1991 (9) TMI 299 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the High Court to quash a criminal proceeding.
2. Validity of the criminal complaint under sections 120B, 409 read with section 120B of the Indian Penal Code, and section 630 of the Companies Act.
3. The role and actions of the petitioner in accepting the surrender of the flat.
4. The relevance of civil proceedings in the context of the criminal complaint.
5. Evaluation of prima facie case and mens rea for the conspiracy charge.

Detailed Analysis:

1. Jurisdiction of the High Court to Quash a Criminal Proceeding:
The High Court often exercises its jurisdiction to quash criminal proceedings at a pre-trial stage. However, the judgment emphasizes that there are specific classes of cases where this power should be refrained from being used. This principle is derived from various judgments of the Supreme Court, this court, and other High Courts.

2. Validity of the Criminal Complaint:
The criminal complaint No. 256/S of 1989 was filed alleging offenses under sections 120B, 409 read with section 120B of the Indian Penal Code, and section 630 of the Companies Act. The complaint was primarily against accused No. 1, a director of the company, and accused No. 2, the landlord. The High Court noted that the learned Magistrate issued process against both accused based on the material presented.

3. Role and Actions of the Petitioner:
The petitioner contended that he was a director of Kotecha Investment Corporation P. Ltd., the landlords of the flat, and had accepted the surrender of the flat from the company's director, who was also a power of attorney holder. The petitioner argued that his actions were lawful and that he should not be held criminally liable. The High Court found the order of the learned Magistrate issuing process to be vague, particularly concerning section 630 of the Companies Act, and quashed the process under this section as it did not apply to the petitioner.

4. Relevance of Civil Proceedings:
The petitioner highlighted that a civil suit encompassing the entire dispute regarding the flat surrender was already filed and transferred to the Court of Small Causes. He argued that the civil court would adequately address the dispute, and the criminal complaint was filed to exert undue pressure. The High Court noted that the criminal court is not concerned with granting reliefs related to the disputed flat or examining allegations of money passing hands. The focus should be on whether a criminal offense has been made out.

5. Evaluation of Prima Facie Case and Mens Rea:
The High Court observed that the complaint stated the flat was surrendered to accused No. 2, and the company had not followed the prescribed procedure for surrendering a valuable asset. The court emphasized that the trial court must determine the mens rea of the petitioner and whether his actions justified a conspiracy charge. The court found that a prima facie case existed and that the chances of conviction were not bleak or remote. Thus, interference at this stage was not warranted.

Conclusion:
The High Court dismissed the criminal writ petition, stating that no interference was justified at this stage. The rule was discharged, and interim orders were vacated. The court emphasized the need for a criminal court investigation into the circumstances of the flat's surrender, considering the public interest involved.