1996 (4) TMI 424 - HC - Companies Law

Penalty for false statements, Penalty for false evidence, Penalty where no specific penalty is provided elsewhere in the act

Summary

Issues Involved:
1. Legality of the extraordinary general meeting convened by the respondent.
2. Validity of the criminal complaints filed by the respondent under sections 200, 628, 629, and 629A of the Companies Act, 1956.
3. Jurisdiction of the High Court under section 482 of the Criminal Procedure Code to quash proceedings.

Issue-wise Detailed Analysis:

1. Legality of the Extraordinary General Meeting Convened by the Respondent:
The petitioners, shareholders of the Bangalore Stock Exchange, challenged the legality of an extraordinary general meeting convened by the respondent after his removal as a director. The respondent allegedly coerced members into signing a notice for the meeting, which was later withdrawn by some members, leading to insufficient support under section 169 of the Companies Act, 1956. The board of directors refused to call the meeting, prompting the respondent to convene it illegally. The petitioners filed suits in the City Civil Court for a declaration that the notice was illegal. The court noted that the board of directors must call an extraordinary general meeting if a valid requisition is deposited, but if the board fails, the requisitionists may call the meeting themselves. The court found that the board's refusal to call the meeting did not constitute an offence under the Act.

2. Validity of the Criminal Complaints Filed by the Respondent:
The respondent filed multiple criminal complaints under sections 200, 628, 629, and 629A of the Companies Act, alleging false statements and failure to convene a meeting. The petitioners argued that the complaints were false, frivolous, and an abuse of the court process. The court examined each complaint and found that:
- Section 629: The court held that filing a false affidavit in a civil suit does not constitute an offence under section 629 of the Companies Act. The affidavits were not required under the Act, and any false statements should be addressed under the Indian Penal Code, following the procedure under section 340 of the Criminal Procedure Code.
- Section 628: The court found that the Arbitration Committee's report, even if false, did not fall under section 628 of the Act, which pertains to specific documents like returns, reports, and balance sheets required by the Act.
- Section 629A: The court noted that section 629A provides penalties where no specific penalty is provided elsewhere in the Act. The failure to convene a meeting under section 169 did not constitute an offence as an alternative remedy was available under section 169(6).

3. Jurisdiction of the High Court under Section 482 of the Criminal Procedure Code:
The respondent argued that the High Court should not interfere with the Magistrate's order taking cognizance of the case, citing the Supreme Court's guidelines in Bhajan Lal's case. The petitioners contended that the complaints fell within the exceptions outlined in Bhajan Lal, justifying interference under section 482 to prevent abuse of the court process. The court agreed with the petitioners, finding that the complaints were filed with mala fide intentions and did not disclose any offence under the Companies Act. The court emphasized that the inherent powers under section 482 should be exercised to prevent unnecessary harassment and to secure the ends of justice.

Conclusion:
The High Court quashed the criminal proceedings in C.C. Nos. 1459, 1467, 1460, 935, 936, and 1253 of 1995, finding that the complaints did not constitute offences under the Companies Act and were filed with malicious intent. The court exercised its jurisdiction under section 482 of the Criminal Procedure Code to prevent abuse of the court process and to secure the ends of justice.