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Rakesh C. Jain and others Versus C.B.I. and another

2015 (10) TMI 1716 - PUNJAB AND HARYANA HIGH COURT

Allegation of cheating and fraud levelled against petitioner - Whether the expression “other legal proceedings” in Section 446 of the Companies Act would include Criminal Proceedings and FIR filed in Delhi can be quashed or not? - Urged by Appellant that since the matters before DRT had been settled and all the amount was paid, it would be an abuse of the process of Court and FIR be quashed - Revenue contends that Court has no jurisdiction to quash the FIR since the FIR is registered in Delhi an .....

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e of Pennar Paterson Ltd. Vs. Shikshak Sahakari Bank Ltd.[2008 (4) TMI 508 - SUPREME COURT OF INDIA] followed - Decided in favour of Respondent - Crl. Misc. No.M-42348 of 2014 - Dated:- 24-7-2015 - MS. ANITA CHAUDHRY, J. For The Petitioner : Mr. Anand Chhibbar, Sr. Advocate with Mr. Vaibhav Sahni, Advocate For The Respondent : Mr. S.S. Sandhu, APP, Mr. Anshul Singh, Advocate ANITA CHAUDHRY, J(ORAL) 1. This is a petition filed under Section 446 of the Companies Act read with Section 482 Cr.P.C. s .....

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uld be useful to give the factual matrix, the petitioners claim themselves to be Ex-Directors/Promoters of Asian Consolidated Industries Ltd. which was earlier in liquidation in the proceedings decided on 12.05.2014. It has been pleaded that the company is now out of liquidation as it has settled all the secured or unsecured creditors. 4. The company started its commercial production in about 1990. It started making losses in 1996 and faced labour problems which led to retrenching of workers. Th .....

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g before the Division Bench. 5. The company had approached Small Industries Development Bank of India (here-in-after referred to as SIDBI) for sanction of limit under the Direct Discounting of Bills (Components) to the extent of ₹ 200 lac and the limit was secured by second charge on the fixed assets of company and personal guarantee of Mr. Rakesh Jain and Mr. Alok Jain besides other charges on their properties. The limit of ₹ 100 lacs was released to the company after the requisite .....

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olio number and distinctive share number. The bank lodged a complaint with CBI vide their letter dated 14.11.2000 and the FIR was registered with the Fraud Cell at New Delhi. 7. The petitioners have pleaded that they had informed SIDBI in October 1995 that distinctive number on share certificate in respect of 20 lac shares pledged by M/s. Ganesh Exports were wrongly printed and they may not be utilized and should be returned so that necessary corrections could be made. It was pleaded that they h .....

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settlement had been arrived at and entire dues had been paid and no outstanding amount was pending. It was pleaded that the complainant of the said FIR had filed recovery proceedings before Debt Recovery Tribunal, Delhi and they had withdrawn the recovery certificate in July, 2013 and an order was passed in this regard. It was pleaded that the company in liquidation did not have any intention to cheat any secured or unsecured creditors. It was pleaded that the petitioners and complainant/respon .....

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. A co-ordinate Bench before whom the matter was listed for the first time, passed the following order on 11.12.2014 :- It is contended by the learned senior counsel appearing on behalf of the petitioners that FIR had been registered against the petitioners on 22.12.2000, as per which, the company and its directors were guilty of pledging share certificates having the same distinct folio number to SIDBI whereas the same had earlier been pledged to Ganesh Export Pvt. Ltd. Over the years, the comp .....

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y before the Debt Recovery Tribunal, the RC issued against the company which was in favour of SIDBI stands closed and the RC withdrawn. The company is stated to have come out of liquidation and has settled all its accounts as is evident from an order passed on 12.05.2014 by the learned Company Judge of this High Court. Thus it is contended that SIDBI has no cause of action now, therefore, the proceedings under the FIR should be quashed. Notice of motion for 02.02.2015. Meanwhile, further proceed .....

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jurisdiction of Delhi Courts. It was pleaded that the complaint was made by the Deputy General Manager of SIDBI that they had defrauded them to the tune of ₹ 689.75 lacs by availing bill discounting facility on the basis of two share certificates of ₹ 20 lacs shares and 13,20,000 shares of ACIL having same certificate number, folio number and distinctive number besides other securities. It was pleaded that the same shares had been pledged with M/s. Rajasthan Breweries Ltd. It was ple .....

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ed 20 cheques of ₹ 10 lacs and two cheques of ₹ 50 lacs and knowing that there was no funds in the account in order to get back the disputed duplicate share certificate. Thereafter, the company sent two bank drafts of ₹ 50 lacs each and asked for return of the two cheques sent earlier and gave an assurance that the remaining 20 cheques of ₹ 10 lacs would be honoured. It was pleaded that the bank drafts were realised while the other cheques totalling ₹ 3 crores had b .....

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unauthorizedly and dishonestly and availed the credit limit from SIDBI. The investigations also revealed that Ashok Jain, Director of M/s. ACIL had informed SIDBI of having purchased printed metal sheets from the seller and had introduced M/s. V.K. Packaging Industries as SSI Unit. M/s. V.K. Packaging Industries also furnished a certificate certifying to have sold printed metal sheets manufactured by them, to M/s. ACIL. Investigations, however, revealed that M/s. V.K. Packaging Industries was a .....

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lls of M/s. Rajasthan Industries but this concern did not exist at the address given and this concern was owned by Mira Jain wife of Mr. Alok Jain and it had not done any business as was reflected in the bills discounted by SIDBI and false and forged documents were presented. The investigations revealed that all the accused arrayed in the FIR were involved in conspiracy and had cheated SIDBI to the extent of 6.8 crores. It was pleaded that investigation into the complaint was completed and chall .....

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not been compromised. 10. Respondent no.2-SIDBI took the same stand as CBI and pleaded that this Court had no jurisdiction and the cause of action had not accrued within the jurisdiction of this Court and the petition was not maintainable in the present form and Section 446 of the Companies Act was not relevant and the petition was misconceived. It was pleaded that one time settlement was communicated to the company/directors on 30.03.2013 with a rider which contained the following condition:- T .....

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eard. 13. The counsel for the petitioners had urged that the petition was filed in this Court as the winding up proceedings took place here. It was urged that the registered office of the company is at Rewari, Haryana. The counsel referred to Section 10 of the Companies Act and Annexure P-3. It was urged that the company had approached the Court for revival of the company and the winding up order was recalled and the matter was pending, therefore, they had approached this Court for quashing of t .....

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used in the Section would include criminal proceedings. It was urged that since the matters before the DRT had been settled and all the amount had been paid, therefore, it would be an abuse of the process of the Court and the FIR be quashed. 14. On the other hand, the counsel representing respondents no.1 & 2 had urged that this Court had no jurisdiction to quash the FIR as the case was registered at Delhi. It was urged that they had specifically raised the plea that the jurisdiction of this .....

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ments were executed in Delhi and the FIR was registered in Delhi and the criminal proceedings can only be taken up by the Court having jurisdiction. It was urged that the one time settlement does not refer to the criminal proceedings. It was urged that no approval has been given by RBI yet to the settlement. 15. While going through the record, it was found that the petitioners had only pleaded that they had not filed any such similar petition in this Court or before the Apex Court. The petitione .....

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s situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of subsection (2); and (b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district. (2) The Central Government may, by notification in the Official Gazette and subject to such restrictions .....

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. (3) For the purposes of jurisdiction to wind up companies, the expression" registered office" means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up. 17. Section 446 reads as under:- 446. Suits stayed on winding up order. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shal .....

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r against any of its branches in India); (c) any application made under section 391 by or in respect of the company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; Whether such suit or proceeding has been 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 .....

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here made to Pennar Paterson Ltd. Vs. Shikshak Sahakari Bank Ltd., (2010) 155 Com Cases 338. 19. The object of Section 446 of the Companies Act is to see that the assets of the company are brought under the control of the winding up Court to avoid wherever possible, expensive litigation and to see that all matters in dispute which are capable of being expeditiously disposed of by the winding up Court are taken up by that Court. This does not, however, mean that all disputes wherein a company is .....

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the company. In Devasi (KP) Vs. Official Liquidator (1997) 90 Com Cases 438, proceedings against the Managing Director of a company under Section 138 of the Negotiable Instrument Act was held to be not an action against the assets of the company and it was held that they could not be transferred to the company Court. 20. The petitioners claim that this Court would have the jurisdiction since the winding up proceedings were taken up by this Court. The petition is silent and they have not specifi .....

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ation and official liquidator had been appointed. It was observed that there are offences against an Act in which the official liquidator has to launch proceedings and therefore, the case was transferred with a direction to the Official Liquidator to examine the complaint and proceed with the same in accordance with law. The authority is not applicable to the facts of the present case. 21. In Pennar Paterson Ltd. (Re) 2002 (36) SCL 525 (Andhra Pradesh), the Andhra Pradesh High Court was examinin .....

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al misconduct on the part of the Company or its Directors is not saved. 13. It has clearly been held that a prosecution does not come within the purview of Section 446 of the Companies Act inter alia on the ground that the said provision has been enacted for the purpose of saving the assets of the Company and having regard to the provisions contained in Sections 187-B and 391(6) and 457, prosecution would not come within the purview thereof. It is now well settled principles of law that where di .....

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e clear, the same in the case of obscurity can be referred to for ascertaining the true meaning of the provision. 19. It is now trite that even assuming that prosecution has been launched illegally, the remedy of the Official Liquidator would be either to file an application under Section 633 of the Companies Act and or to file an application before the concerned High Court to which the Court of Magistrate is subordinate either under Article 226 or 227 of the Constitution of India or under Secti .....

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