2000 (6) TMI 735 - HC - Companies Law

Offences - Production and inspection of books where offence suspected, Search warrants - Issue of, Fundamental rights

Issues Involved:
1. Jurisdiction of the Special Judge to issue a search warrant.
2. Applicability of Section 627 of the Companies Act versus Section 94 of the Code of Criminal Procedure (CrPC).
3. Validity of the search warrant under Section 93(1)(a) and (c) of the CrPC.
4. Compliance with Article 20(3) of the Constitution of India regarding self-incrimination.
5. Procedural propriety in issuing the search warrant ex parte.

Detailed Analysis:

1. Jurisdiction of the Special Judge to Issue a Search Warrant:
The petition under Section 482 of the CrPC sought to quash the order dated 28-1-2000 by the Special Judge for Economic Offences, which directed the issuance of a search warrant for the premises of Spectrum Power Generation Limited (Accused No. 4) to seize specific documents. The complainant, a shareholder of Accused No. 4, alleged that the directors (Accused Nos. 1 to 3) had entered into a sham contract with Kris Engineers, violating various provisions of the Companies Act and misappropriating funds. The search warrant was issued ex parte before the appearance of the accused.

2. Applicability of Section 627 of the Companies Act versus Section 94 of the CrPC:
The petitioner contended that under Section 627 of the Companies Act, only a Judge of the High Court could order the search and inspection of records in cases involving offences related to the management of a company. Section 627 allows applications by the Public Prosecutor, Central Government, or a company prosecutor, but not by a shareholder. The court held that Section 627 does not abrogate Section 94 of the CrPC, as it does not exclude a shareholder from seeking a search warrant under the CrPC. Therefore, Section 627 is not a substitute for Section 94, and the Special Judge had jurisdiction to issue the search warrant under the CrPC.

3. Validity of the Search Warrant under Section 93(1)(a) and (c) of the CrPC:
The search warrant was challenged on the grounds that it was issued without jurisdiction and contrary to the CrPC provisions. The court noted that Section 93(1)(a) allows a search warrant if there is reason to believe that a person will not produce the required documents if summoned under Section 91. The court also considered Section 93(1)(c), which allows a general search warrant when it serves the purpose of an inquiry, trial, or other proceedings. The court held that the search warrant could be sustained under both Sections 93(1)(a) and 93(1)(c), given the circumstances and the nature of the documents sought.

4. Compliance with Article 20(3) of the Constitution of India Regarding Self-Incrimination:
The petitioner argued that issuing a search warrant under Section 93(1)(a) violated Article 20(3) of the Constitution, which protects against self-incrimination. The court referred to the Supreme Court's judgment in State of Gujarat v. Shyamlal, which held that Section 91 does not apply to an accused. However, the court distinguished the present case, noting that the search warrant was directed against the company (Accused No. 4) and not the individual directors (Accused Nos. 1 to 3). The court concluded that the search and seizure under Section 93(1)(c) did not compel the accused to incriminate themselves, as they were not required to produce the documents personally.

5. Procedural Propriety in Issuing the Search Warrant Ex Parte:
The petitioner contended that the search warrant was issued ex parte without hearing the accused, which amounted to an abuse of process. The court dismissed this contention, stating that the mere presence of the petitioner's counsel in court and the lack of a formal record of his representation did not invalidate the ex parte order. The court emphasized that the search warrant was issued based on the complainant's affidavit, which provided sufficient grounds for the Special Judge's satisfaction.

Conclusion:
The court held that the Special Judge had jurisdiction to issue the search warrant under the CrPC and that Section 627 of the Companies Act did not exclude the application of Section 94 of the CrPC. The search warrant was valid under Sections 93(1)(a) and 93(1)(c) of the CrPC and did not violate Article 20(3) of the Constitution. The procedural propriety of issuing the search warrant ex parte was upheld. The court directed that the documents produced under the interim orders be transmitted to the Special Judge for Economic Offences for use during the trial. The petition was closed with these directions.

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