1998 (7) TMI 509 - HC - Companies Law

Summary

Issues Involved:
1. Territorial jurisdiction of the Special Court for Economic Offences in Bangalore.
2. Applicability of the Supreme Court decision in Hanuman Prasad Gupta v. Hiralal.
3. Question of limitation and absence of mens rea.
4. Procedure to be followed by a Magistrate not competent to take cognizance of the case.

Detailed Analysis:

1. Territorial Jurisdiction of the Special Court for Economic Offences in Bangalore:
The primary issue was whether the Special Court for Economic Offences in Bangalore had territorial jurisdiction to try cases against companies whose registered offices are situated outside Karnataka. The petitioners argued that the offences were committed at the location of the companies' registered offices, which were outside Karnataka. The respondent contended that the jurisdiction lay in Bangalore, where he, a permanent resident, did not receive the required documents.

The court concluded that the offences were committed at the registered offices of the companies, as that is where the failure to comply with the statutory requirements occurred. This conclusion was based on the principle that the obligation to perform certain acts, such as sending share certificates or balance sheets, arises at the registered office of the company.

2. Applicability of the Supreme Court Decision in Hanuman Prasad Gupta v. Hiralal:
The petitioners relied on the Supreme Court decision in Hanuman Prasad Gupta v. Hiralal, which held that the place of performance and payment is where the company's registered office is located. The court below had distinguished this case on the grounds that it dealt with section 205(5) of the Companies Act, while the present case involved sections 39(2), 219(4), and 113(2).

However, the High Court found that the principle enunciated by the Supreme Court was applicable to all cases where the company is expected to comply with statutory provisions. The court emphasized that the obligation to perform certain acts arises at the registered office, and thus, the offence is deemed to have been committed there.

3. Question of Limitation and Absence of Mens Rea:
The petitioners also raised issues regarding the limitation period and the absence of mens rea. However, the court deemed these questions secondary to the issue of territorial jurisdiction. Since the court found that it lacked territorial jurisdiction, these questions were left open for the court with proper jurisdiction to decide.

4. Procedure to be Followed by a Magistrate Not Competent to Take Cognizance of the Case:
The court referred to section 201 of the Code of Criminal Procedure, which outlines the procedure for a Magistrate who is not competent to take cognizance of a case. The Magistrate is required to return the complaint to the complainant for presentation to the proper court.

Conclusion:
The High Court allowed the petitions, set aside the impugned orders, and directed the Magistrate to return the complaints to the complainant with necessary endorsements for presentation to the proper court. This decision was based on the finding that the Special Court for Economic Offences in Bangalore did not have territorial jurisdiction to try the cases against the companies whose registered offices were situated outside Karnataka.