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Issues:
1. Appeal against the order of acquittal under section 417 of the Code of Criminal Procedure. 2. Interpretation of sections 86-D and 87-D of the Indore Companies Act. 3. Whether the actions of the respondents constitute "guaranteeing a loan" as per section 87-D. 4. Application of the rule of strict construction in penal provisions. 5. Examination of the irregularity in the procedure adopted by the Magistrate. Analysis: The appeal was filed by the State against the order of acquittal by the Additional City Magistrate, Indore, regarding an offence under section 87D of the Indore Companies Act. The case involved the managing director of a company and his son, who were accused of contravening the provisions of the Companies Act by executing promissory notes jointly with the managing agents for loans taken by the agents. The main contention was whether this action amounted to "guaranteeing a loan" as per section 87-D. The Government Advocate argued that by signing the promissory notes, the company took on the liability and guaranteed the loans made to the managing agents. On the other hand, the respondents' counsel contended that the company had already incurred a liability for a previous loan, and the subsequent promissory note was a continuation of this arrangement, not a guarantee. The interpretation of the term "guarantee" in section 87-D was a crucial point of contention between the parties. The court analyzed the language of section 87-D and emphasized the need for strict construction of penal provisions. It was noted that the term "guarantee" had a technical meaning, requiring the existence of a principal debtor and a conditional liability on the guarantor. The court concluded that the actions of the company in executing the promissory notes did not fall within the scope of "guaranteeing a loan" as defined in the statute. Furthermore, the court highlighted an irregularity in the procedure followed by the Magistrate, who recorded the statement of the respondents' counsel instead of examining the respondents directly. While disapproving of this procedural error, the court deemed it unnecessary to order a retrial, as the appeal against the acquittal could not succeed based on the interpretation of the relevant legal provisions. In conclusion, the court dismissed the appeal, upholding the order of acquittal and emphasizing the importance of strict interpretation of statutory provisions, especially in penal cases.
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