2005 (9) TMI 667 - HC - Companies Law

Summary

Issues Involved:
1. Transfer and disposal of criminal cases.
2. Stay against further proceedings of criminal cases.
3. Jurisdiction of the Metropolitan Magistrate.
4. Authority of the Official Liquidator.
5. Validity of actions by the Ex-Managing Director post-winding up order.

Detailed Analysis:

1. Transfer and Disposal of Criminal Cases:
The applicant, a government company, sought the transfer and disposal of Criminal Case Nos. 1698, 1699, 1700 & 1701 of 2000, pending in the Court of Metropolitan Magistrate, Court No. 5, Ahmedabad. These cases were filed by the Ex-Managing Director of a company in liquidation against the applicant and its officers under various sections of the Indian Penal Code. The applicant argued that after the winding-up order, only the Official Liquidator has the authority to prosecute or defend any legal proceedings on behalf of the company.

2. Stay Against Further Proceedings of Criminal Cases:
The applicant also prayed for a stay against further proceedings of the criminal cases pending before the Metropolitan Magistrate. The argument was based on the premise that the Ex-Managing Director, who filed the complaints, ceased to have any authority to represent the company after the winding-up order.

3. Jurisdiction of the Metropolitan Magistrate:
The applicant contended that the Metropolitan Magistrate's court lacked jurisdiction to entertain or dispose of the criminal complaints filed by the company in liquidation. Under Section 446(2)(a) of the Companies Act, 1956, the High Court has the jurisdiction to entertain any suit or proceeding by or against the company, including criminal proceedings.

4. Authority of the Official Liquidator:
The applicant argued that post-winding up, the Official Liquidator becomes the custodian of the company's assets and has the exclusive authority to represent the company in all legal matters. The Ex-Managing Director, therefore, had no power to continue prosecuting the criminal cases. This position was supported by various judicial precedents which held that only the Official Liquidator could take such actions on behalf of the company in liquidation.

5. Validity of Actions by the Ex-Managing Director Post-Winding Up Order:
The applicant asserted that the actions of the Ex-Managing Director in continuing the prosecution were invalid. The Ex-Managing Director's authority ceased once the winding-up order was passed, and any legal proceedings initiated by him on behalf of the company were without legal standing. The High Court agreed with this view, stating that the Ex-Managing Director could not continue to represent the company after the winding-up order.

Conclusion:
The High Court concluded that the learned Magistrate committed a serious error in allowing the Ex-Managing Director to proceed with the complaints. The Court held that the complaints should be transferred to the High Court for proper adjudication. The Official Liquidator was directed to examine the complaints and decide whether to continue the prosecution. The Court emphasized that the statutory provisions and judicial precedents clearly indicated that the Official Liquidator alone had the authority to represent the company in liquidation. The applications were allowed, and the criminal cases were ordered to be transferred to the High Court for further proceedings.