SAILENDRA NATH SINHA Vs. STATE

JUDGEMENT

(1.) We have before us a Rule taken out by two past directors of a company, now in liquidation, who are being prosecuted on charges under Sections 406, 467 and 477A, read with Section 120B of the Penal Code and a further application subsequently made by the same two persons. The application of which notice has been given to the opposite parties was directed to be heard along with the Rule.

(2.) Both by the application on which the Rule was issued and the subsequent application, the Petitioners have prayed that the criminal proceeding pending against them be quashed. The ground urged by them in the Rule is that in the absence of a prior direction judicially given by the Court under Section 237 (1) of the Companies Act, the prosecution launched against them by the liquidator is 'ab inito' void. In the application they contend that the liquidator having taken action under Section 235 of the Companies Act in regard to the self-same matter, the criminal prosecution is no longer maintainable. The questions have arisen to the following way.

(3.) The first Petitioner, Dr. Sailendra Nath Sinha, was one of the directors of the Bank of Commerce Ltd., and the second Petitioner, Sri Subhendu Prasad Roy Choudhury, was its Managing Director. On 7-8-1950, this Court on its Original Side made an order for the winding up of the Company and appointed Mr. G. K. Dutt, a Barrister, to be the Official Liquidator. On 7-9-1950, Mr. Dutt was replaced by the Official Receiver. On 15-1-1951, Bachawat J. made the usual general order under Section 179 of the Companies Act, authorising the Official Liquidator to institute or defend any suit or prosecution or other legal proceeding, civil or criminal, in the name or on behalf of the Company. In July, 1952, the Official Liquidator applied to the Court for directions on a report made to him by his senior Assistant, supported by affidavits of certain ex-officers of the Bank, from which it appeared that the Petitioners, acting in concert, had committed the offences of criminal misappropriation, forgery of valuable securities and falsification of accounts in relation to the assets of the Bank. Banerjee, J., who was the Company Judge at the time, disposed of the application on 22-7-1952 by giving liberty to the official Liquidator to take such civil or criminal proceedings as he might think necessary and to. engage a senior pleader for the purpose on the usual fees.' The material portion of the learned Judge's order, as drawn up, reads as follows : "It is ordered that the said Applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary, read with the affidavit of H. Sen Gupta and Nepal Chandra Adhikary --And it is further ordered that the said Applicant be at liberty to engage a Senior Pleader on usual fees for the purpose as aforesaid."