2019 (6) TMI 1712 - HC - Companies Law

Rejection of application of discharge filed under Section 227 of Cr.P.C. - Fraud and cheating against the complainant by showing resignation from the Board of Directors - forgery of signatures - meeting of the company not called - preparation of forge resignation letter of complainant Mukesh as well as Radheshyam and accepted their resignation. Application filed by the applicants rejected on the ground that under the provisions of Companies Act cognizance of matter can only be taken if complaint is made by Registrar of Companies or shareholders, therefore, the provisions of Companies Act, 2013 are not applicable in the present case and this court is having jurisdiction to try the case registered by the police against the applicants for the offence punishable under Indian Penal Code. HELD THAT - According to the notification dated 18.05.2016 in exercise of the powers conferred by Sub-section 1 of section 435 of Companies Act 2013 the Central Government after obtaining the concurrence of the respective of Chief Justices of the High Court designates the courts mentioned in the table as special court for the purpose of trial of offence punishable under the Companies Act, 2013 with imprisonment of 2 years or more in terms of section 435 of the Companies Act, 2013. As per Serial No. 6 of the table IX Additional Sessions Judge Gwalior has been designated as Special Judge for the State of Madhya Pradesh to try the offences punishable under the Companies Act, 2013. Provision of Section 436(2) also provide that while trying an offence under the Companies Act, a Special Court may also try an offence other than an offence under this Act with which the accused may, under the Code of Criminal Procedure, 1973 be charged at the same trial - However, in the present case, no offence under the Companies Act has been registered by the police. The police has registered the offence against the applicants punishable under Section under Section 420, 467, 468, 471, 120-B of I.P.C. therefore, after completion of the investigation, police filed charge-sheet against the applicants before the Court of Judicial Magistrate First Class Indore who committed the case to the Sessions Court, which was transferred to the 12th Additional Sessions Judge, Indore for the trial. The trial court has rightly held that applicants have fabricated and manipulated the records of the company to commit fraud and cheating against the complainant by showing resignation from the Board of Directors by forging the signatures by way of superimposing their signatures in the resignation letter and this fact is also substantiated by the report of the hand writing expert. Therefore, the police registered the offence against the applicants for the offence punishable under Section under Section 420, 467, 468, 471, 120-B of I.P.C. and no criminal trial has been initiated against the applicants for any of the offence which are punishable under the provision of Companies Act, therefore, in absence of the any offence punishable under the Companies Act, Special Court is not having jurisdiction to try the case which is punishable under the Indian Penal Code and court of Indore has territorial jurisdiction to try the case for the commission of offence punishable under Section under Section 420, 467, 468, 471, 120-B of I.P.C. Therefore, this court is of the view that the trial court has not committed any error in rejecting the application under Section 227 of Cr.P.C. filed by the applicants - petition dismissed.

Summary

Issues:
Jurisdiction of Special Court under Companies Act vs. Jurisdiction of Regular Court under IPC

Analysis:
1. Jurisdiction of Special Court under Companies Act:
The applicants sought discharge under Section 227 of Cr.P.C., arguing that the alleged offenses fall under the purview of the Companies Act, 2013 and should be tried by a Special Court designated under the Act. They contended that the offenses related to non-calling of meetings, forged resignations, and appointment of directors, all covered under the Companies Act. However, the trial court rejected this argument, stating that only complaints by the Registrar of Companies or shareholders trigger the Companies Act provisions. The court highlighted that the FIR registered against the applicants pertained to offenses under the IPC, not the Companies Act.

2. Interpretation of Companies Act Provisions:
The defense argued that the trial court failed to consider the provisions of the Companies Act, specifically Section 436(2), which allows a Special Court to try offenses under the IPC along with Companies Act offenses. They emphasized that the complainant, being an ex-director and shareholder, had the right to file a complaint under the Companies Act. The defense contended that the actions of the applicants, such as fabrication of documents and forgery, constituted offenses under the Companies Act, punishable by up to 10 years of imprisonment.

3. Prosecution's Allegations under IPC:
On the other hand, the prosecution alleged that the applicants engaged in fraudulent activities to gain control of the company's assets. They accused the applicants of manipulating records, filing false returns, and fabricating resignations to deceive and cheat the complainants. The prosecution argued that the offenses committed by the applicants, including fraud and cheating, fell under sections 406, 420, 465, 467, 468, 471, and 201 of the IPC. They asserted that the FIR was justified based on detailed investigations and hand-writing analysis.

4. Court's Decision and Rationale:
After examining the arguments and provisions, the court emphasized the notification designating Special Courts under the Companies Act. It clarified that the Special Court's jurisdiction is limited to offenses punishable under the Companies Act, not IPC offenses. The court noted that the FIR registered against the applicants concerned IPC offenses, not violations of the Companies Act. Therefore, the trial court's decision to reject the discharge application under Section 227 of Cr.P.C. was upheld, as the Special Court lacked jurisdiction over the IPC offenses alleged in the case.

5. Final Verdict:
In conclusion, the petition seeking discharge was dismissed by the court, affirming that the trial court's decision was appropriate in light of the jurisdictional issues between the Special Court under the Companies Act and the regular court under the IPC. The judgment clarified the scope of jurisdiction for each court based on the nature of offenses alleged, ultimately upholding the trial court's ruling.