2002 (2) TMI 1245 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the company court to direct prosecution.

Analysis:
The case involved an appeal against an order related to the appointment of an administrator in a company petition concerning Anubhav Plantations Ltd. The administrator raised concerns about suspicious transactions involving the sale of lands by certain individuals, leading to an investigation by the C.B.C.I.D. The court, based on the investigation report, directed the prosecution of the accused under various sections of the Indian Penal Code. The appellant challenged the jurisdiction of the company court to direct prosecution.

The appellant argued that the Companies Act does not provide for the company court to launch prosecutions, except for specific provisions related to summoning individuals suspected of holding company property. On the other hand, the administrator relied on Rule 9 of the Companies (Court) Rules, which allows the court to give necessary directions for the ends of justice or to prevent abuse of the court's process. Additionally, reference was made to a Supreme Court judgment stating that anyone can set criminal law in motion by taking note of an offense.

The court carefully considered the contentions of both parties and observed that the investigation report indicated grave offenses under the Indian Penal Code. It was noted that when a prima facie case is established, the court cannot ignore it and must set the criminal law in motion by directing prosecution. The court clarified that directing prosecution does not equate to imposing punishment but is essential for further legal proceedings. The court concluded that the company court is empowered to issue such directions under Rule 9 of the Companies (Court) Rules. Consequently, the appeal challenging the jurisdiction of the company court to direct prosecution was dismissed.