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2021 (12) TMI 249 - HC - Companies LawValidity of FIR - disputes arising in relation to administration of a company - argument of the learned counsel for the petitioners is that the complainant has initiated the proceedings under the Companies Act before the NCLT and the criminal prosecution launched by filing the impugned First Information Report is thus mala fide and accordingly the F.I.R. and any proceedings drawn pursuant thereto are liable to be quashed - HELD THAT - Once the Companies Act, 2013 has come into force, mismanagement of the affairs of a company or even allegations of fraud is to be investigated in terms of the procedure contemplated in the Companies Act, 2013. SFIO is the authority to conduct the investigation and special court established under Section 435 of the Act , 2013 is the competent court to try the offences which is empowered even to try the offences other than the offences under the Companies Act as per the provision contained in Section 436 (2). It is not only the FIR which is under challenge in this petition which has been lodged but in addition to it, three more FIRs have been lodged by the complainant against the petitioners in succession apparently on account of the fact that the prayer for grant of interim relief relating to convening the extraordinary general meeting of the company was not acceded to by NCLT. The first such prayer was rejected by NCLT on 26.07.2021 and thereafter again on 10.08.2021. It is in this background that it has been submitted on behalf of the petitioners that the impugned FIR has precipitated on account of malafide reasons. Though the investigation of the impugned FIR shall go on, however, till the next date of listing, the petitioners shall not be arrested in connection thereto - Application disposed off.
Issues Involved:
1. Quashing of the First Information Report (FIR) 2. Allegations of mismanagement and fraud 3. Jurisdiction of National Company Law Tribunal (NCLT) vs. criminal investigation 4. Applicability of Companies Act, 2013 5. Malafide intention behind filing multiple FIRs Detailed Analysis: 1. Quashing of the First Information Report (FIR): The petitioners sought to quash the impugned FIR No.0898 of 2021, lodged on 15.11.2021 under sections 409, 420, 467, 468 & 471 of IPC at Police Station-Gomti Nagar, District-Lucknow East. The grounds for quashing included that the allegations were related to the administration of a company and were pending adjudication before the NCLT, making the dispute civil in nature. The petitioners argued that the FIR was an attempt to give a civil dispute a criminal color and should be quashed. 2. Allegations of Mismanagement and Fraud: The complainant, a Shareholder and Director of the company, alleged that the petitioners mismanaged the company's affairs, committed conspiracy with forged documents, and siphoned off company funds. The allegations included illegal withdrawals from the company’s account and fraudulent misappropriation of company funds for personal gain. 3. Jurisdiction of National Company Law Tribunal (NCLT) vs. Criminal Investigation: The petitioners argued that the NCLT was already handling the dispute under the Companies Act, 2013, and the FIR was filed out of malafide intention after failing to get interim relief from the NCLT. They cited the judgment of the Madras High Court in Doraisamy vs. State, where a similar FIR was quashed, and the Supreme Court upheld the quashing with a caveat that it would not impact any action under the Companies Act. 4. Applicability of Companies Act, 2013: The court examined the provisions of the Companies Act, 2013, particularly Chapter XIV (inspection, inquiry, and investigation), Sections 206, 208, 210, 211, 212, 213, 435, 436, and 447. It noted that the Act provides a detailed mechanism for addressing grievances related to company mismanagement and fraud, including investigation by the Registrar of Companies and the Serious Fraud Investigation Office (SFIO), and prosecution by Special Courts. 5. Malafide Intention Behind Filing Multiple FIRs: The court observed that the complainant had filed multiple FIRs in succession after failing to obtain interim relief from the NCLT, indicating a potential malafide intention. This situation was compared to the guidelines in the Bhajan Lal case, where quashing of FIR is permissible if the criminal proceeding is attended with malafide or instituted maliciously. Conclusion: The court found that the issues raised required detailed consideration and that the petitioners had made a prima facie case for interim relief. It held that the investigation of the impugned FIR could continue, but the petitioners should not be arrested until the next date of listing. The judgment emphasized that the Companies Act, 2013, provides a comprehensive framework for dealing with company-related disputes and fraud, and the SFIO and Special Courts are the competent authorities for such matters.
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