1985 (8) TMI 374 - HC - Companies Law

Summary

Issues Involved:
1. Cognizance of the complaint by the Additional Chief Metropolitan Magistrate.
2. Bar of limitation under Sections 468 and 469 of the Code of Criminal Procedure.
3. Condonation of delay under Section 473 of the Code of Criminal Procedure.
4. Disclosure of interest under Section 299 of the Companies Act, 1956.
5. Judicial application of mind by the Magistrate.
6. Inherent powers of the High Court under Section 482 of the Code of Criminal Procedure.

Issue-wise Detailed Analysis:

1. Cognizance of the complaint by the Additional Chief Metropolitan Magistrate:
The petitioner challenged the legality and validity of the summoning order issued by the Additional Chief Metropolitan Magistrate, arguing that the complaint was barred by time and the Magistrate failed to condone the delay before taking cognizance. The Magistrate's order summoning the petitioner was deemed to lack application of judicial mind and was violative of principles of natural justice.

2. Bar of limitation under Sections 468 and 469 of the Code of Criminal Procedure:
Section 468(2) of the Code prescribes a six-month limitation period for offences punishable with fine only. The complaint was filed on 19th September 1984, while the alleged offence came to the respondent's knowledge on 24th January 1981, making the complaint barred by time. The court emphasized that the bar of limitation operates before taking cognizance of an offence.

3. Condonation of delay under Section 473 of the Code of Criminal Procedure:
Section 473 allows the court to take cognizance of an offence after the expiry of the limitation period if the delay is satisfactorily explained or if it is necessary in the interests of justice. The court held that the Magistrate must apply judicial mind to the question of limitation at the pre-cognizance stage. The explanation for the delay provided by the respondent was vague and insufficient, failing to justify the inordinate delay of more than three years.

4. Disclosure of interest under Section 299 of the Companies Act, 1956:
Section 299 requires directors to disclose their interest in any contract or arrangement with the company. The petitioner was accused of not disclosing his interest in a lease agreement. However, the court noted that the Board of Directors had passed a resolution approving the lease agreement, indicating that the Board was aware of the petitioner's interest. This provided presumptive proof of disclosure, weakening the prosecution's case.

5. Judicial application of mind by the Magistrate:
The court criticized the Magistrate's order for lacking a clear and categorical decision on condoning the delay. The order summoning the petitioner was found to be based on a stereotyped language without proper judicial consideration. The court emphasized that the Magistrate must record satisfaction that the delay was satisfactorily explained or that condonation was necessary in the interests of justice before taking cognizance.

6. Inherent powers of the High Court under Section 482 of the Code of Criminal Procedure:
The High Court invoked its inherent powers under Section 482 to quash the impugned order, as the Magistrate's order was likely to result in injustice and abuse of the process of the court. The court held that the allegations in the complaint were inherently improbable, and the Magistrate's discretion in issuing process was capricious and arbitrary.

Conclusion:
The petition was allowed, and the impugned order was quashed. The court found that the complaint was barred by time, the delay was not satisfactorily explained, and the Magistrate failed to apply judicial mind before taking cognizance. The inherent powers of the High Court were invoked to prevent injustice and abuse of the judicial process.