TMI Blog2008 (4) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... be continued with, then leave of the Court is necessary. Section 446 of the Companies Act however does not prohibit taking actions against the Directors and officers or servants of the Company. This provision cannot be invoked for the quashing of the criminal complaint. In view of the aforesaid, this Court is of the opinion that the proceedings initiated by the petitioner under section 446 read with section 633(2) of the Companies Act was not maintainable. Even otherwise, on merit the petitioners are not entitled for any relief whatsoever. - COMPANY PETITION NOS. 6 OF 2006 AND 1 OF 2007 - - - Dated:- 22-4-2008 - TARUN AGARWALA, J. Pankaj Bajpai and P. Chakravarti for the Petitioner. Pratish Kumar and N.K. Agarwal for the Opposite Parties. JUDGMENT 1. The petitioner, Piyush Rastogi, has filed the petition under section 446 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 for the quashing of all Civil and Criminal proceedings pending in various Courts, especially Criminal Case No. 2092 of 2005 pending in the Court of Special Judicial Magistrate, Lucknow and also prayed for absolving the petitioner from any civil or cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92 of 2005 filed by the Reserve Bank of India before the Court of Special Judicial Magistrate, Lucknow and also for the quashing of the order dated 30-9-2004 passed by the Special Judicial Magistrate, Lucknow by which the Court has taken cognizance of the alleged offence. The petitioner has also taken the same grounds alleging that he was a sleeping Director and had resigned on 1-4-1998 which was duly accepted by the Registrar of the Companies and that the Court of Special Judicial Magistrate had wrongly taken cognizance of the alleged misfeasance against the Directors which could only be taken and proceeded by the Company Court under section 633(2) of the Act. Further, no previous leave was taken by the Reserve Bank of India from the court under section 446 of the Companies Act. 4. Since both the petitions are based on common facts and have prayed for the same reliefs, the same is being decided together. 5. The complainant, Reserve Bank of India, has filed a counter affidavit stating that the petitions filed by the petitioner was not maintainable under section 446 of the Companies Act and that the Directors could not file an application under section 446 for the quashing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit, the Company Law Board constituted under section 10E of the Companies Act, 1956 (1 of 1956) may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order: Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial company and the other persons interested in the matter." "58B (4AAA). Whoever fails to comply with any order made by the Company Law Board under sub-section (2) of section 45QA, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to a fine of not less than rupees fifty for every day during which such non-compliance continues." "58C. Offences by companies. (1) Where a person committing a contravention or default referred to in section 58B is a company, every person who at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es reason so to do, dispense with the personal attendance of the officer of the Bank filing the complaint, but the Magistrate may in his discretion, at any stage of the proceedings, direct the personal attendance of the complainant." 8. Section 45QA gives power to the Company Law Board to order repayment of any deposit by a non-banking financial Company. In order to safeguard the interest of the Company or the depositors or in public interest, sub-clause (4AAA) of section 58A of the Act provided that if the order of the Company Law Board was not complied with, the same would become punishable. Section 58C provides that a person committing a default would be punishable and section 58E provides cognizance of such offence by a Court. In the present case, the Company Law Board directed the Company and its Directors to refund the deposit made by the deposi-tors. Since this order was not complied with, the Reserve Bank of India, which is the regulatory authority for non-banking financial Company under Chapter III-B of the Act, has filed the criminal complaint for non-compliance/contravention of the orders passed by the Company Law Board against the defaulting Company and its Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement is terminated for leave to act as the managing or other director or manager of the company. (15)Applications under section 439 for the winding-up of a company, or under section 583 for the winding-up of an unregistered company, or under section 584 for the winding-up of a foreign company. (16)Applications under section 517 to set aside any arrangement between a company about to be or in the course of being wound-up (voluntary) and its creditors. (17)Applications under section 522 to continue a voluntary winding-up subject to the supervision of the Court. (18)Applications for a declaration under section 542 (XI Schedule) in the course of proceedings under section 397 or 398 that a person who was knowingly a party to carrying on business in a fraudulent manner shall be personally liable for all or any of the debts or other liabilities of the company. (19)Applications by a creditor or member under section 543 (XI Schedule) in the course of proceedings under section 397 or 398, to enquire into the conduct of any of the persons mentioned in section 543 (XI Schedule) and compel him to repay or restore any money or property to the company or pay compensation. (20)Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een instituted or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960 (65 of 1960). (3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court. (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court." 12. In Harihar Nath v. State Bank of India [2006] 67 SCL 234, the Supreme Court held that the object of section 446 of the Companies Act was not to nullify any claims against the company but the object of it was to save the company which has been ordered to be wound up from unnecessary litigation and from multiplicity of the proceedings and to protect the assets for equitable distribution amongst its creditors and shareholders. The Supreme Court held that the object of the Act wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and that criminal proceedings have to be excluded. The words "suit", "legal proceedings" and "other proceedings" used in section 446 of the Act has to be read in the light of the words "prosecution" or "criminal case" which are used in section 457 of the Companies Act. In view of the aforesaid, this Court is of the opinion that criminal proceedings are excluded from section 446 of the Companies Act. Consequently, no permission is required to be taken from the Company Court for filing a criminal case or a criminal complaint either against the Company or against its Directors. 15. There is another aspect of the matter. A complaint under a penal provision of a statute against the Company or its Directors, except those provided under the Companies Act, cannot be properly dealt with by the Company Court. The orders passed by the Criminal Court are subject to appeals, revisions etc. If the Winding up Court is held to be empowered to transfer these criminal proceedings to itself, it would lead to an anomalous consequence. The Criminal Court has the power to take cognizance to institute any criminal proceedings against the Company and/or against its Directors and it cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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