2020 (10) TMI 1181 - HC - Companies Law

Grant of Bail - Oppression and Mismanagement - appointment of Applicant as Director on the basis of forged director - It is alleged that Ex-Director without discussion with other Directors prepared forged documents and ousted his wife from the Directorship - HELD THAT - This court finds that the dispute relates to the mismanagement of the affairs of the Pvt. Ltd. Company but the FIR has been lodged under provisions of IPC and procedure under Cr.P.C has been adopted in prosecution of applicant. The Companies Act 2013 is a complete code which provides for the procedure of conduct investigation into the affairs of the company where allegations of fraud are made against the office bearers of the company. The allegations regarding the offences committed by the applicant should have been investigated under the provisions of companies act aforesaid. Code of Criminal Procedure 1973 is a code by itself as far as procedure for arrest investigation and prosecution of the offence under Companies Act is concerned. The procedure provided under the Companies Act does not excludes the application of Cr.P.C completely. Section 212(6) excludes the applicability of Cr.P.C only for the limited purpose for treating the offence under Section 447 cognizable. Section 438 of the Companies Act makes it clear Section 212(14) of the Companies Act provides that the central government has to provide whether prosecution should be launched against the companies and its officer or employees who are or have been in employment in the company or any other person directly or indirectly connected with the affairs of the company. Therefore it appears that when the director of company is prosecuted the company should also be arrayed as an accused. Even if the argument of the learned counsel for the informant is accepted that the applicant was illegally inducted in the company as director by fabrication of resolution even then the prosecution under Section aforesaid can be launched against the applicant under the provisions of Companies Act since Section 212 (4) Cr.P.C clearly provides prosecution of any other persons directly or indirectly connected with the affairs of the company . In the present case the entire investigation has been conducted by the Investigating Officer of the police and not by the Special Fraud Investigating Officer appointed under the Companies Act. First proviso to Section 212(6)(ii) provides that no person accused of any offence under Section 447 of the Companies Act shall be released on bail. The only exception is a person who is under age of 16 years or a woman or a sick or infirm person. The applicant in this case is a woman whose prayer for bail can also be considered under Section 437(1) Cr.P.C. In the present case there is no approval from the central government for Investigating Officer to investigate the offence alleged against the applicant under Section 212 of the Companies Act 2013. Regarding criminal history of the applicant is appears that all the case have been lodged by or at the behest of her fellow directors who are part of the same company. The Court is of the view that the applicant has made out a case for bail - bail application is allowed.

Summary

Issues Involved:
1. Allegations of forgery and misappropriation of company funds.
2. Dispute over the directorship and management of the company.
3. Procedural flaws in the investigation under the Companies Act, 2013.
4. Consideration of bail for the applicant.

Issue-Wise Detailed Analysis:

1. Allegations of Forgery and Misappropriation of Company Funds:
The FIR alleges that Ravindra Kumar Maurya, a director of Vaishali Real Estate Pvt. Ltd., prepared forged documents to oust his wife, Smt. Pratima Verma, from the directorship without discussing with other directors. Ravindra Kumar Maurya and the applicant allegedly opened a separate account in State Bank of India and transferred the company's profits to this account, thereby misappropriating the funds. The applicant, in collusion with other directors, also lodged an FIR against the informant, which was later dismissed by the Investigating Officer.

2. Dispute Over Directorship and Management of the Company:
The applicant's counsel argued that the applicant was falsely implicated due to a previous FIR lodged against the informant. It was claimed that Smt. Pratima Verma resigned from her position as director, and her resignation was duly accepted and reported to the Registrar of Companies. The informant, with the help of an advocate, implicated the applicant and Ravindra Kumar Maurya in multiple FIRs. A company petition filed before the National Company Law Tribunal in Allahabad is pending.

3. Procedural Flaws in the Investigation Under the Companies Act, 2013:
The court noted that the dispute relates to the mismanagement of the company's affairs, and the FIR was lodged under IPC provisions with the Cr.P.C. procedure adopted for prosecution. However, the Companies Act, 2013 provides a complete code for investigating company affairs involving fraud. The court highlighted relevant sections of the Companies Act, including Sections 210, 212, 217, 219, 229, 436, 438, 446-A, and 447, which outline the procedures for investigation and prosecution of company-related offences. The court emphasized that the investigation should have been conducted by the Serious Fraud Investigation Office (SFIO) as per the Companies Act, and the central government's approval was necessary for such an investigation. The court found procedural flaws as the investigation was conducted by a police officer instead of an SFIO officer.

4. Consideration of Bail for the Applicant:
The court considered the nature of the offence, procedural flaws, arguments from both parties, the spread of COVID-19 in jails, and the evidence on record. The court referred to the larger mandate of Article 21 of the Constitution of India and the Supreme Court's dictum in the case of Dataram Singh Vs. State of U.P. and another. The court observed that the applicant, being a woman, could be considered for bail under Section 437(1) Cr.P.C. Given the procedural flaws and the applicant's status, the court granted bail with specific conditions to ensure the applicant's cooperation in the trial and prevent tampering with evidence or committing further offences.

Conclusion:
The court allowed the bail application, directing the applicant to furnish a personal bond and two reliable sureties. The court imposed several conditions, including cooperation in the trial, non-tampering with evidence, and regular court appearances. The court also provided specific instructions for verifying the authenticity of the bail order and conditions for the applicant's travel abroad. The bail would be effective after the period of any short-term bail due to COVID-19 ends, and sureties must be furnished once normal court functioning resumes. The court emphasized that any breach of conditions could result in bail cancellation.