2023 (5) TMI 1255 - HC - Companies Law

Oppression and mismanagement - Fraud and illegal financial activities committed by them while managing the company - criminal breach of trust and forgery Contention is that even if the case of the prosecution is taken on its face as is emerging from the first information reports and the grounds on which the charge sheet has been filed no cognizable offence is emerging and therefore the trial court has committed manifest illegality in taking cognizance of the offences and in issuing process against the applicants. HELD THAT - There is no bar in lodging an FIR or in conducting an investigation or even in the trial or conviction of an offender under two different enactments but the bar is only with regard to the punishment of the offender twice for the same offence. Where an act or an omission constitutes an offence under two enactments the offender may be prosecuted under either or both enactments but shall not be liable to be punished twice for the same offence. The word civil court appearing herein above could not be read as criminal court. If the intention of the Legislature was to exclude the provisions of Indian Penal Code with regard to the offences investigated under Companies Act then nothing had prevented the Legislature from making such a provision. Even otherwise it is a well established principle of law that the exclusion of the jurisdiction of the Court has to be specific and cannot be inferred and the provisions excluding the jurisdiction have to be construed strictly. Thus in the considered opinion of this Court the word Civil Court emerging in this section cannot be read as Criminal Court . Prima facie there are specific allegations made by opposite party no. 2 in the FIR s lodged by him and the Investigating Officer having conducted investigation by collecting the material and recording the statements of the witnesses under Section 161 of the Cr.P.C. and considering the same filed the charge sheet - The Court has to consider whether from allegations contains in FIR and material collected during the course of investigation prima facie any offence is disclosed. Correctness or otherwise of the said allegations has to be be decided only during trial. At the initial stage of issuance of process it was not open to Courts to stifle proceedings by entering into merits of the contentions made on behalf of the accused. Criminal complaints could not be quashed only on the ground that allegations made therein appear to be of a civil nature. If ingredients of offence alleged against Accused were prima facie made out Criminal proceeding shall not be interdicted. Thus no illegality appears to have been committed by the investigating officer in submitting the charge sheet or by the trial court in taking cognizance and in issuing process. Resultantly all the petitions filed by the applicants placed above are not having force and for the reasons mentioned herein before all these petitions are dismissed.

Summary

Issues Involved:
1. Quashing of entire proceedings and charge sheets under Section 482 Cr.P.C. for various FIRs.
2. Allegations of criminal breach of trust, cheating, and forgery.
3. Applicability of Companies Act, 2013 versus Indian Penal Code (IPC) provisions.
4. Legal principles for quashing criminal proceedings.

Summary of Judgment:

Issue 1: Quashing of Entire Proceedings and Charge Sheets
The applications under Section 482 Cr.P.C. were filed to quash the entire proceedings and charge sheets related to multiple FIRs. The FIRs alleged criminal breach of trust, cheating, and forgery involving significant financial transactions.

Issue 2: Allegations of Criminal Breach of Trust, Cheating, and Forgery
The FIRs alleged that the applicants misappropriated funds amounting to several crores through fraudulent activities, including transferring company funds to personal accounts, purchasing properties, and opening unauthorized bank accounts. The allegations also included the illegal convening of company meetings and forging documents.

Issue 3: Applicability of Companies Act, 2013 versus IPC Provisions
The applicants argued that the Companies Act, 2013 provides a detailed procedure for addressing grievances related to company management, and thus, criminal prosecution under IPC should be barred. However, the court noted that there is no provision in the Companies Act that ousts the applicability of IPC. Section 26 of the General Clauses Act and Article 20(2) of the Constitution were cited, emphasizing that an act could constitute an offense under multiple enactments, and prosecution under IPC is permissible.

Issue 4: Legal Principles for Quashing Criminal Proceedings
The court referred to several precedents, including *State of Haryana v. Bhajan Lal*, which outline the conditions under which criminal proceedings can be quashed. The court emphasized that at the stage of taking cognizance and issuing process, detailed examination of evidence is not required. The court also noted that the allegations in the FIRs were serious and involved substantial financial misappropriation, which justified the continuation of criminal proceedings.

Conclusion:
The court dismissed the petitions for quashing the criminal proceedings, stating that no illegality was committed by the investigating officer or the trial court. The applicants were advised to approach appropriate forums for bail, and the observations made in this judgment should not influence the merits of their cases. The court reiterated that criminal proceedings should not be quashed merely because the allegations also involve civil disputes.