SAILENDRANATH SINHA Vs. JASODA DULAL ADHIKARY

JUDGEMENT

(1.) This appeal by, special leavc raises a question of interpretation of S. 237 of the Indian Companies Act. Appellant No. 1 is one of the past directors of the Bank of Commerce Ltd., now in liquidation and appellant No. 2 was its Managing Director. The Bank was ordered to be wound up by the High Court of Calcutta on August 7, 1950 and one G. K. Dutt. Bar-at-law was appointed its Official Liquidator but on September 7, 1950 the Official Receiver was appointed in place of Dutt. On July 23, 1952 respondent No. 1 filed in Court of the Presidency Magistrate a complaint against the appellants u/ss. 120B, 406, 467, 477A, Indian Penal Code and 182A of the Indian Companics Act and stated that he was doing so under the authority of the official liquidator and the official liquidator had obtained the directions of the High Court to file the complaint. On May 5, 1953 the appellant applied to the Presidency Magistrate for dismissal of the complaint as bring without the sanction of the Company Judge and therefore the official liquidator in his official capacity was incompetent to prefer the complaint, being the creation of the statute he could only act within the four corners of the statute. He possessed only those powers which the statute conferred on him. This application was dismissed by the Presidency Magistrate on June 13, 1953.

(2.) The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was 'ab initio' void because of the absence of prior direction judicially given by the High Court under S. 237 (1) of the Indian Companies Act. The High Court found against the appellants and discharged the rule. The learned Chief Justice held that the provisions of S. 237 (1) are no bar to a prosecution by the liquidator; that under S. 237 (1) there is "nothing in the nature of a judicial proceeding"; that it could not be said that the order was not a valid direction under S. 237 (1). He said:

(3.) On August 5, 1953 the official liquidator took out misfeasance proceedings under S. 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of commencement of proceedings u/s. 235. This application was also heard with the rule which was issued on June 29, 1953 and it was dismissed by the same judgment by which the rule was discharged, i.e., of June 21, 1954.