2000 (6) TMI 734 - HC - Companies Law

Issues Involved:
1. Whether the High Court can take cognizance of offences under the Companies Act, 1956.
2. Whether the Company Court can try offences punishable under the Companies Act, 1956.
3. Interpretation of Section 446 of the Companies Act in relation to criminal proceedings.
4. Applicability of the Code of Criminal Procedure (Cr. P.C.) to offences under the Companies Act.
5. Special procedures provided in the Companies Act for trial of offences.
6. The role of Article 21 of the Constitution in the context of trial and deprivation of personal liberty.
7. The validity of the decision in Khosla Fans (India) P. Ltd. by the Punjab and Haryana High Court.
8. The request for an inquiry under Section 340 Cr. P.C. regarding alleged offences under the Indian Penal Code.

Detailed Analysis:

1. Whether the High Court can take cognizance of offences under the Companies Act, 1956:
The petitioner requested the High Court to take cognizance of an offence under Section 629 of the Companies Act. The Court examined whether it has the jurisdiction to take cognizance of such offences. It was concluded that the High Court cannot take cognizance because Section 621 of the Companies Act specifies that cognizance can be taken only on a complaint in writing by the Registrar, a shareholder, or a person authorized by the Central Government.

2. Whether the Company Court can try offences punishable under the Companies Act, 1956:
The Court analyzed whether the Company Court can try offences under Section 629. It was determined that the trial of offences under the Companies Act must be conducted according to the provisions of the Code of Criminal Procedure, except where the Act provides a special procedure. Section 622 of the Act indicates that no Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence against the Act, implying that the Company Court does not have jurisdiction to try such offences.

3. Interpretation of Section 446 of the Companies Act in relation to criminal proceedings:
The petitioner argued that Section 446 of the Companies Act allows the Company Court to entertain criminal proceedings. The Court referred to the decision in Khosla Fans (India) P. Ltd. by the Punjab and Haryana High Court, which held that Section 446 is a special provision allowing the High Court to entertain criminal proceedings. However, the Kerala High Court disagreed, stating that the term "proceeding" in Section 446(2) refers to civil proceedings similar to a suit and does not include criminal proceedings.

4. Applicability of the Code of Criminal Procedure (Cr. P.C.) to offences under the Companies Act:
Section 4 of the Cr. P.C. was discussed, which provides that all offences under the Indian Penal Code and other laws shall be tried according to the provisions of the Cr. P.C., unless a special procedure is provided in the respective law. The Court concluded that since the Companies Act does not provide a special procedure for the trial of offences (except for Section 454), the offences under the Act must be tried according to the Cr. P.C.

5. Special procedures provided in the Companies Act for trial of offences:
The Court noted that Section 454(5A) of the Companies Act provides a special procedure for the trial of offences under Section 454(5). However, no special procedure is provided for other offences under the Act. Therefore, the trial of such offences must follow the Cr. P.C., and the Company Court does not have jurisdiction to try these offences.

6. The role of Article 21 of the Constitution in the context of trial and deprivation of personal liberty:
The Court emphasized that Article 21 of the Constitution mandates that no person shall be deprived of personal liberty except according to the procedure established by law. The procedure for the trial of offences must be established by legislation. Since the Companies Act does not establish a special procedure for most offences, the trial must follow the Cr. P.C. to ensure compliance with Article 21.

7. The validity of the decision in Khosla Fans (India) P. Ltd. by the Punjab and Haryana High Court:
The Kerala High Court found that the decision in Khosla Fans (India) P. Ltd. did not consider the relevant provisions of the Companies Act and the Cr. P.C. The term "proceeding" in Section 446(2) was interpreted by the Punjab and Haryana High Court to include criminal proceedings, but the Kerala High Court disagreed, stating that it refers to civil proceedings.

8. The request for an inquiry under Section 340 Cr. P.C. regarding alleged offences under the Indian Penal Code:
The petitioner also requested an inquiry under Section 340 Cr. P.C. into alleged offences under Sections 193, 191, 199, and 51 of the Indian Penal Code. The Court stated that since it cannot take cognizance of the offence under Section 629 of the Companies Act, the petition must be dismissed. However, the petitioner is not precluded from filing a separate petition for an inquiry under Section 340 Cr. P.C.

Conclusion:
The application was dismissed without prejudice to the petitioner's right to file a separate petition alleging the commission of offences for which an inquiry can be conducted under Section 340 Cr. P.C.

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