IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF AUGUST, 2019 BEFORE THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION No.6179 OF 2016 BETWEEN SRI. HARIDAS POTTATH S/O KUMAR POTTATH, AGED ABOUT 56 YEARS, R/AT SREE HARI, NO.56, 7TH MAIN, SHANKARNAGAR, BENGALURU-560096 (BY SRI. K V SATISH, ADVOCATE) AND 1. PEERLESS ENGINEERING PRODUCTS PRIVATE LIMITED, NO.26, 12TH MAIN, III BLOCK, JAYANAGAR, BENGALURU-560011 REPRESENTED BY ITS MANAGING DIRECTOR, DR. SABHAPATHI DORAI RAJU 2. Dr. SABHAPATHI DORAI RAJU S/O SABAPATHI HUDALIAR, AGED ABOUT 72 YEARS, R/AT NO.26, 12TH MAIN, III BLOCK, EAST JAYANAGAR, BENGALURU-560011 3.Mrs. VELLOR JANAKIRAM GEETHA KUMARI W/O Dr. SABHAPATHI DORAI RAJU, ... PETITIONER AGED ABOUT 65 YEARS, R/O NO.26, 12TH MAIN, III BLOCK, EAST JAYANAGAR, BANGALORE-560 011 (BY SRI. M R C MANOHAR, ADVOCATE) ... RESPONDENTS THIS CRL.PETITION IS FILED U/S.482 CR.P.C PRAYING TO QUASH THE ORDER DATED 02.07.2016 PASSED IN CRL.RP.NO.892/2015 (ANNEXURE-A) ON THE FILE OF LXVII ADDL. CITY CIVIL AND S.J., BANGALORE AND RESTORE THE COMPLAINT IN C.C.NO.322/2014 FILED BEFORE THE SPL. COURT FOR ECONOMIC OFFENCES, BANGALORE FOR DISPOSAL IN ACCORDANCE WITH LAW AND ALLOW THIS PETITION.
THIS CRIMINAL PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Heard learned counsel for petitioner and learned counsel for respondents. Perused records.
2. Petitioner herein presented a complaint under Section 200 of Cr.P.C. seeking action against respondents under Section 448 r/w Section 447 of the Companies Act, 2013. The material allegations leveled against the respondents are that, respondents forged signatures of the complainant on a resolution dated 20.05.2013 and submitted the same before the Registrar of Companies, which is an offence under Section 448 of the Companies Act, 2013. Learned Magistrate took cognizance of the alleged offence and issued summons to respondents under Section 447 r/w Section 448 of the Companies Act, 2013.
3. On service of summons, respondents filed an application under Section 239 of the Cr.P.C. seeking discharge. Learned Magistrate by a considered order dismissed the said application. Respondents challenged the said order before the learned LVII Addl. City Civil and Sessions Judge, Bengaluru City and by the impugned order dated 02.07.2016, allowed the revision and consequently, discharged respondents/accused nos. 1 to 3 of the offences punishable under Section 447 r/w Section 448 of the Companies Act, 2013. The only reasoning assigned by the learned Sessions Judge in the impugned order finds place at para No.11 and 12 of the order which is extracted here below.
“11. The company’s amendment Act 2013 (18/2013) came into force w.e.f. 12.09.2013 the amendment provisions at Sl.No.53 pertaining to Sec. 443 to 453 both inclusive but, according to the complainant, the revision petitioner No.2 alleged to have committed the offence under Sec. 448 of Company’s Act by violating the provisions of Company’s Act i.e,. by inducting the revision petitioner No.3 as a Director of the said company during January 2013 and also illegally transferred 450 shares in favour of the revision petitioner No.3 without the consent of the complainant and also inducted 5 Director who are the relatives of the revision petitioner No.2 to the said company and reported to the Registrar of Company’s by forging the signature of the complainant. Therefore, the revision petitioners cannot be punished for the offence alleged to have committed prior to amendment Act which came into force from 12.9.2013. The Learned Presiding Officer of Spl. Court for Economic Offences has not appreciated the said facts in proper perspective and committed an error in not discharging the revision petitioners for the offence punishable under Sec. 447 r/w. 448 of Company’s Act. Hence, the interference of this court is warranted. Therefore, the revision petitioners cannot be tried for the offence punishable under Secs.447 r/w.448 of Company’s Act 2013, as because the alleged violation of the provisions of Company’s Act by the revision petitioners prior to the Company’s Amendment Act 2013, which came into force from 12.09.2103.
12. The complainant/respondent has not chosen to initiate the proceedings against the revision petitioners before the Company’s Amendment Act 2013 brought into operation. Advocate for the respondent interalia contended that, the revision petitioners can be prosecuted under Sec. 628 of Company’s Act 1946, as which is pari-materia with provisions of Sec. 448 of Company’s Act. But, the revision petitioners cannot insist the court to try the revision petitioners under Sec.628 of Company’s Act 1956, as because, the complainant has filed the private complaint under Sec.200 Cr.P.C. r/w Sec. 447 and 448 of Company’s Act before the Spl. Court for Economic Offences. Moreover, the complainant/ respondent has knocked the door of Company Law Board at Chennai and also filed civil suit for seeking the same relief against the revision petitioners. The complainant has failed to make out prima facie case that, the revision petitioners have committed offences punishable under Sec.447 r/w Sec.448 of Company’s Act. The Presiding Officer of Spl. Court for Economic Offences has failed to appreciate the said fact while passing the impugned order. Hence, interference of this court is warranted. Therefore, I am of the considered view that, the Presiding Officer of the Spl. Court for Economic Offences has erroneously rejected the discharge application filed by the revision petitioners to discharge them for the offence punishable under Sec. 447 r/w. 448 of Company’s Act.”
4. Reading of the above order indicates that the learned Magistrate has proceeded on the erroneous impression that the averments made in the complaint fall under Section 628 of the Companies Act 1956 and since the prosecution is instituted under the new Act, same is not tenable. Said reasoning cannot be accepted as there is no finding by the trial court that the averments made in the complaint do not make out the ingredients of Section 448 r/w Section 447 of the Companies Act, 2013. The Revisional Court has misread and misinterpreted the complaint. A careful reading of the averments made in the complaint clearly suggest that the alleged offences were committed after the new enactment came into force. The case of the complainant as reflected in para 19 and 25 of the complaint is that alleged resolutions were fabricated by forging the signature to make it appear that they were “said to have been passed on 02.01.2013.” Further allegations in para 20 read as under:
“20. Thereafter, the Complainant has also found that four more resolutions have been fabricated by the Accused No.2 by forging the signature of the Complainant and purported to have been passed in the Meeting of the Board of Directors allegedly held on 20.05.2013. As per the said falsified resolutions, four persons namely, Sri. Umashankar, Smt. B Lakshmi, who are son and daughter of the Accused No.2 and Miss. Anju Haridas, Daughter of the complainant and one Sri. Ashok Kumar, who is said to be a friend of the Accused have been appointed as additional directors of the Accused No.1 Company. The extracts of the aforesaid resolutions have in fact been filed with the Registrar of Companies and certified copies of the same along with Form No.32 obtained by the Complainant are produced herewith. ”
5. The averments made in para 24 make it evident that the action was sought by the complainant in respect of the acts committed after the enactment of Act of 2013. It reads as under:
“ 24. The Complainant submits that the Accused No.2 despite being aware of the aforesaid provisions under the Articles of Association has once again fabricated another resolution purportedly passed on 30.12.2013 as per Notice of AGM dated 20.12.2003 to the effect that the aforesaid four additional directors viz., Sri. Umashankar, Smt. B Lakshmi, Miss. Anju Haridas and Sri. Ashok Kumar, have ceased to be directors of the Company in view of their not holding the qualifying shares in the Company. However, the accused No.3, who is the wife of the accused No.2, who has also been illegally appointed as a Director and who also did not hold the requisite 10 (ten) qualifying shares continues to occupy the position of a Director of the Company. The said developments came to the knowledge of the Complainant recently and it is later learnt by the Complainant that the Accused No.2 has transferred 450 (four hundred and fifty) number of shares standing in his name in favour of his wife without calling for any board meeting or concurrence of the Complainant. The said fact is evident from the resolution passed by the Accused dated 30.12.2013 which is produced herewith.”
6. In the wake of these clear averments constituting the offences under the provisions of Section 448 r/w 447 of the Companies Act 2013, the revisional Court has committed a serious error by setting aside the order passed by the Magistrate. As a result, the impugned order is liable to be set aside.
Accordingly, the petition is allowed. The impugned order dated 02.07.2016 passed in Crl.R.P.No.892/2015 on the file of LXVII Addl. City Civil and Sessions Judge, Bengaluru is set aside and the order dated 08.10.2015 passed in C.C.No.322/2014 on the file of the Special Court of Economic Offences at Bengaluru is restored.
Sd/- JUDGE psg*