TMI Blog2001 (1) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the parties argued that in the appeal maintainability of the criminal complaint against the appellant is questioned, therefore, appeal be finally heard and disposed of at this stage itself. We propose to do so accordingly. 3. Facts in brief necessary for the disposal of this appeal are: that on 4-6-1998 complainant-RBI filed the petition under section 433 of the Companies Act read with section 45 of the RBI Act for winding up of JVG Finance Ltd. (Respondent-Company), before the learned company Judge. On 5-6-1998, official liquidator attached to this Court was appointed as provisional liquidator. The complainant-RBI also filed a criminal complaint under sections 58B(5)( aa ), read with section 58C against the said company and other alleging that it was a non-banking company governed by the provisions of Chapter IIIB of the RBI Act and Non-Banking Financial Companies (RB) Directions, 1977 and that it was prohibited from accepting deposits from the public by an order dated 10-10-1997. The respondent-company and others violated these directions and thereby committed the said offences punishable up to three years imprisonment and fine. The Magistrates took cognizance on the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and convince at the appropriate stage of the proceedings that either he is not a Director or that he is not liable to the offence alleged. The said right of the petitioner is not scuttled by the impugned order. The Special Leave Petition is disposed of accordingly." 5. The complainant-RBI, also filed an application under section 446(1), read with rule 117 of the Rules before the Company Court, seeking leave to continue above-said criminal complaint against JVG Finance Ltd. (respondent-company) and others. On 27-10-1998 the company Judge passed the impugned order granting leave to the complainant-RBI to proceed with said criminal complaint against the company and directing the trial court to consider the objections raised on behalf of the appellant. It was observed : "Till such time winding up proceedings are pending, the RBI cannot be debarred from continuing with the proceedings initiated against the company. It is under these circumstances that the permission as sought for is hereby granted. So far as the question of locus standi of the RBI to institute the winding up petition is concerned the same will be considered on the next date of hearing. So far as the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be examined. Reference in this regard can be made to the following observations of the Supreme Court in S. Gopal Reddy v. State of Andhra Pradesh AIR 1996 SC 2184 : "Interpretation of statutes Construction of expression in statute-text and context of entire Act must be looked into Court must look to object which statutes seeks to achieve." (p. 2184) 9. The object of section 446 of the Act is to protect the assets of the company during the winding up proceedings so as to avoid any wasteful expenditure. Reference in this regard can be made to the Supreme Court decision in Sudarsan Chits (I) Ltd. v. G. Sukumaran Pillai [1984] 4 SCC 657 : wherein it was held : "In the absence of a provision like section 446 (2) under the repealed Indian Companies Act, 1913 the Official Liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits as is not unknown, dragged on through the trial Court and Courts of appeal resulting not only in multiplicity of proceedings but would hold up the progress of the winding up proceedings. To save the Company which is ordered to be wound up from this prolix a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with against the company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceedings by or against the company;" [Emphasis supplied] ( iii )Section 454 of the Act provides that where the court has made winding up order or appointed an Official Liquidator, the statement as to the affairs of the company is to be made out and submitted in the prescribed form to the Official Liquidator unless otherwise directed by the court. Non furnishing of the same has been made an offence. Under sub-section (5) of section 454 reads: "454. Statement of affairs to be made to Official Liquidator (5) If any person, without reasonable excuse, makes default in complying with any of the requirements of this section, he shall be punishable with imprisonment for a term which may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of section 454 and to try such offenders as per the procedure provided for trial of summons cases under the Code of Criminal Procedure, 1974; but on the other hand in sections 442 and 446 the Legislature has used only the expression suit or other legal proceedings. The words prosecution or criminal case are conspicuously missing in these sections. It appears quite logical as purpose and object of sections 442 and 446 is to enable the Company Court to oversee the affairs of the company and to avoid wasteful expenditure. Therefore, the intention of the Legislature under these sections does not appear to provide jurisdiction to the Company Court over criminal proceedings either against the company or against its directors. Wherever Legislature thought it necessary to provide such jurisdiction it has used the appropriate expressions. 13. Further section 621 makes the offences against the Act to be cognizable only on the complaint by Registrar, shareholder or the Government. No permission of the Company Court is required. However, under section 446(1) suit or other legal proceedings cannot be instituted without permission of the company court.Therefore, Section 621(1) its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure. If the winding up court is held to be empowered to transfer these criminal proceedings to itself it would lead to anomalous consequences. 16. While considering the prosecution of directors for violations of the provisions of Provident Fund Act, the Supreme Court in Rabindra Chamrior v. Registrar of Companies 1992 (Supp.) (2) SCC 10 considered the scope of the expression Any proceedings in section 633 of the Act and held that it cannot save directors of the company from liability or prosecution for violating these provisions. It was observed that such a relief can be granted only in case of proceedings arising under the Act and not under other acts. It was held : "Under section 633 of the Companies Act relief cannot be extended in respect of any liability under any Act other than the Companies Act. The expression any proceeding in section 633 cannot be read out of context and treated in isolation. It must be construed in the light of the penal provisions. Otherwise the penal clauses under the various other Acts would be rendered ineffective by application of section 633. Again, if Parliament intended 633 to have a coverage wider than the Act, it would have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the maintainability of criminal complaints under section 138, read with section 141 of Negotiable Instruments Act, 1881, against the companies, which have approached the Board for Industrial Finance and Reconstruction seeking declaration under SICA, that they have become sick. It was held that : "The said contention is also devoid of merits. The word suit envisaged in section 22(1) cannot be stretched to criminal prosecutions. The suit mentioned therein is restricted to recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company . As the suit is clearly delineated in the provision itself, the context would not admit of any other stretching process." 20. The learned counsel for the appellant in support of their contention heavily placed reliance on the judgment of a Single Judge of Gujarat High Court in Harish C. Raskapoor v. Jaferbhai Mohmedbhai Chhatpar [1989] 65 Com. Cas. 163 wherein it was observed that the expression "proceedings" under section 391(6) includes "criminal proceedings" as well wherein reliance was placed on a Single Bench decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
