SHIMBU IMPORTS AND EXPORTS Vs. AVINASH SUBRAMANYAM

JUDGEMENT

(1.) THESE applications filed under Section 538(1) of the Companies Act, 1956, read with Rule 9 of the Companies (Court) Rules, 1959, are disposed of by this common order as they involve common questions of law and fact.

(2.) APPLICATIONS have been filed averring that the Company has been ordered to be wound up by an order passed by this Court in company petition referred to in the applications and thereafter, the Official Liquidator attached to this Court became the Liquidator of the said Company by virtue of Section 449 of the Companies Act, 1956 (hereinafter called the 'Act') and thereafter, the Official Liquidator issued notice to the Ex-Directors to hand over the books of account and records of the Company. However, the Ex-Directors and Officers of the Company, who are arrayed as respondents did not produce the account books or the documents as required by the Official Liquidator and wherefore, the applications are filed seeking for a direction to the respondents to hand over all the books and records of the Company (in liquidation) and punish them for default under Section 538 of the Act and to pass such other orders as this Court may deem fit in the instant case.

(3.) LEARNED Counsel appearing for the respondents in Company Application No. 135 of 2000 submitted that Chapter V of the Act deals with offences antecedent to or in the course of winding up and Section 538 deals with offences by officers of companies in liquidation as enumerated under Clauses (a) to (p) of Section 538(1) of the Act and in the case of any of the offences mentioned in Clauses (m), (n) and (o), the same are punishable with imprisonment for a term which may extend to five years, or with fine, or with both, and, in the case of any other offence, with imprisonment for a term which may extend to two years, or with fine, or with both. In view of the definition of 'the Court' under Section 2(11)(b), the Court with respect of any offence against this Act means the Court of a Magistrate of the First Class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence. LEARNED Counsel has also relied upon the provisions of Section 622 of the Act, according to which, no Court inferior to that of Presidency Magistrate or a Magistrate of the first class shall try any offence against this Act and Section 624 of the Act, which stipulates that notwithstanding anything in the Code of Criminal Procedure, 1898 (5 of 1898), every offence against this Act shall be deemed to be non-cognizable within the meaning of the said Code. LEARNED Counsel has relied upon the decision of the Delhi High Court in Official Liquidator, R.C. Abrol and Co. Private Limited v. R.C. Abrol and Others (1977) 47 Comp. Cas. 537 (Del.), wherein, the jurisdiction of the Company Court to try offence punishable under Section 538 of the Act has been gone into and it is held that except in respect of provisions under Section 454(5-A) of the Act, the Company Court has no jurisdiction to take cognizance of the offence under Section 538 of the Act. LEARNED Counsel has also relied upon the decision of the Bombay High Court in Ion Exchange Finance Limited v. Firth India Steel Co. Limited (In Liquidation) and Bombay Leasing Co. Private Limited v. Gresoil (India) Limited (2001) 103 Comp. Cas. 666 (Bom.), in support of his contention that suit or other legal proceedings in Section 446 of the Act does not include prosecution and Company Court has no jurisdiction to take cognizance of the offence. He has also relied upon the decision of the Kerala High Court in V. Sugandha Lal v. St. Mary's Finance Limited (2000) 99 Comp. Cas. 359 (Ker.), wherein it is held as follows.-- Under Section 4 of the Code of Criminal Procedure, 1973, the general law is that all offences under the Indian Penal Code, 1860, and any other law shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the Code, but, in cases in which there are specific provisions in any enactment in respect of investigation, inquiry or trial, those matters will be governed by those provisions under the Act and not by the provisions of the Code. The definition of "offence" in Section 2(n) of the Code takes in any act or omission made punishable by the provisions in the Indian Penal Code as well as by the provisions in any other law for the time being in force. Special procedure is provided in the Companies Act, 1956, for the trial of offences under Section 454 of the Act. There is no procedure provided in the Act for the trial of other offences. The provisions of Section 622 would indicate that the trial of offences will have to be in the Criminal Court, in accordance with the provisions of the Code of Criminal Procedure subject to the condition that no Court inferior to that of a Presidency Magistrate or of a Magistrate of first class shall try an offence against the Act. The term "proceeding" in Section 446(2) can only mean proceeding similar to a suit and in the light of the provisions in the Act and the Code of Criminal Procedure, the term "proceeding" cannot mean criminal proceedings. The Company Court cannot take cognizance of an offence punishable under Section 629 of the Act. LEARNED Counsel further submitted that the only provisions under which Company Court is empowered to take cognizance of the offence is under Section 454(5-A) of the Act, which has been incorporated by Amendment Act (LXV of 1960) and he has relied upon the objects for the said amendment in support of his contention that even in respect of offence under Section 454, complaints were being filed before the jurisdictional Magistrate and to avoid the inconvenience caused and for effective supervision of the liquidation, power has been given to the Company Court to deal with offence under Section. 454(5-A) and accordingly, Section 454(5-A) has been inserted.