1976 (4) TMI 155 - HC - Companies Law

Issues Involved:
1. Jurisdiction of the High Court to entertain the criminal complaint.
2. Interpretation of Section 446(2) of the Companies Act, 1956.
3. Applicability of the Criminal Procedure Code, 1898 and 1973.
4. Procedure for taking cognizance of criminal offences.
5. Powers of transfer under Section 446(3) of the Companies Act, 1956.

Detailed Analysis:

1. Jurisdiction of the High Court to entertain the criminal complaint:
The official liquidator filed a criminal complaint under Sections 538 and 541 of the Companies Act, 1956, due to the accused's failure to hand over the company's books of account and records and their failure to maintain proper books of account during the two years preceding the winding-up of the company. The court had previously ordered summons on 19th September 1972, but the case faced delays due to difficulties in serving the accused. On 22nd September 1975, doubts were expressed about the High Court's original criminal jurisdiction to entertain the complaint.

2. Interpretation of Section 446(2) of the Companies Act, 1956:
Both the complainant and the accused argued that the High Court had jurisdiction under Section 446(2) of the Companies Act, 1956, which states: "The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of-(a) any suit or proceeding by or against the company...". The court considered whether this provision was broad enough to cover the present complaint. The court noted that Section 454(5A) allows the court winding up a company to take cognizance of offences related to the failure to file a statement of affairs, indicating that Section 446(2) might not be intended to cover all types of complaints.

3. Applicability of the Criminal Procedure Code, 1898 and 1973:
Under the Criminal Procedure Code, 1898, Section 28 allowed the High Court to try offences under the Indian Penal Code, but Section 29 specified that offences under other laws could be tried by courts mentioned in those laws. The court found no provision in the Companies Act, 1956, or the Criminal Procedure Code, 1898, indicating that the High Court had original jurisdiction to try the present offence. The analysis was extended to the Criminal Procedure Code, 1973, which similarly did not provide the High Court with the power to take cognizance of offences directly.

4. Procedure for taking cognizance of criminal offences:
The court explained that under both the 1898 and 1973 Codes, cognizance of criminal offences could be taken by magistrates upon receiving a complaint, police report, or information. Section 193 of the 1973 Code states that courts of session cannot take cognizance of offences unless committed by a magistrate. Section 194 of the 1898 Code allowed the High Court to take cognizance upon information exhibited by the Advocate-General with the State Government's sanction. Thus, the High Court could not take cognizance of the present complaint directly.

5. Powers of transfer under Section 446(3) of the Companies Act, 1956:
The court noted that Section 446(3) of the Companies Act, 1956, allows the court winding up a company to transfer any suit or proceeding pending in another court to itself. This means that while the High Court cannot initially take cognizance of the complaint, it can transfer the case to itself once it becomes a pending proceeding in another court, such as a magistrate's court.

Conclusion:
The court concluded that it did not have jurisdiction to take cognizance of the offence under Sections 538 and 541 of the Companies Act, 1956. The complaint must be filed before a magistrate, who can then take cognizance of the offence. The High Court can subsequently transfer the case to itself under Section 446(3) of the Companies Act, 1956. The complaint was returned to the complainant for filing before the appropriate court.

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