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2018 (6) TMI 1727 - HC - Companies LawJurisdiction - it is the submission of the Learned Counsel for the Respondents that the present Appeal filed by the Appellant is an abuse of Process and that the Appellant has no locus to even initiate a complaint under the Companies Act, 1956 - whether High Court could exercise power in respect of a proceeding pending not before it, but, at the Magistrate's Court and the issue before it was not whether the High Court can exercise powers under Section 633(1) of the Companies Act, 1956 to relieve a person on liability in a proceeding pending before it? - HELD THAT - The object of Section 633 of the Companies Act is to grant relief against undue hardship in a given case and grant relief from liability to a person who though technically guilty of negligence, default, breach of duty, misfeasance or breach of trust, are able to satisfy the subjective conscience of the Court that they had acted honestly and reasonably and having regard to the attendant facts and circumstances of their case they ought to be fairly excused / relieved from the charge or charges levelled against them - One cannot ignore a very vital fact that Section 633(2) of the Companies Act, 1956 confers a larger / wider ambit to the Hon'ble High Court to grant an 'Apprehended' / 'Anticipatory relief' in regard to the Apprehended / Anticipatory criminal proceedings also. As per Section 633(2) of the Companies Act, 1956 the power to grant relief to the Hon'ble High Court, is a discretionary power and the same should be exercised by the Court only where it is satisfied that the concerned person had acted honestly and reasonably and that considering the circumstances of a given case, he should be excused. The only issue for consideration under Section 633(1) or (2) is that whether a person had acted in good faith honestly and whether he had any reason to escape from the liability. A glimpse of Section 633(1) of the Companies Act, 1956 unerringly points out that in the criminal proceedings, the Court shall have no power to give relieve from any civil liability, which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust - Also, this Court points out that the decisions of various High Court cited on behalf of the Appellant in the present O.S.A. No. 393 of 2013 where the criminal prosecutions were initiated by Registrar of Companies/Statutory Authority after issuance of show cause notices to the concerned person(s) and thereby making them aware / bringing it to their knowledge well in advance about the anticipated / apprehended / prospective/contemplated proceedings - But in the present case on hand, the Appellant is the complainant in C.C. No. 107 of 2013 on the file of trial Court. There is no Second Opinion of a very significant fact that the power under Section 633(2) of the Companies Act can be exercised by the High Court with great care, caution and circumspection based on the facts and circumstances of the given case, which float on the surface. Appeal dismissed.
Issues Involved:
1. Maintainability of the Company Petition under Section 633(2) of the Companies Act, 1956. 2. Jurisdiction of the High Court under Section 633(2) to grant relief in cases where proceedings are pending before a Magistrate. 3. Interpretation of the terms "claim" and "proceeding" under Section 633(2). 4. The impact of the initiation of criminal proceedings on the High Court's jurisdiction under Section 633(2). 5. The appellant's locus standi to challenge the maintainability of the Company Petition. Detailed Analysis: 1. Maintainability of the Company Petition under Section 633(2) of the Companies Act, 1956: The appellant argued that the Company Petition filed by the respondents under Section 633(2) was not maintainable because criminal proceedings had already been initiated. The appellant contended that Section 633(2) applies only to apprehended proceedings and not to cases where proceedings are already pending. The court, however, found that Section 633(2) of the Companies Act confers additional powers on the High Court to grant relief even in respect of apprehended proceedings. The court concluded that the power under Section 633(2) does not limit the jurisdiction of the High Court to grant relief in pending proceedings. 2. Jurisdiction of the High Court under Section 633(2) to grant relief in cases where proceedings are pending before a Magistrate: The appellant argued that the High Court could not exercise its power under Section 633(2) to relieve a person from liability in proceedings pending before a Magistrate. The court noted that the High Court has a broader jurisdiction under Section 633(2) to grant relief even in cases of anticipated proceedings. The court emphasized that this additional power does not impose a restraint or limitation on the High Court's jurisdiction to grant relief in pending proceedings. 3. Interpretation of the terms "claim" and "proceeding" under Section 633(2): The appellant contended that the term "claim" in Section 633(2) refers only to civil claims and not to penal proceedings. The court referred to various case laws and concluded that the term "claim" in Section 633(2) must be construed broadly to include both civil and penal proceedings. The court emphasized that the High Court has the power to grant relief against an apprehended criminal prosecution under Section 633(2). 4. The impact of the initiation of criminal proceedings on the High Court's jurisdiction under Section 633(2): The appellant argued that once criminal proceedings were initiated, the High Court could not grant relief under Section 633(2). The court, however, held that the initiation of criminal proceedings does not bar the High Court from exercising its powers under Section 633(2). The court noted that the High Court's power under Section 633(2) is discretionary and can be exercised even after the commencement of criminal proceedings. 5. The appellant's locus standi to challenge the maintainability of the Company Petition: The respondents argued that the appellant had no locus standi to challenge the maintainability of the Company Petition. The court found that the appellant, as the complainant in the criminal proceedings, had the right to challenge the maintainability of the Company Petition. The court concluded that the order of the learned Single Judge dismissing the appellant's preliminary objection affected the appellant's valuable rights and, therefore, the appellant had the locus standi to file the appeal. Conclusion: The court dismissed the appeal and affirmed the order of the learned Single Judge, holding that the Company Petition under Section 633(2) was maintainable and that the High Court had the jurisdiction to grant relief even in cases where proceedings were pending before a Magistrate. The court granted liberty to the appellant to contest the main Company Petition on merits.
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