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SHIVRAJ GUPTA Versus HANSRAJ GUPTA & CO. P. LTD.

2015 (7) TMI 495 - DELHI HIGH COURT

Validity of Summons issued for offence under Section 630 of the Companies Act 1956 - Validity of Board resolution is already in dispute - Held that:- In the summoning order dated 20th April, 2010 the Magistrate has referred to the sale deed in favor of the complainant/respondent company as well as the order dated 1st November, 1990 passed by this Court in CA No. 403/90 in CP 115/86 and also taken into account that the petitioner/accused was entitled to receive ₹ 7000 per month House rent a .....

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grounds to proceed and accordingly summoned the accused under Section 630 of the Companies Act, 1956. The said order is a legally correct order.

It is settled law that the complaint under Section 630 of the Company Law may be maintainable despite of pendency of the civil litigation, but the facts in the present case are distinct as it is doubtful whether the complaint in the existing circumstances when the board resolution itself is under dispute is maintainable whether the proceedin .....

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- Crl.M.A. Nos.4197/2011 & 17460/2014 in CRL.M.C. 1149/2011 - Dated:- 5-6-2015 - MR. MANMOHAN SINGH, J. For The Petitioner : Mr.S.S. Gandhi, Sr. Adv. with Mr.Vikram Singh Panwar, Adv. For The Respondent : Mr.Suhail Dutt, Sr. Adv. with Mr.Sujoy Kumar, Adv. MANMOHAN SINGH, J. 1. The present petition under Section 482 Cr.P.C. seeking quashing of criminal complaint No. 25 of 2007 titled as "M/s. Hansraj Gupta & co. Pvt. Ltd. vs. Shri Shivraj Gupta" and the order of summoning dated 20th .....

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in CS (OS) No. 43/2005 pending before this Court. ii) Contempt Application being lA No. 1218/2005 in CS (OS) No. 43/2005 pending against Mr. Rajendra Kumar Gupta and Mr. Ravi Raj Gupta for violation of order dated 14-01-2005 pending before this Court. iii) Agreement to sell entered into between the Respondent Company and the Petitioner for sale of the farm house property in respect of which the Complaint is filed. The said Agreement is the subject matter of suit for specific performance on the .....

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y i.e. the farm house property in the suit for specific performance filed by the Petitioner against the Respondent/Complainant Company being CS (OS) No.915/2009. In another suit, an order of injunction dated 17.12.2008 passed by this Court in a suit filed by the Complainant being CS (OS) No. 2626 of 2008 against the Petitioner directing the petitioner to maintain status quo with regard to the title and possession of the suit property being the farm house. iv) Receipt of part payment towards sale .....

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dra Kumar Gupta and Mr. Raviraj Gupta; both allegedly jointly authorized by the respondent Company, by board resolution dated 14th February, 2005, the board resolutions dated 6th January, 2005 i.e. including 14th February, 2005, by Complainant Company are already under challenge before this court in a suit filed by the petitioner herein (i.e. CS (OS) No. 43/2005), who is claiming to be one of the Directors of the respondent company, the brother of the said Sh. Rajendra Kumar Gupta. Further, Mr. .....

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of which the subject Complaint has been filed. Contempt proceedings have already been initiated by the petitioner which are pending. The respondent knowing all the circumstances by material facts, the complaint was filed and summoning order was obtained. 5. The order of summoning against the present petitioner who is 86 year old man suffering from many ailments. The respondent on the basis of twisted facts although many civil litigations on the same facts and grievance has field the complaint. .....

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has been filed against the petitioner n order to harass him. It is alleged that the complaint has been filed pursuant to the Resolution dated 14th February, 2005 of the Board of Directors of the Respondent Company in which meeting Shri Rajendra Gupta participated, who had ceased to be a director of the respondent Company with effect from 31st December, 2004 and could not have participated in any meeting of the Board of Directors of the respondent/complainant Company subsequently and for which p .....

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dent in respect of disputes pertaining to employer and employee. The respondent company did not disclose that it had already entered into an agreement to sell with the petitioner herein with respect to the said property and pursuant thereto also accepted and encashed the cheque for ₹ 20,000,00/- (Rupees Twenty Lacs only). Even otherwise the petitioner being Director-ln-charge of the respondent company and some time in September 2002 along with his wife were put in possession of the said pr .....

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aint under Section 630 of the Companies Act, 1956 the respondent stated that it is the owner of the said property and that in the year 1990 the petitioner in the-present proceedings before this court had filed an application being CA No.403 of 1990 in CP 115 of 1986 indicated that the petitioner has no right or authority to occupy the said property. The same belongs to and is owned by the respondent company. 9. In the complaint it is also the case of the complainant, that is the respondent herei .....

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plaint that a legal notice dated 1st December, 2005 was sent by the respondent to the petitioner calling upon Mm to vacate the said property owned by the respondent company but despite service of notice the petitioner/ accused refused to vacate the said property. 11. The respondent has in para 15 of the said criminal complaint has stated as under : .....that the complainant at no point of time authorized him to use the said property as his residence, despite the fact further that the said occupa .....

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h April, 2010 the Magistrate has referred to the sale deed in favor of the complainant/respondent company as well as the order dated 1st November, 1990 passed by this Court in CA No. 403/90 in CP 115/86 and also taken into account that the petitioner/accused was entitled to receive ₹ 7000 per month House rent allowance. The Magistrate has further recorder in the summoning order that the respondent company is the owner of the said property and that prima facie it does appear that the petiti .....

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grounds raised by the petitioner in the present petition under Section 482 of the CrPC do not entitle the petitioner to seek an order for quashing of the summoning order and the criminal complaint filed under Section 630 of the Companies Act, 1956. 14. Mr. Suhail Dutt, learned Senior counsel appearing on behalf of respondent has made his submissions which are outlined as under : a) That both civil and criminal remedies are available to the aggrieved party. The mere filing of civil proceedings wo .....

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rom any infirmity. From the facts of the present case, it is a clear case of Section 630 of the Companies Act, 1956 is therefore made out. b) The petitioner is yet to prove his defence in the civil suits pending in this court and in the Criminal Complaint No.25 of 2007 pending before the trial court. The petitioner has ample opportunity and is entitled to lead evidence even in the proceedings under Section 630 of the Companies Act, 1956 pending before the trail court. On the basis of a purported .....

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r. vs. XLO India Ltd. and Anr., (2009) 3 SCC 342 It was held that pendency of a civil suit and the existence of an interim order directing maintenance of status quo does not bar criminal proceedings under section 630 of the companies act, 1956. (ii) Maratt Rubber Ltd. vs J.K. Marattukalam, 2001 SCC (Cri) 646 It was held that in a case instituted on complaint the High Court was possibly not entitled to look to the several documents purported to have been' filed by the accused in several civil .....

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are made out on the basis of the allegations made in the complaint without going into truth or otherwise of the allegations, High Court cannot exercise its jurisdiction under Section 482. d) Mr. Dutt argues that the petitioner has sufficient opportunity to explain his case by way of the statement of the accused under Section 313 of Cr.P.C. and thereafter he is also entitled to lead defence evidence. The respondent is entitled to seek recourse to the statutory remedy enshrined under Section 630 .....

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te being old person and his client has no objection if he be exempted from personal. 15. It is argued on behalf of respondent that at the stage of passing a summoning order the trial court is only required to consider the averments in the complaint and if the averments are taken as true and offence is made out then the summoning order cannot be quashed. In the present case the said property admittedly belongs to and is owned by the respondent company. It is stated in the complaint that no right .....

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specific performance on the allegation that there is allegedly an agreement to sell in favor of the petitioner and that he has allegedly paid part consideration of ₹ 20 lacs to the respondent. 17. The petitioner has also further sought to rely on two interim orders I passed by this court being order dated 17th December, 2008 passed in CS(OS) No.2626/2008 and order on 22nd May, 2009 in CS(OS) No.915/2009. The order dated 17th December, 2008 was passed in the suit filed by the respondent dir .....

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fore the submission is made on behalf of petitioner that the complaint itself is bad as the same has been filed on the basis of a resolution which in itself could not have been passed in view of the status quo order of the court. The next ground taken by the petitioner is that the summoning order could not have been passed as the complainant were not examined before the court which is contrary to the mandatory provisions of Cr.P.C. 19. The said Section 630 of the Companies Act, 1956 for ready re .....

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th fine which may extend to one thousand rupees. (2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years." 20. After examining the averments made in the complaint and having gone through the decisions referred by Mr. Dutt, learned Senior counsel, I .....

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in the present case the petitioner has challenged the validity of filing of complaint itself. It is the case of the petitioner that the board resolution dated 14th February, 2005. under the garb of which the instant complaint was filed, could not have been passed in view of the status quo order passed by this court vide order dated 14th January, 2005 in CS(OS) No.43/2005 and since the said board resolution itself is illegal, hence, the complaint could not have been filed and the same is liable t .....

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GM scheduled to be held on 5th February, 2005 may be held but the decisions in regard to Directorship of the company if any action taken in the AGM shall not be given effect. He submits that the very constitution of the board was under challenge in the said suit filed by the Petitioner alongwith his son. The proceedings of the Board Meeting dated 14th February, 2005 being in contempt of the civil proceedings being CS (OS) No. 43 of 2005. The status-quo order dated 14th January, 2005 was recorded .....

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etween the parties..." The Petitioner had immediately initiated contempt proceedings before this Court being I. A. No. 1218/2005 in CS (OS) No. 43 I of 2005 for passing of the said board resolution in contempt of the status quo order. 23. Mr. Gandhi, learned Senior counsel submits that the said proceedings being CS (OS) No. 43/2005, the directorship of Mr. Rajendra Kumar Gupta of the Complainant Company has been challenged. It is stated by him that this court in the said proceedings being C .....

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an order dated 31st January, 2015 to the limited extent of permitting the holding of the AGM of the Complainant Company on 5th February, 2005 and it was further observed that resolution, if any, passed affecting the directorship of the Plaintiffs therein (i.e. Mr. Shivraj Gupta, the accused herein and his son, Mr. Jayant Gupta) shall not be given effect to. Prior to the status quo order. Powers (Financial & Legal) of the Complainant Company were jointly exercised by Mr. Shivraj Gupta (petiti .....

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g of the Board meeting dated 14th February, 2005, is pending in the civil suit. The passing of the said resolution was never challenged at the same time. 25. By the judgment dated 28th May, 2010 (read with order dated 9th July, 2010 correcting the typographical error of order dated 28th May, 2010), the Division Bench of this High Court, while deciding the challenge to the permitting of amendment to the plaint of CS (OS) No. 2005 has inter-alia observed as under: "... We have considered the .....

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estrain the defendants from acting any furtherance of the resolution passed in the meeting held on 06.01.2005. What would be the effect if this suit is decreed ultimately? Naturally, any action taken pursuant to the resolutions passed on 06.01.2005 shall be rendered illegal. One of the resolutions passed in that meeting was that AGM be held on 05.02.2005. Thus, if the suit is decreed, it would have direct bearing of the outcome of AGM which was held on 05.02.2005. In this view, we have to take n .....

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was also clarified that the decision in respect of the Directorship to the AGM, if any, shall not be given effect to, in the meantime. No doubt. Dr. Singhvi argued that the only embargo put by the Court were limited to the decision with regard to the directorship of the plaintiffs and no other business, which was to be transacted on 05.02.2005, we have to keep in mind that these are the interim orders. That would not mean that all other decisions taken on 05.02.2005 automatically become legal on .....

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the events which have taken place subsequent to the board meeting held of 06.01.2005 form one single chain. These are the incessant and continuous events arising out of the same transaction. Amendment based on such subsequent events is permissible and is to be allowed to do complete justice in the matter..." [Emphasis supplied] 26. It is argued by Mr. Gandhi, learned Senior counsel that Magistrate committed grave error of law in ignoring the mandate laid down in Section 200 of the Code of C .....

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ainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate: Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses (a) if a public servant acting or purporting to act in the discharge of his official duties or a Court has made the complainant; or (b) if the Magistrate makes over the case for inquiry .....

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viso can it be dispensed with. The said view was taken by the Supreme Court in Associated Cement Co. Ltd. vs Keshavanand [(1998) 1 SCC 687] wherein it was categorically held that: "Chapter XV of the new Code contains provisions for lodging complaints with magistrates. Section 200, as the starting provision of that chapter enjoins on the Magistrate, who takes cognizance of an offence on a complaint, to examine the complainant on oath. Such examination is mandatory as can be discerned from th .....

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as filed by a public servant, acting or purporting to act in the discharge of his official duties and the other when a court has made the complaint. Except under the above understandable situations the complainant has to make his physical presence for being examined by the magistrate." 29. Even otherwise, in the present matter the board resolution dated 14th February, 2005 which authorized the institution of the complaint was not proved at all during the pre summoning evidence. The board re .....

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appearance were issued without examining the complainant. When pre-summoning evidence was recorded, Uday Gupta was one of the director of the company but at the same time, he was not authorized by the board resolution dated 14th February, 2005. 30. I do not agree with the submissions of the respondent that the said plea can be taken in defence. In normal case, the answer is yes but in the facts of the present case where the board resolution itself is under challenge before this Court within the .....

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