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TMI Blog2018 (6) TMI 1727X X X X Extracts X X X X X X X X Extracts X X X X ..... n or at the stage of actual pendency. The distinction has nothing to do with Court, especially the High Court. 46. To put it differently, the jurisdiction of a Magistrate of First Class or the jurisdiction of a District Court, to grant relief, is confined only to cases, which are actually pending before them. These courts do not have the jurisdiction to grant relief in respect of the apprehended proceedings. But, the High Court is conferred with an additional power under Section 633(2) even to take care of the contemplated proceedings also. The power under Section 633(2) is in addition to the power already available to the High Court under Section 633(1) and also under several other provisions of the Code. Such an additional power cannot be taken to mean the imposition of a restraint or limitation on the jurisdiction of the High Court to grant relief in pending proceedings. In other words, the conferment of an additional power under sub-section (2), to grant relief even in respect of anticipated proceedings, cannot be taken to mean that the power vested in sub-section (1) is taken away. Therefore, with great respect to the learned Judges of several High Courts, I am of the consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for dismissal of the said Petition. As against the dismissal of C.A. No. 1072 of 2013, the Appellant, has filed the present Original Side Appeal before this Court. 5. The Learned Counsel for the Appellant submits that the Learned Single Judge had committed an error in holding that as though the Hon'ble High Court can exercise its power under Section 633(1) of the Companies Act, 1956 to relieve a person from his liability in a proceeding pending before the Magistrate Court, which is directly contrary to the ingredients of Section 633(1), which specifically sets out that 'Power is vested only on the Court hearing the case', meaning the Court where the proceeding is pending. 6. The Learned Counsel for the Appellant contends that the Learned Single Judge had failed to appreciate that the only question that was to be determined by the Hon'ble High Court as to whether it could exercise such power in respect of a proceeding pending not before it, but, at the Magistrate's Court and the issue before it was not whether the High Court can exercise powers under Section 633(1) of the Companies Act, 1956 to relieve a person on liability in a proceeding pending before it. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Companies Act is pending before a Court, the power to relieve under Section 633(1) of the Companies Act, 1956 can only be exercised by that Court and not by any superior Court including the Hon'ble High Court. 11. The Learned Counsel for the Appellant comes out with a plea that the Learned Single Judge had erred in not appreciating the contention of the Appellant that the Hon'ble High Court can exercise its power only under Section 633(2) of the Companies Act, 1956 in respect of an apprehension of prosecution or that it could not exercise the power under Section 633(1) of the Companies Act in respect of prosecution pending before it directly when the case of the Appellant is only that in the present case the proceeding is pending on the file of the Learned Additional Chief Metropolitan Magistrate [EO1], Egmore and hence the 'High Court' is not the Court before which the proceeding is pending and in such a case, the High Court cannot exercise its powers under Section 633[1] of the Companies Act as that the power is vested in such a case where the proceeding is pending. 12. The Learned Counsel for the Appellant submits that Section 633(2) of the Companies Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Side Appeal filed by the Appellant before this Court is very much maintainable in the eye of Law. Appellant's Decisions: 16. The Learned Counsel for the Appellant cites the decision of In re Tolaram Jalan and Others reported in AIR 1959 Bombay at Page 245 wherein at Paragraph Nos. 6 to 8, it is observed as under: "6. It is urged that the word 'claim' would prima facie mean a civil claim such as a claim for damages which may be made by a company against a defaulting director or an officer of the company or where the company is in liquidation by the liquidator or a creditor or a contributory and not a penal proceeding contemplated by sections such as Section 162. The dictionary meaning of the word "claim" is undoubtedly an assertion of a right to something and a relief provided by statute. I have also been pointed out several sections of the Act where the Legislature has used the word "claim" such as Sections 101, 104, 429, 474 and 529 and it is clear from these sections that the meaning that can be attached to the word "claim" used in these sections must mean a demand or an assertion to a civil right. It was also urged that the Legislature could not have intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms therefore that there is no clear demarcation made in this section between proceedings of a penal nature and a civil remedy by way of a claim provided in Sub-section (2) of this section. Inasmuch as a proceeding in connection with misfeasance is included in Sub-section (1), the word 'proceeding" therein used cannot be said to mean proceeding of a penal nature only but would include proceedings also of a civil nature. 8. As I have pointed out, Section 633 is the exact replica of Section 372 of the English Act of 1929. That section came up for consideration in at least two decisions pointed out to me. In re Barry and Stains Linoleum Ltd., (1934) 1 Ch 227 a director failed to obtain his qualification shares within the time fixed thinking that he had them at the date of his appointment, and having either overlooked or forgotten the definition of qualification shares in the company's articles of association. At the end of the time he ceased, in accordance with Sub-section (3) of Section 141 of the Companies Act, 1929 to be a director, but continued to act and to receive remuneration as a director, thus incurring penalties under Sub-section (5). Later he was re-appointed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a fine and a penalty and a proceeding where the company might make a claim with regard to something which the director may be liable to pay to the company in which case he thought the Company Court would not readily grant relief without knowing the wishes of the shareholders." 17. The Learned Counsel for the Appellant relies on the decision of Thakur Dan Singh Bist V. Registrar of Companies reported in 1960 AIR [Allahabad] page 160 whereby and where under at Paragraph Nos. 10 to 12, it is observed as following: "10. The terms of Section 633 and the way in which it has been framed appear to support the contention of the learned counsel for the Registrar. Sub-section (1) of Section 633 which confers jurisdiction for granting relief on the Court before which a proceeding is pending appears to have been very widely worded. It covers all kinds of proceedings and relief under it can be granted in respect of every kind of liability--penal as well as civil. That sub-section can, however, apply only when the proceedings become pending because it is only that Court in which the proceedings are pending which has power to grant relief under that subsection. 11. Sub-section (2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry specie of legal demand. Keeping in view the fact that the word signified "a right of demand or supposed right; a calling of another to pay something due or supposed to be due as a claim for wages or services" it was held that the word "claim' was comprehensive enough to embrace actions founded On torts as well as actions founded on contracts. This case does not therefore support the contention that the word 'claim' could include proceedings for criminal prosecution also. In (1934) 150 LT 254 (supra), Maugham J., had before him a petition under Section 372 of the English Companies Act of 1929 which corresponds to Section 633 of the Indian Companies Act of 1956. A certain director of the company in that case had acted as a director and performed the duties of that officer without possessing the required qualifications. During the period in which he had so acted he had received 1,000/- per annum as remuneration in accordance with the provisions of the Articles of Association of the company. By acting as a director without possessing the necessary qualifications he had also made himself liable to a fine not exceeding 5/- for every day on which he had acted in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equer. In the latter kind of proceedings, however, the company or the liquidator or the share-holders were the persons mainly concerned. Under Sub-section (1) of Section 372 be relieved the director who was the petitioner before him wholly from his liability to the fine which could be imposed upon him under Section 141 of the Act but refused to grant relief under Section 372, Sub-section (2), for civil liabilities because he did not have before him the opinion of the company or its share-holders. In this case therefore the learned Judge practically assumed that under Sub-section (1) of Section 372 he had jurisdiction to grant relief against a possible prosecution. He also overlooked that under Sub-section (1) of Section 372 under which he was granting relief jurisdiction to grant relief vested only in the Court before which the proceedings were pending and no proceedings under Section 141 were pending in this Court." 18. The Learned Counsel for the Appellant seeks in aid of Re: Muktsar Electric Supply Co., Ltd., in Liquidation V. State reported in 1966 36 Comp Cases 144 P H, wherein at Paragraph No. 16, it is mentioned as under: "16. In In re Gilt Edge Safety Glass Limited, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, power under Section 633(2) to grant relief against an apprehended prosecution. 19. The Learned Counsel for the Appellant adverts to the decision of Auto Link Finance Private Limited V. Registrar of Companies reported in ILR 1970 1 Delhi at Page 573 : 1971 (41) CC 63 wherein at Paragraph Nos. 4 and 7, it is observed and held as under: "4. On behalf of the Registrar of Companies it has been urged that this Court has no jurisdiction to grant relief under section 633(2) of the said Act, Section 633(2) of the Act empowers the Court to grant relief in certain cases of negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company. Section 2(11) of the Act defines the Court with reference to any offence under the Act. The Court means the Court of the Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence and with respect to any matter relating to a company (other than any offence against this Act), the Court having jurisdiction under this Act with respect to that matter relating to that company as provided in section 10. Primarily, therefore, with respect to negligence, default, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The only question that, therefore, requires consideration is whether there is a case for the petitioner being excused under sub-section (2) of Section 633 of the Act of liability on account of defaults and breaches of the Company in respect of which proceedings are apprehended. 4. Section 633 of the Act empowers the Court to give relief where it is satisfied that the officer of a Company, even though technically guilty of negligence, breach of duty, misfeasance or breach of trust or otherwise liable on account of any default or breach of the Company has nevertheless acted honestly and reasonably and that having regard to all the circumstances of the case, "including those connected with his appointment", he ought fairly to be excused. The object of the section appears to be to provide against undue hardship in deserving causes and to give relief from liability to persons who, though liable in law, ought to be excused rather than be allowed to be subjected to legal proceedings." apart from that in the aforesaid decision at Paragraph Nos. 5 and 6, it is mentioned as under: "5. It is true that when a person agrees to be appointed to the Board of Directors of a Company he is exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectors are either the nominee directors or are appointed by virtue of their special skill or expertise. It is also unfortunate that with the limited accountability an effective control of the management of the affairs of a Company by the Board is not possible. While there is a strong case for urgent legislative action, both in the matter of widening the frontiers of accountability of a company, both to its Board of Directors and to the members, as also in relieving the special category of directors from consequences of default and breaches of the Company, judicial moderation is necessary in the administration of Section 633 of the Act so as to ensure that such categories of Directors are not subjected to the harassment of legal proceedings for breaches and defaults of a Company, which may at times be rather protracted. It would be proper in such cases to relieve such directors of consequences of the defaults and the breaches unless they are directly involved in the acts or omission complained of or have otherwise not acted honestly or reasonably or have financial involvement in the company. 6. Having regard, therefore, to the fact that the petitioner has been a Director of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actuality. The learned counsel has referred to G.D. Bhargava v. Registrar of Companies [1970] 40 Comp Case 664 (All) and P.C. Pothen, Liquidator of the Commonwealth Bank Ltd. (In Liquidation), 2nd [1966] 1 Ker 1, in which both courts have held that the powers of the High Court are the same as that of the Magistrate. As indicated above I am in perfect agreement with this conclusion. In fact, this is what the section states. These two cases do not deal with what the power of the High Court is after a proceeding has been actually initiated in a criminal court. I may also indicate that the other court covered by Section 633(1) need not necessarily be a criminal court because there may very well be a civil proceeding, criminal proceeding or even revenue proceeding in respect of which Section 633(1) may apply. In all such cases if a proceeding is anticipated, the officer concerned can move the High Court at an early stage and get relief in a suitable case. This has the great advantage of avoiding that other proceeding if the High Court grants relief. If that other proceeding has commenced then the officer concerned has no other course open but to apply to the relevant court under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority subordinate to the Company Law Board is concerned, the same did call for respect and adherence. It could not be that those directions were applied in the case of some of the companies and ignored with regard to others. When once the petitioners had moved the company court under sub-section (2) of section 633, he could have waited for the result of these proceedings or at the most required the court to expeditiously dispose of them instead of stealing a march over the petitioners and filing the complaints. 6. Mr. K. S. Bindra, appearing from the side of the intervene, has vehemently contended that these circulars have no binding character and in any case they could not be considered to have any legitimacy after the coming into force of the new Code of Criminal Procedure, 1973. He has made reference to the new provisions of the law of limitation introduced and has pointed out that any delay in the filing of the complaints by the Registrar would have resulted in the cases getting barred by time and the person holding offices of the company who had committed misfeasance and other illegal acts escaping due punishment. It is pointed out that the punishments awardable under the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under Sub-Section(1), (3) No court shall grant any relief to any officer under Sub-section (1) or Sub-section(2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted. 20. A perusal of the various provisions of the Act reveals that it imposes a number of obligations upon the officers of a company. It also makes provisions for initiating, before a court of law, proceedings against the officers of the company for negligence, default, breach of duty, misfeasance or breach of trust. The object underlying Section 633 of the Act obviously is to avoid hardship to officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment is not acceptable, because after initiation of the prosecution, application under Section 633(2) of the Companies Act cannot lie and this Court will have no jurisdiction to allow such an application. In that event an application under Section 633(1) only is contemplated. I find support for this view from an earlier pronouncement of this Court in the case of Shri Krishna Parshad and Others vs. Registrar of Companies Delhi and Haryana reported as 1978 Vol 48 Company cases, 397. The counsel for the Department has not pointed out any ruling to the contrary. 12. For the purposes of deciding the present application it is not necessary for me to express any opinion on the interpretation of or to go into the questions relating to the construction of Section 370 of the Companies Act. Such questions can be more appropriately dealt with by the Court which will be seized of the matter if any proceedings are initiated against the company after going into evidence and considering other material that may be placed before that Court. 13. For the purpose of present case, this Court is mainly concerned with the question as to whether the said Directors and the Secretary of the company who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be excused, the court may relieve him, either wholly or partly from his liability on such terms of as it may think fit. This provision to my mind clearly invests the Court; including the court of learned Metropolitan Magistrate, with power to excuse the accused in any proceedings before it provided the requirements of this sub-section are satisfied. 10. Provisions of sub-section 2 provides that where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for such relief and High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust, had been brought under sub-section (1). 11. Reading the section there is hardly any doubt that the power of the High Court to entertain the petition is only to be exercised when there is mere apprehension that any proceeding will or might be brought against the officer. The moment in fact any proceedings are initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or beach of trust against an officer of the company, it would be a valid defense that he has acted honestly and reasonably and that having regard to all the circumstances of the case he should be excused from the liability. b) Such exercise can be done even by this Court and person need not be relegated to the Court where the proceedings are filed. 14. It is a unique provision introduced in the Act with the objective to provide relief against undue hardship, in deserving cases. The purpose is to give relief from liability to persons who though technically guilty of negligence, default, breach of duty etc, are able to convince the conscious of the Court that they have acted honestly and reasonably and thus having regard to the circumstances of the case they ought fairly to be excused from the charges against them. 15. In P.S. Bedi v. Registrar of Company, Delhi 1985 2 Company Law Journal 122 DE Act this court has taken the view that:- "Even when the Registrar of Companies filed a criminal plaint despite notice of petition for relief under Section 633(2) of the Act, the petition was maintainable and could be disposed of by the Court with appropriate order." 16. The applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.]" 19. In my unreported judgment delivered on 5th April,2011, in C.P. No. 8 of 2010 and C.A. No. 5 of 2010, Bithal D Mundra & Ors. - v- The Registrar Of Companies, West Bengal, I held that the High Court under Section 633(1) and 633(2) had the same power as the criminal court to relieve an alleged offender. The power to relieve includes the power to discharge an alleged offender when no cause of action against him is disclosed. The said provisions of the Act conferred a power upon the High Court to exonerate the accused if it appeared to it that he may be liable but had acted "honestly and reasonably" and furthermore, having regard the circumstances he ought to be excused [See section 633(1) of the Act]. Now, this power given to the High Court is part of the power given to it to relieve an accused. Such discretion is also vested in the criminal court to relieve an offender, if similar circumstances exist. In passing that judgment I had relied upon two decisions of our court in SBI Home Finance Ltd. - v - Regional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 190. Considering S. 468, the Magistrate has the power under Section 203 to dismiss the complaint on the ground of limitation. Therefore, the powers of the magistrate under Section 633(1) to exonerate the accused in case he is of the opinion that the accused is likely to have committed the offence but there are grounds for his exoneration are in my judgment in addition to his powers to take cognizance and proceed with the trial and not an isolated power. Therefore, the High Court is also invested with similar powers. First, to ascertain whether there is cause for proceeding with the complaint and then to consider whether the accused should be exonerated [see SBI Home Finance Ltd. - v - Regional Director, Department of Company Affairs, reported in (2007)138 Company Cases 106(Cal), see also Chandra Kumar Dhanuka & Ors. - v - Registrar of Companies, reported in (2008) 141 Company Cases 101]" 21. I would elucidate upon my above judgment by clarifying that the power to relieve, includes the power to dismiss the complaint and to discharge the accused. This power can be exercised before exercising the power to exonerate the accused exoneration is ordered after the Court is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot hold goods, having regard to the fact that on the date on which the company petition was made, the petitioners legitimately carried an apprehension that the prosecution would be launched against them. If the launching of prosecution is an earlier event, it would frustrate the petitioners' right to move the court for orders under section 633(2) of the Act. In the present company petition, this High Court had passed an order on April 30, 1993, not to take any final decision in the matter of launching prosecution. The said order was received by the Registrar of Companies only on June 7, 1993, and, therefore, the respondent-Registrar of Companies was not aware of the same till that day. This situation makes it clear that on the date on which this company petition was made, the cause for moving the court under section 633 of the Act did exist, and, therefore, the petition cannot be dismissed merely on the ground that subsequent to the filling of the petition, the prosecution had been launched. 28. Adverting now to the liability of the petitioners to be prosecuted under section 63 of the Act, the main ingredient of the provision is that every person who authorised the issue of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies: [1983] 54 Comp Cas 197 (Bom), Suresh Tulsi-das Kilachand v. Collector of Bombay [1980] 2 LLJ 81 (Bom), Suresh Tulsidas Kilachand v. Collector of Bombay [1984] 64 FJR 399; [1984] Lab IC 1614, State of U.P. v. Lalaram Gupta [1974] Lab 1C 963 (All), Khetramohan Nayak v. Sri Sidha Kamal Nayana Ramanuj Das, AIR 1956 Orissa 206, B.M. Chatterjee v. State of West Bengal, AIR 1970 Cal 290 and Nathulal Govardhan v. Regional Provident Fund Commissioner [1984] MPLJ 340; [1985] 66 FJR 66 (MP). Learned counsel, therefore, submitted that as the prosecutions have already been lodged against the petitioner also, he is not entitled to get any relief from this court and he is at liberty to raise any defence that may be available to him before the criminal court in which prosecutions have already been filed. 13. Learned counsel for respondent No. 3 submitted that a criminal case before the Employees' Insurance Court under the Employees' State Insurance Act has already been filed against the petitioner also bearing No. 15 of 1982 for the earlier period. Learned counsel further submitted that under Section 2(15), (17) of the Employees' State Insurance Act, the petitioner is an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner in support of his defence as it is not for this company court but it is for the courts where the prosecutions have already been lodged, which have to consider the same. Therefore, I am not expressing any opinion regarding the merits of those cases which are yet to be decided on merits after recording evidence thereon. That apart, there appears nothing on record to indicate that prosecutions have been lodged against the petitioner also with a view to only harass him as alleged by him because it cannot be disputed that the petitioner being a director of the company is also an occupier. Therefore, he is at liberty to take whatever defences are available to him before those courts and consequently I do not find any valid ground to allow this petition, as the judgment of the Delhi High Court, on which learned counsel for the petitioner has placed reliance, has only made certain observations regarding such directors. (viii) In the decision Farouk Irani and Another V. Board for Industrial and Financial Reconstruction, 2002 [110] Company Cases at page 64, it is observed as under : "Under Section 633(2), this Court has the power to grant relief as a trial court, provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be justified to relieve the petitioners by exercising its discretionary jurisdiction under Section 633. It is made clear that any observation or finding recorded in this order is only for the limited purpose of this company petition and the criminal court before whom the complaints may be made, against the petitioners herein, shall decide the complaints on the merits and on the evidence that may be let in without reference to any observations or findings, if any, recorded by this Court for the purpose of this petition." (ix) In the decision M. Meyyappan V. Registrar of Companies, 2012 (112) Company Cases 450 [Madras] at Paragraph Nos. 13 and 15, it is observed as under : "13. Learned counsel for the petitioner has relied on the following decisions in support of his claim that by virtue of the above-referred provisions this court in a appropriate case relieve the person concerned from the prosecution : (1) In the case of Muktsar Electric Supply Co. Ltd., In re (In Liquidation) [1966] 36 Comp Cas 144 (Punj); (2) East India Hotels Ltd., In re [1980] 50 Comp Cas 381 (Cal); (3) G.M. Mohan v. Registrar of Companies [1984] 56 Comp Cas 265 (Karn); and (4) P. Vaman Rao v. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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." 27. It is also represented on behalf of the Respondents that the other Respondents and the Registrar of Companies in Company Petition have not preferred any Appeal against the Order dated 23.10.2013 passed in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013. 28. The Learned Counsel for the Respondents points out that the issue that crops up for rumination is that whether the Hon'ble High Court is barred from entertaining a Petition under Section 633(2) of the Companies Act by an Officer of a Company against whom any proceeding that is brought before any Court. In this regard, the Learned Counsel for the Respondents emphatically projects an argument that the power conferred under Section 633 of the Companies Act upon the High Court is an additional power and cannot be read in a restricted manner. 29. The Learned Counsel for the Respondents submits that the Learned Single Judge had extensively analysed various provisions of the Companies Act, 1956 and came to the resultant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Section 633 gives wide powers to the Court to grant relief in appropriate cases, provided the Court is convinced that the accused acted honestly and reasonably." 31. The Learned Counsel for the Respondents submits that the Impugned order dated 23.10.2013 passed in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 passed by the Learned Single Judge is not a 'Judgment' within the meaning of Clause 15 of the Letters Patent and in short, the impugned order does not affect any rights of the Appellant adversely. Furthermore, the Appellant is wary of facing a contest in C.P. No. 297 of 2013 and there are Respondents including the Registrar of Companies and added further, the Appellant does not mention in which status/capacity he claims to be an aggrieved. Besides the above, the Appellant is not a Share Holder or Contributory as per order in TCP No. 101 of 2016 in C.P. No. 62 of 2012 dated 22.06.2018 passed by the National Company Law Tribunal, Division Bench, Chennai Branch between M/s. Vis-Ram Financial Services Pvt., Ltd., V. M/s. Metafilms India Limited and 33 Others. 32. The Learned Counsel for the Respondents by referring to Section 621 of the Companies Act, 1956 conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Additional Chief Metropolitan Magistrate, (EO1), Egmore, Chennai as against the Respondents 1 and 2 and another G. Sivaprakash, Chartered Accountant, Chennai--30, which was taken up on file by the Learned Additional Chief Metropolitan Magistrate, EO1, Egmore. 36. The Respondents 1 and 2 in the present Appeal upon receipt of summons had entered appearance through the Learned Counsel, later the Respondents had filed C.P. No. 297 of 2013 before this Court [under Section 633 of the Companies Act, 1956 r/w Rule 9, 11 of the Company Court Rules, 1958] against the present Appellant [who figured as 1st Respondent one R. Subramanian, as 2nd Respondent and the Registrar of Companies, Chennai, viz., 3rd Respondent. As a matter of fact, the Respondents [Petitioners in C.P. No. 297 of 2013] prayed for passing of an order by this Court to relieve them wholly from the alleged acts of default and liability complained by the 1st Respondent [Appellant] in C.C. No. 107 of 2013 pending on the file of the Learned Additional Chief Metropolitan Magistrate, EO1, Egmore, Chennai. 37. It appears that the Respondents [Petitioners in C.P. No. 297 of 2013] had obtained an order of Stay of the Criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd Amendment] Act, 2002, the Civil Courts to a vast extent were deprived of their jurisdiction because of the formation of National Law Tribunal and National Company Law Appellate Tribunal. Apart from that, it is seen from the Order dated 22.06.2018 in T.C.P. No. 101 of 2010 passed by the National Company Law Tribunal [Division Bench, Chennai] in C.P. No. 62 of 2012 [between M/s. Vis-Ram Financial Services Pvt., Ltd., Limited V. M/s. Metafilms India Limited and 33 Others] wherein and where under it is observed as under: "The Petitioner is not a member of the Respondent Company. Except providing letter of allotment, no share certificate has been produced. Letter of allotment is purportedly issued on 28.07.1997. No steps or claim ever made for the share certificates since 1997. The petitioner has never asserted his right as shareholder for 15 years. The petition is barred by limitation. The petitioner is pawn in the hands of R. Subramaniam who has been engaged in series of disputes and the present petition is one more attempt to harass the applicants. The petition is abuse of process. Having failed to obtain orders through various parties like Thamaraiparani Investments Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that in the decision Progressive Aluminium Limited V. Registrar of Companies reported in (1997) 4 Company Law Journal at Page 215(AP), it is held that the prosecution was not a bar to the continuation of the Relief Petition. Also that, as per Section 633(3) of the Companies Act, 1956 whether it is a criminal proceeding or a relief of civil liability is claimed under Section 633(2) of the Act, in all these cases, notice is to be given to the Registrar of Companies, as per Section 633(3) of the Act. The power to relieve is in the hands of the Court, when it is convinced that an individual had acted reasonably and honestly, as per Division Bench Decision D. Doss V. C.P. Connell (1937) 7 Company Cases at Page 429. The subjective satisfaction of the Court in granting relief in a given case must be reached after a careful and meticulous rumination of the entire subject matter in issue to the effect that the person concerned had acted honestly and reasonably and that by taking note of all circumstances of the case, he must be excused. In short, the power under Section 633 of the Companies Act, 1956 is not be exercised in a casual and caveliar and loose fashion, mainly resting upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (I) that can properly be designated as claims. It would therefore follow that if the word "proceeding" in sub section(I) is wide enough to cover a criminal prosecution, the word "claim" in sub-section(2) must be construed as having been used in a special sense so as to include also a criminal prosecution. In other words you are to look upon a criminal prosecution as a claim that the offender be punished in accordance with law. The wording of sub-section(I) and (2) of section 633 of the Act is, for the present purpose, identical with the wording of sub-sections(I) and (2) of section 372 of the English Act of 1929, and with reference to sub-section(2) of that Act, it was held in Barry and Staines Linoleum Limited, In re (1934) I Ch. 227; (1934) 4 Company Cases 196. I therefore hold that sub-section(2) of Section 633 is wide enough for this Court to grant relief against an apprehended criminal prosecution..." 48. Further, in the decision in the matter of Muktsar Electric Supply Co., Ltd., reported in 1966 (Vol. 36) the Company Cases at page 144, at Special Pages 156 and 157, it is observed as under: "Actually, summary proceedings before the Magistrates had been commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but sub-section(2) applies only to apprehended claims, i.e., claims for civil liability, and does not cover penal liabilities or prosecutions. I have carefully perused this judgment but with great respect, I am unable to agree with the view of the English Courts as also the Orissa, Bombay and Kerala High Courts that relief can be granted against possible criminal prosecution under sub-section(2) of section 633 of the Act of 1956 or Section 281(2) of the Act, as under Section 372(2) of the English Act." 49. It may be useful to refer to the decision of this Court Y. Venkanna Chowdry [died] and another V. G. Lakshmidevaamma and 20 others reported in 1994 1 L.W. at Page 112 and at Special Page 113, wherein at Paragraph Nos. 18 and 19, it is mentioned as under: "18. We have seen from the facts and of the adjudications that have been made in the process of preparation of the final decree including the impugned order under which all issues as to the objections of defendants 7, 8, 10 and 19 in particular have been disposed of except that the total amount realised from the two pictures by the first defendant and the rate of interest are left to be determined, for which purpose, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being such orders which contain the quality of finality such as orders specified in clauses (1) to (w) of Order 43 Rule 1 of the Code of Civil Procedure, which are judgments within the meaning of the Letters Patent as well, and therefore appealable and added, "There may also be interlocutory orders which are not covered by Order 43. Rule 1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding. Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote." The second of the types of judgment enlisted in the judgment of the Supreme Court are of two forms : (1) Where the trial judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable, and (2) where the trial judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit, etc. in the latter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the same has been urged, I take that into consideration. In the context of the report, there is no material concealment of information by such statement. In any event, the directors report is contained in reports which detailed the financial position of the company and anyone interested could have skipped over the pages to come to the schedule to be balance-sheet in order to ascertain the financial status of the company... Upon an application being filed under Section 633(2) of the Act, the High Court assumes the power and jurisdiction as the court before which the proceedings threatened to be instituted may have been brought. In such a case, the criminal court would have the jurisdiction to acquit the accused, to exonerate the accused or to find him guilty and to sentence him. Section 633(2) does not merely give the discretion to the High Court to pardon a person upon his admission of negligence or breach of trust or misfeasance or default or breach of duty. Upon the High Court coming to the conclusion that the apprehension referred to in the opening words of sub-section(2) was genuine, the High Court, willy-nilly becomes the criminal court in which the complaint against the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of duty, misfeasance or breach of trust. Sub-Section (2), in its closing part, identifies the criminal court and provides that the High Court will have the same powers as the criminal court to relieve a petitioning officer. The expression "if it had been a court before which a proceeding against that officer... had been brought under Sub-Section (1)" makes it clear that the High Court in exercise of powers under Sub-section (2) will have the same powers as the court receiving the criminal proceedings. Such expression does not imply that the High Court will exercise only such powers under Sub-Section(2) that the criminal court may, upon the criminal court finding the charged officer guilty. For the criminal court to relieve the charged officer, such court may or may not conclude that the charged officer is liable. There can be no other meaning to the expression 'he is or may be liable' found in Sub-section(1). If the criminal court can relieve a charged officer without coming to any conclusion that the charged officer is actually guilty or is liable for the offence, so can the High court. In taking into account the surrounding circumstances, the criminal court may form a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it thinks necessary. Therefore, if S.633 is interpreted as to include proceedings under Acts other than the Companies Act it will be open to the Court to give such relief under S.633 without giving notice to the authority competent to prosecute in respect of liabilities under the other laws or upon giving notice to others concerned and not the Registrar. Thus the mandatory requirement of sub-section(3) of S.633 can easily be bypassed." 54. Further, in the aforesaid decision at Pages 18 and 19 at Paragraph Nos. 23 and 24, it is observed as under: "23. Under the Companies Act of 1956 (similarly under the Old Act of 1913) various duties and liabilities have been im-posed; equally offences have been created for the non-performance of such duties. These offences are offences in relation to the performance of certain duties under the Act. the various offences are mentioned under Sections 59, 62, 63, 68, 142, 162, 207, 218, 272, 374, 420, 423, 538 to 545 & 606. 24. The expression 'any proceeding' occurring under Section 633 cannot be read out of context and treated in isolation. It must be construed in the light of the penal provisions. Otherwise what will happen is the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an officer of a company and gives power to the Court hearing the case in certain circumstances to grant relief. Sub-section (2) gives power on the other hand to the High Court to grant relief against a prospective liability in respect of a claim that an officer of a company apprehends might be made against him in regard to negligence, default, breach of duty misfeasance or breach of trust. Now, it is clear that whereas Sub-section (1) refers to proceedings already commenced, Sub-section (2) contemplates a claim which is anticipated as one which might be made in future. Under Sub-section (1) the important words are "the Court hearing the case" which obviously mean the Court before which a proceeding is pending. These words, therefore, mean that it would not be this Court which can grant relief under Sub-section (1) but the Court before whom the proceeding has commenced and is pending. Sub-section (2) on the other hand creates a fiction and provides that in respect of an apprehended claim this Court shall have the same power to grant relief as it would have had under this section if it had been the Court before which proceedings for negligence default, breach of duty, misfeasance or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er one of the penal sections of the Act. Those are not sections like Section 633 which empower the Court to grant relief in respect of liability incurred by such a director or an officer of a Company. A comparison between those sections and Section 633 cannot therefore help in the construction of the word "claim" in Section 633(2)". Further, in the aforesaid decision at Special Page 247 wherein at Paragraph No. 10 it is observed as follows: "10. As already pointed out, the important words in Sub-section (2) of Section 633 are "the Court ..... shall have the same power to relieve him as it would have had under this section if it had been a Court before which proceedings against that person for negligence ..... had been brought." These words, in my view mean proceedings described in Sub-section (1) including proceedings involving fines and penalties in respect of which, if already commenced only the Court which they are pending has the authority to grant relief but which if not pending or already commenced it would be this Court which would have jurisdiction to grant as if it had been a Court before which proceedings had been brought. In this view I have no difficulty in holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the Appellant to the effect that the Respondents cannot contend in C.A. No. 1072 of 2013 in C.P. No. 297 of 2013 that the High Court can grant them relief under Section 633(2) of the Company Act, is legally untenable one. Further, this Court, in the present Intra Court Appeal is not traversing upon the merits of the controversies / disputes between the parties and also not expressing any opinion on the merits of the controversies in pending Company Petition No. 297 of 2013, on the file of this Court. 58. Also, this Court points out that the decisions of various High Court cited on behalf of the Appellant in the present O.S.A. No. 393 of 2013 where the criminal prosecutions were initiated by Registrar of Companies/Statutory Authority after issuance of show cause notices to the concerned person(s) and thereby making them aware / bringing it to their knowledge well in advance about the anticipated / apprehended / prospective/contemplated proceedings. But in the present case on hand, the Appellant is the complainant in C.C. No. 107 of 2013 on the file of trial Court. 59. There is no Second Opinion of a very significant fact that the power under Section 633(2) of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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