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2020 (2) TMI 401 - HC - Companies LawQuashing of FIR - allegation is that the accused persons have with an intention and conspiracy planned to cheat the people and after opening branch offices and collecting money from the customers they have fled away with some of ₹ 5 Crores approximately - HELD THAT - Matter referred to the Hon ble Division Bench of this Court for consideration Whether sub-section (2) of Section 50 of the Bihar Self Supporting Co-operative Societies Act, 1996 may be interpreted to mean and understand that the words other legal proceedings occurring thereunder create a bar in lodgment of a first information report against the co-operative society registered under the said Act, its Director(s), Officer(s), Manager(s) or a member of the society and that it would also cover the criminal proceeding against them? Let the records be placed before Hon ble the Chief Justice for referring the aforesaid questions to the Hon ble Division Bench of this Court.
Issues Involved:
1. Maintainability of an application under Section 482 Cr.P.C. for quashing an FIR. 2. Interpretation of "other legal proceedings" under Section 50(2) of the Bihar Self Supporting Co-operative Societies Act, 1996. 3. Applicability of judicial precedents regarding the inherent powers of the High Court to quash criminal proceedings. Detailed Analysis: 1. Maintainability of an application under Section 482 Cr.P.C. for quashing an FIR: The petitioner sought to quash the FIR registered under various sections of the Indian Penal Code. The learned APP for the State argued, relying on Supreme Court judgments, that the High Court should not interfere with investigations at this stage. The APP cited cases like State of Bihar and Anr. Vrs. Shri P.P. Sharma & Anr. and S.N. Sharma v. Bipen Kumar Tiwari, emphasizing that the court's function begins when a charge is preferred before it. The APP further referenced R.P. Kapur V. State of Punjab and State of Bihar Vs. Murad Ali Khan & Ors., asserting that the High Court's inherent powers should not be used to quash an investigation. In contrast, the petitioner's counsel argued, citing State of Haryana & Ors. Vs. Ch. Bhajan Lal & Ors., that the High Court can quash proceedings in specific scenarios, such as when the FIR does not disclose any offence or when the proceedings are manifestly attended with mala fide. The counsel also referenced Central Bureau Investigation Vs. K. M. Sharma, Roy V.D. vs. State of Kerala, and Zandu Pharmaceutical Works Ltd. and Ors. Vs. Md. Sharaful Haque and Ors., to support the argument that the High Court can intervene to prevent abuse of the process of the court. 2. Interpretation of "other legal proceedings" under Section 50(2) of the Bihar Self Supporting Co-operative Societies Act, 1996: The petitioners argued that Section 50(2) of the Act bars criminal proceedings against the society or its members once a liquidator is appointed. They cited a co-ordinate Bench judgment which interpreted "other legal proceedings" to include criminal proceedings. The learned APP, however, contended that the term should not encompass criminal proceedings, drawing parallels with Section 446 of the Companies Act, 1956, as interpreted by the Delhi High Court in D. K. Kapur Vs. Reserve Bank of India & Ors.. The APP emphasized that the purpose of such provisions is to protect the assets of the entity in liquidation and not to shield individuals from criminal liability. 3. Applicability of judicial precedents regarding the inherent powers of the High Court to quash criminal proceedings: The court reviewed various precedents, including Central Bureau of Investigation Vs. Ravi Shankar Srivastava, IAS and Anr., which reiterated that the High Court's powers under Section 482 Cr.P.C. are broad but should be exercised with caution. The court emphasized that these powers should not be used to undermine legitimate prosecutions. Consideration and Conclusion: The court expressed its disagreement with the interpretation given by the co-ordinate Bench regarding Section 50(2) of the Act, stating that the term "other legal proceedings" does not include criminal proceedings. The court highlighted that the legislature did not include the term "criminal proceedings" in Section 50(2), similar to the Companies Act, 1956. Consequently, the court decided to refer the interpretation issue to a Division Bench for a more authoritative determination. Referral to Division Bench: The court formulated a specific question for the Division Bench: Whether Section 50(2) of the Bihar Self Supporting Co-operative Societies Act, 1996, bars the lodgment of an FIR against the cooperative society, its directors, officers, or members, thereby including criminal proceedings within "other legal proceedings." Next Steps: The records were directed to be placed before the Chief Justice for referring the question to the Division Bench.
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