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TMI Blog2021 (1) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... fixing the date for its appearance and to proceed with the matter further, which order is produced as ANNEXURE-A; b) Issue such other writ, order or direction as deemed fit in the circumstances of the case, in the interest of justice and equity. 2. The petitioners in W.P.No.10142/2020 are before this Court seeking for the following reliefs: a) Issue an order, direction or writ in the nature of certiorari or any other appropriate writ or order setting aside the order dated 3.07.2020 passed by the LVIII Addl. City civil and Sessions Judge, Bangalore City in Criminal Revision Petition No.750/2017 on his file setting aside the order dated 03.07.2017 passed by the Special Court, Economic Offences, Bangalore city in PCR No.12/2017 and to further, directing the trial Court to restore PCR No.12/2017 to file and to issue notice to the complainant i.e. the respondent herein by fixing the date for its appearance and to proceed with the matter further, which order is produced as ANNEXURE-A; b) Issue such other writ, order or direction as deemed fit in the circumstances of the case, in the interest of justice and equity. 3. FACTS: W.P.No.10140/2020: 3.1. Petitioner No.1 is stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 409 r/w 120-B of the IPC on the ground that petitioners No.1 to 3 were directors in Vidya Investment and Trading company Pvt. Ltd. (VITC), Regal Investment and Trading Company Pvt. Ltd. (Regal) and Napean Trading and Investment Company Pvt. Ltd. (Napean). 3.10. It is alleged that in the said three companies, there is no other shareholder other than the three companies themselves which were holding equity shares of the said companies, each of the companies holding shares in the other. Since all the shares in the companies were owned by the companies themselves, there is no other owner of the said companies and when they were wound up, there being no shareholder, the entire assets of the said companies had to vest in the state. However, the accused conspiring with each other committed fraud to take over the assets of the three companies which together had a net worth of Rs. 40,000/- crores. It is alleged that the petitioners had taken away Rs. 12,000/- crores of assets of the three companies by way of gifts made by the companies directly or indirectly to a private trust controlled by accused Nos.1 and 2. The accused have conspired to misappropriate the entire assets of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 750/2017 3.14. Aggrieved by the orders passed in aforesaid PCR Nos.6/2017 and 7/2017, the complainant filed Crl.Revision Petitions No.749/2017 and 750/2017, respectively before the 58th Addl. City Civil and Sessions Judge, Bangalore which came to be disposed by separate orders dated 3.7.2020 allowing the said Revision Petitions. While doing so the revisional court held that the accused, the petitioners herein do not come within the definition of Officer defined under Section 2(59) of the Companies Act. Hence, the bar to take cognizance under Section 439(2) of Companies Act was not applicable and therefore, held that the order dated 3.07.2017 passed by the Special Court for Economic Offences was bad in law and set it aside with a direction to restore PCR No.6/2017 and PCR No. 12/2017 and to proceed with the matter. 4. It is aggrieved by the said orders dated 3.7.2020, the petitioners are before this Court. 5. On service of notice, the respondent has filed its statement of objections on 3.10.2020 in both matters. In the statement of objections, it is contended that: 5.1. There are serious allegations made against the petitioners as regards siphoning of 31,342 crores. 5.2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing as regards the investment made by the petitioner Group in Companies belonging to said Sri.R.Subramanian. There is a proceeding filed against the said Sri.R.Subramanian and Subhiksha Trading Services Limited of which he is a director for dishonor of cheques, as also several other proceedings had been filed by the petitioner group, it is due to the same that the said R.Subramanian has sought to wreck vengeance on the petitioner group and has been filing one false complaint after another. 6.8. Several allegations have been made against the said R.Subramanian and his involvement in several offences which may not be germane to the present fact situation. 7. On the filing of the rejoinder, respondent has filed an application under Order VI Rule 16 of CPC to strike out the pleadings and documents produced by the petitioners in the rejoinder. In the said application, it is contended that: 7.1. The only question which is relevant to the matter is the scope of the bar of cognizance imposed under Section 439(2) of the Act of 2013, 7.2. The averments and allegations made in the rejoinder are only to browbeat the respondent. The averments made in rejoinder are not germane to the matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll these factors and taking into consideration that there are serious allegations against Subhiksha group and said Sri.R.Subramanian, who is representing and or a part of the respondent, as also taking into consideration none of the objects of the respondent have been satisfied though a period of six years had been elapsed from the date of incorporation, the licence dated 22.6.2012 issued by the Registrar of Companies to the respondent was revoked. 9.7. The said respondent has been filing numerous matters against the petitioner and their group of companies making false allegations. 9.8. The respondent company was represented by its authorized signatory Sri.R.Subramanian in the Company Application filed in Co.P.No.182/2014 against the petitioners and others. 9.9. The entire litigation which has been initiated including the private complaint is to wreck vendetta on the petitioners and their group of companies. There are no bonafides in the same. 9.10. Though any person can initiate criminal proceedings it would be required to ascertain in a proceedings under Section 482 of Cr.P.C that if such initiation of criminal proceedings is bonafide or malafide. In the present case, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken in the alternative and without prejudice to one another." And the prayer sought for therein is as under: (a) Issue a writ of declaration that the provision of Section 439(2) of the Companies Act 2013 barring courts of law from taking cognisance of any complaint in respect of the Act from persons other than shareholders is unconstitutional oppressive excessive illegal and ultra vires and hence void. (b) Issue rule nisi in terms of prayers (a) above; (c) pass such other and further order/orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case." 9.13. Relying on the above, it is submitted that the respondent itself having challenged the requirements of Section 439(2) before the High Court of Judicature of Delhi cannot be permitted to argue contrary to what is stated in the said writ petition filed by the respondent. 9.14. On the above ground he submits that the order passed by the Special Court for Economic Offences dated 3.7.2017 is proper and correct. The order passed by the Rivisional court dated 3.7.2020 is a misreading of the law and as such, the said order is required to be set-aside and the petition to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 1971 SCC (Cri) 143 : AIR 1971 SC 786 : (1971) 3 SCR 236] .) Existence thus of a valid sanction is a prerequisite to the taking of cognizance of the enumerated offences alleged to have been committed by a public servant. The bar is to the taking of cognizance of offence by the court. Therefore, when the court is called upon to take cognizance of such offences, it must enquire whether there is a valid sanction to prosecute the public servant for the offence alleged to have been committed by him as public servant. Undoubtedly, the accused must be a public servant when he is alleged to have committed the offence of which he is accused because Sections 161, 164, 165 IPC and Section 5(2) of the 1947 Act clearly spell out that the offences therein defined can be committed by a public servant. If it is contemplated to prosecute public servant who has committed such offences, when the court is called upon to take cognizance of the offence, a sanction ought to be available otherwise the court would have no jurisdiction to take cognizance of the offence. A trial without a valid sanction where one is necessary under Section 6 has been held to be a trial without jurisdiction by the court. (Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and K.S. Dharmadatan v. Central Government [(1979) 4 SCC 204 : 1979 SCC (Cri) 958 : (1979) 3 SCR 832 : 1979 Cri LJ 1127] . It therefore appears well-settled that the relevant date with reference to which a valid sanction is sine qua non for taking cognizance of an offence committed by a public servant as required by Section 6 is the date on which the court is called upon to take cognizance of the offence of which he is accused. 10.6. Kalicharan Mahapatra v. State of Orissa, (1998) 6 SCC 411 [para 7 and 14) 7. There is no indication anywhere in the above provisions that an offence committed by a public servant under the Act would vanish off from penal liability at the moment he demits his office as public servant. His being a public servant is necessary when he commits the offence in order to make him liable under the Act. He cannot commit any such offence after he demits his office. If the interpretation now sought to be placed by the appellant is accepted, it would lead to the absurd position that any public servant could commit the offences under the Act soon before retiring or demitting his office and thus avert any prosecution for it or that when a public servant is prosecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-clause (a) because he had been employed in connection with the affairs of the Union. But the sub- section contemplates that the person must be employed in connection with the affairs of the Union and not that he was employed with the affairs of the Union. The policy underlying Section 6 and similar sections, is that there should not be unnecessary harassment of public servants. But if a person ceases to be a public servant the question of harassment does not arise. The fact that an appeal is pending does not make him a public servant. The appellant ceased to be a public servant when the order of dismissal was passed. There is no force in the contention of the learned counsel and the trial cannot be held to be bad for lack of sanction under Section 6 of the Act". 10.8. K.S. Dharmadatan v. Central Govt., (1979) 4 SCC 204 [para 5] 5. A perusal of this section would clearly disclose that the section applies only where at the time when the offence was committed the offender was acting as a public servant. If the offender had ceased to be a public servant then Section 6 would have no application at all. Furthermore, it is also manifest from the perusal of Section 6 that the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions against whosoever appears against the respondent and /or passes an order against the Respondent. The Respondent has infact filed a criminal complaint against the officer who passed the orders under Section 8 of the Act of 2013, which was against the respondent. 13.4. Virtually the entire rejoinder viz., para 10, 17 to 37 are sought to be deleted and almost all the documents produced along with the rejoinder are requested to be ignored. The rejoinder consists of 37 paragraphs. In the said rejoinder, the prior litigation between the petitioner group and the representative of the respondent, both as authorized signatory as also a counsel have been detailed. The fact of the litigation between the petitioner group and respondent has also been detailed. 13.5. Para 10 of the rejoinder deals with current status of the shareholders of the respondent company. It cannot therefore be said that the same is not relevant to these proceedings. 13.6. Para 17 to 37 deal with the order of the Regional Director passed in a proceeding between one of the group companies of the petitioner and the respondent, the observations made by the Regional Director in the said proceedings, as also the nexus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, but that cannot be the only reason for striking out of pleadings as also documents. 13.15. Further I am of the considered view that the filing of the rejoinder and production of documents would not cause any abuse of process of the court. 13.16. The averments made and the documents produced are in reply to the detailed objections filed by the respondents and these averments and documents would be required to be considered by this Court. 13.17. In view thereof I answer Point No.1 by holding that the application in IA No.2/2020 under Order VI Rule 16 of CPC is required to be dismissed and is so dismissed. 14. POINT NO.2: Whether Section 439(2) of Act of 2013 and Section 19(1) of Prevention of Corruption Act are in pari materia with each other? 14.1. Section 19 of the Prevention of Corruption Act is reproduced hereunder for easy reference: "19. Previous sanction necessary for prosecution.-- (1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction,-- (a) in the case of a person who is employed in connection with the affairs of the Union and is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar nature." 14.2. Section 439 of Companies Act is reproduced herein for easy reference: "439. Offences to be non-cognizable.-- (1) Notwithstanding anything in the Code of Criminal Procedure, 1973 (2 of 1974), every offence under this Act except the offences referred to in sub-section (6) of section 212 shall be deemed to be non-cognizable within the meaning of the said Code. (2) No court shall take cognizance of any offence under this Act which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder of the company, or of a person authorised by the Central Government in that behalf: Provided that the court may take cognizance of offences relating to issue and transfer of securities and non-payment of dividend, on a complaint in writing, by a person authorised by the Securities and Exchange Board of India: Provided further that nothing in this sub- section shall apply to a prosecution by a company of any of its officers." 14.3. The contention of Sri.R.Subramanian is that both the above provisions are in pari materia with each other. In that before initiating proceeding under Section 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANSWER TO POINT NO.3: Whether any person can file a proceeding against the directors of a company and/or the company under Section 439(2) of the Act of 2013 ? 15.1. In view of the above finding in respect of point No.2, it is but required that to initiate proceeding under Section 439(2) and/or if before the Court taking cognizance such matter arises than the court can take cognisance only on a complaint in writing by the Registrar or shareholder of the company or a person authorised by the Central Government in that behalf. 15.2. I answer Point No. 3 by holding that apart from the named persons a complaint can also be filed by a person authorised by Securities and Exchange Board of India in terms of the proviso (1) of Section 439(2) or the Official Liquidator in terms of Section 439(4), no other person can initiate any criminal proceeding against a company for the offence committed under the Act of 2013. 16. POINT No. IV: Whether the order of Revisional court d 3.07.2020 require any interference ? 16.1. In view of the discussion and finding as regards point Nos.2 and 3, the issue is not whether the accused would come under the definition of 'Officer' under Section 2(59) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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