HARISH CHANDRA Vs. KAVINDRA NARAIN SINHA

JUDGEMENT

(1.) In this case an application was filed purporting to be under Section 85, Companies Act, making allegations against several directors of the Bharat Dharma Syndicate, Ltd., of Benares. The allegation inter alia was that the opposite party who is one of the directors had contravened the provisions of Section 85, Companies Act, inasmuch as he had acted as a director without possessing qualification shares in accordance with Art. 56 of the Articles of Association. A question arose as to whether his prosecution could be ordered or whether he could be tried by the High Court. Accordingly the following questions have been referred to this Full Bench for answers: (1) Are contraventions of the provisions the Companies Act offences ? (2) If so, has the High Court jurisdiction to take cognizance of and try such offences and to impose the fines prescribed by the provisions of the Act? Section 85(3), Companies Act, like numerous other sections of the Act makes any unqualified person who acts as a director of a company liable to a fine not exceeding Rs. 50 for every day," etc. It is noteworthy that this section does not say that the Court hearing an application can impose such a fine on the person, but merely declares that such a person shall be liable to a fine. Similar words have been used in other sections of the Act. There can be no doubt, therefore, that a contravention of the provisions of Section 85, Companies Act, is an offence which is punishable with fine. The answer to the first question referred to us must therefore be in the affirmative.

(2.) The second point referred to us raises the question as to whether the HighCourt has not only jurisdiction to try a person for an offence committed under any of the sections of the Companies Act, but also whether the High Court can itself in the first instance take cognizance of the offence and try the accused and convict him and punish him. The learned advocate for the applicant has urged before us that the High Court is the Court which has been specifically mentioned in Section 3, Companies Act as being empowered to try such persons. But Section 3(1) merely provides that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate. The jurisdiction of the High Court referred to in Section 3 is obviously the jurisdiction exercised by virtue of the specific provisions of the Act and not a jurisdiction which may be invoked where merely a criminal offence is declared. It is very difficult to say that Section 3 has specifically mentioned that the High Court would be the Court which should as a Court of first instance try persons who have been guilty of an offence committed on account of breaches of the provisions of the sections of the Act.

(3.) On behalf of the opposite party it was first suggested that Section 278(1) which lays down that no Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence against the Act, shows that the Magistrates are mentioned as a Court which should try such offences. We are unable to accept this contention. All that Section 278 lays down is that no Court of a grade inferior to that of certain Magistrates shall have power to try such offences. It does not say that any particular Magistrate or the Sessions Court or the High Court shall try such offences. Sub s. (2) of that section refers to the Presidency Towns of Calcutta, Madras and Bombay and has no application to this High Court. It therefore follows that the Companies Act does not mention any particular Court which would have jurisdiction to try offences under Section 85 and other sections of the Act. Great reliance has been placed by both the learned Counsel on Section 29, Criminal P.C. Mr. Malik has contended before us that under Section 29(2), the High Court has been declared to be one of the Courts which is to try such an offence and that there are no restrictions in it. On the other hand, Dr. Katju has contended that the High Court cannot take cognisance of such an offence, unless and until there has been a commitment to it.