2000 (1) TMI 909 - SC - Companies Law

Karnataka High Court quashing a criminal proceeding instituted by the complainant-company alleging that the accused-respondent, a former director of the company committed an offence under section 630 of the Companies Act, 1956 Held that - A bare scrutiny of the impugned judgment would indicate that the High Court has thought, as if it is trying the case, and then after weighing the materials it has come to a conclusion one way or the other. This is certainly in excess of the jurisdiction conferred on the High Court under section 482. In that view of the matter, no hesitation to come to the conclusion that the High Court by the impugned order has exceeded its jurisdiction vested under section 482 in quashing the criminal procee-ding. We, therefore, set aside the impugned order of the High Court and direct that the complaint proceeding should proceed in accordance with law.

Summary

Issues:
Quashing of criminal proceeding under section 630 of the Companies Act, 1956 based on civil suit pendency and jurisdiction of the High Court under section 482 of the Code of Criminal Procedure, 1973.

Analysis:
The appeal challenged the Karnataka High Court's judgment that quashed a criminal proceeding under section 630 of the Companies Act, 1956, against a former director accused of continuing to utilize company property post-directorship cessation. The accused had filed a civil suit in 1992 claiming directorship, but it was dismissed in 1995. The complainant filed the present complaint post the civil suit dismissal. The accused filed for discharge under section 245 of the Code of Criminal Procedure, citing pending civil suits. The magistrate rejected this, emphasizing that civil suit pendency does not bar criminal proceedings.

The Supreme Court highlighted that once cognizance is taken based on a complaint, filing an application under section 245 of the Code is improper. The magistrate's role is to assess if a prima facie case exists, and further inquiry may be conducted under section 202 if required. The magistrate, in this case, found sufficient grounds to proceed, rejecting the accused's plea. The accused then approached the High Court under section 482, which invoked inherent powers due to alleged miscarriage of justice. However, the High Court's extensive review of civil suits and reliance on observations from those cases exceeded its jurisdiction under section 482.

The Supreme Court emphasized that the High Court's role under section 482 is limited to preventing abuse of process or gross miscarriage of justice. The High Court's detailed analysis and conclusions as if trying the case directly went beyond its scope. Consequently, the Supreme Court set aside the High Court's order, directing the complaint proceeding to continue as per the law. The appeal was disposed of without expressing any opinion on the merits of the case (CC No. 1254 of 1995).