1997 (10) TMI 319 - HC - Companies Law

Summary

Issues:
Jurisdiction of the Magistrate, Locus standi of the respondent, Disclosure of offense under section 113(2) of the Companies Act, 1956, Revision of the impugned order, Payment of interest due on debentures.

Jurisdiction of the Magistrate:
The petition challenged the Magistrate's order dated 29-7-1995 under section 482 of the Code of Criminal Procedure. The petitioners contended that the Magistrate at Jaipur lacked territorial jurisdiction to entertain the complaint. However, the court held that the Magistrate did have the territorial jurisdiction to hear the case based on relevant legal precedents.

Locus standi of the respondent:
The respondent, a member of an investors' forum and a registered shareholder of the petitioner company, filed a complaint against the petitioners under section 113(2) of the Companies Act. The petitioners argued that the respondent lacked locus standi as a shareholder. The court disagreed, stating that the respondent, being an aggrieved person, had the standing to maintain the cause.

Disclosure of offense under section 113(2) of the Companies Act, 1956:
The complaint alleged that the petitioners, as officers of the company, failed to register the transfer of debentures and pay interest due to the respondent. The petitioners contended that the complaint did not disclose an offense under section 113(2) as they were not "officers in default." The court, however, found that the complaint did prima facie disclose an offense under section 113(2) and that the petitioners fell within the definition of 'officers in default' as per the Act.

Revision of the impugned order:
The petition was treated as a revision application under section 397 of the Code. The court referred to various decisions that supported the respondent's case and held that the impugned order was revisable. The court found that the impugned order was valid in law and did not require setting aside under the revisionary powers of the Court.

Payment of interest due on debentures:
The court noted that the dispute primarily revolved around the payment of interest due to the respondent on the debentures. To resolve the matter efficiently, the court directed the petitioners to make the payment of interest within three months. Upon compliance, the Magistrate was instructed to bring the litigation to a halt under section 258 of the Code, emphasizing the importance of resolving such disputes promptly to avoid unnecessary litigation.

This detailed analysis of the judgment highlights the key legal issues addressed by the court, including jurisdiction, locus standi, disclosure of offense, revision of orders, and resolution of disputes through timely payments.