2018 (9) TMI 2135 - HC - Companies Law

Rejection of bail application - Territorial Jurisdiction of Noida Police - Fraudulent transactions with the company - misappropriation of funds of the Company - It was alleged the flats and shops were sold in favour of the co-accused persons at a much lower price than the scheduled price, who in their turn, sold the flats and shops to the bona fide purchasers at a higher price - Prosecution for offences - Jurisdiction of the Civil Court as per the provision of Section 430 of Companies Act. Territorial Jurisdiction of Noida Police - first contention raised by the Counsel for the applicant is that the registered office of the Company is situated in Noida and all the decisions were taken at Noida, therefore, only the Noida police has territorial jurisdiction to investigate the matter and the Police Station Sirol, Distt. Gwalior, has no territorial jurisdiction to entertain the matter - HELD THAT - The entire offence has taken place in Gwalior. In the considered opinion of the Court, the offence has been committed within the territorial jurisdiction of Police Station Sirol, Distt. Gwalior. Even otherwise, if for the sake of argument, it is accepted, that the decision taken at Noida, can also be treated as a part of cause of action/offence, then it is well-established principle of law that where the offence has taken place within the territorial jurisdiction of more than one police stations, then each of the police stations will have jurisdiction to investigate the offence - the objection of the applicant, with regard to the lack of territorial jurisdiction of Police Station Sirol, Distt. Gwalior is hereby rejected. Prosecution for offences - it is contended by applicant that in view of the specific provisions of Sections 439(1), (2), 436(1)(2),441, 442, 435 and 445 of Companies Act, the applicant cannot be prosecuted for offences punishable under Penal Code - HELD THAT - It is fairly conceded by the Counsel for the applicant, that there is no provision in Companies Act, which ousts the applicability of the provisions of Indian Penal Code - The Supreme Court in the case of STATE OF NCT OF DELHI VERSUS SANJAY AND JAYSUKH BAVANJI SHINGALIA VERSUS STATE OF GUJARAT has held Reading the provisions of the Act minutely and carefully, prima facie we are of the view that there is no complete and absolute bar in prosecuting persons under the Penal Code where the offences committed by persons are penal and cognizable offence - This Court is of the considered opinion, that the second contention of the applicant, that he cannot be prosecuted for offences under the Indian Penal Code, and can be prosecuted for punishments provided under the Companies Act only, cannot be accepted, hence, it is rejected. Jurisdiction of the Civil Court as per the provision of Section 430 of Companies Act - HELD THAT - The submission made by the Counsel for the applicant, that the word Civil Court , should be read as Criminal Court , is misconceived. If the intention of the Legislature was to exclude the provisions of Indian Penal Code, 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, the word Civil Court , cannot be read as Criminal Court , as suggested by the Counsel for the applicant. Thus, this Court is of the considered opinion, that the F.I.R. in Crime No. 27/2017 registered at Police Station Sirol, Distt. Gwalior for offence under Sections 420, 467, 409 and 120-B of I.P.C. read with Section 166, 188-B of Companies Act, as well as the criminal proceedings in S.T. No. 437/2017 pending in the Court of 9th A.S.J., Gwalior cannot be quashed. Application dismissed.

Summary

Issues: Jurisdiction of Police Station, Applicability of Companies Act, Jurisdiction of Civil Court

Jurisdiction of Police Station:
The judgment addresses the issue of territorial jurisdiction concerning the investigation of a case involving offences under the Indian Penal Code and the Companies Act. The applicant argued that since the decisions were made in Noida, the Noida police should handle the case, not the Police Station in Gwalior. However, the Court rejected this argument, emphasizing that the alleged fraudulent activities, including sham sale deeds and misappropriation of funds, occurred in Gwalior. Citing legal provisions, the Court highlighted that when offences take place in multiple areas, each area's police station has jurisdiction to investigate. The judgment referred to a Supreme Court case to support this stance.

Applicability of Companies Act:
The judgment delves into whether the applicant could be prosecuted under the Indian Penal Code for offences also covered by the Companies Act. The applicant contended that specific provisions of the Companies Act precluded prosecution under the Penal Code. However, the Court dismissed this argument, stating that there was no provision in the Companies Act excluding the Penal Code's applicability. Legal precedents were cited to support the rejection of the applicant's argument, emphasizing that prosecution under different statutes for the same offence is permissible.

Jurisdiction of Civil Court:
Lastly, the judgment addressed the argument that since Section 430 of the Companies Act bars the jurisdiction of civil courts, criminal court jurisdiction should also be barred. The Court rejected this contention, stating that the exclusion of civil court jurisdiction does not automatically extend to criminal court jurisdiction. It highlighted the need for specific legislative provisions to exclude criminal court jurisdiction and emphasized that such exclusions must be strictly construed. The judgment concluded that the FIR and criminal proceedings could not be quashed, ultimately dismissing the application.

This detailed analysis of the judgment provides insights into the Court's reasoning on each issue, citing legal provisions and precedents to support its conclusions.