under the Indian Penal Code are concerned, we are unable to see how police officers could not be equated to the position, though not of experts, at least of persons well experienced in the matter of investigation into offences. Further, the provision under section 242 of the Companies Act enabling the Central Government to take legal advice is only an enabling provision and it gives a discretion to the Central Government to take legal advice or not before prosecuting offenders. There is no duty cast on the Central Government to take legal advice after reviewing the report of investigation before prosecuting the offenders. In the case of an investigation by the police after the police sends the final report and the court takes cognizance of the offences disclosed in the final report, copies of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
