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2018 (2) TMI 2110 - MADRAS HIGH COURTDoctrine of purposive interpretation - alleged violation of under Sections 372 A 85(3) r/w 211 and Schedule II of the Companies Act, 1956, by which the petitioners herein were asked to show cause - seeking to invoke Section 463(2) of the Companies Act, 2013 - HELD THAT:- The principle governing the interpretation of the statute has reached the stage where the Courts interpreted a provision of legislation notwithstanding its nature, be it penal, revenue, social or otherwise. It is more so, when the rule of interpretation, while applied against a reasonable and harmonious one does not stand to reason or leading to absurdity. A principle of natural justice has to be read into and seen in any provision unless expressly conferred taking its own rationale behind it. The said principle is to be applied with more rigour in a case where the show cause notice was given followed by explanation a consequential decision was made without passing orders thereon. This Court is of the considered view that when once the show cause notice is issued, then it would amount to initiation of the proceedings qua negligence, default, breach of duty etc., However, the same would not be applicable to a criminal action. The decision to initiate a criminal proceeding would naturally come on a factual finding resulting in the final order to be passed by the first respondent, on a consideration of the reply given to the show cause notice. Therefore, the first respondent has to pass a reasoned order on two aspects. One is on merit with respect to the negligence, default etc, attributable on the part of the officer and the second is with respect to the decision made to proceed under the criminal law. These two factors are mandatory as the Court under Section 463(2) of the Companies Act, 2013 is only required to say as to whether the officer has acted honestly and reasonably after finding the negligence on his part by the first respondent - This Court is of the view that the power to go into the question of negligence, default, breach of duty etc., does not lie with this Court as it is the role which is to be played by the first respondent. However, the issue pertaining to an officer having acted honestly and reasonably solely lies with this Court to be decided as against the petitioner concerned. To put it differently, such an issue can never be gone into by the first respondent as against this Court. Thus, the first respondent cannot decide the issue of taking criminal action without a factual finding resulting in a final order to be communicated to the petitioner. After all, a show cause notice issued should result in an adjudication process, for which, a person, whose rights are liable to be affected has to be informed by a decision supported by reasons, on a consideration of the reply given. Therefore, it is mandatory on the part of the first respondent to see to it that such an order is passed and served on the officer against whom a criminal proceedings is likely to be initiated by giving a private complaint. Even otherwise, the decision is necessarily to be communicated by the first respondent. The first respondent is directed to pass appropriate reasoned orders on a consideration of the reply given by the petitioners concerned - Petition disposed off.
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