2022 (3) TMI 366 - HC - Companies Law

Maintainability of petition - time limitation - false and frivolous complaint or not - appointing the persons as Directors of the company by submitting a forged document - Section 241 to 246 of Companies Act, 2013 - HELD THAT - It is settled principal of law that the power under Section 482 Cr.P.C. is to be exercised sparingly not to smother the legitimate prosecution. The power has to be exercised with circumspection in the rarest of rare cases. The power of the police to investigate into a cognizable offence is ordinarily not to be interfered by the judiciary. The High Court should be extremely cautious and slow to interfere with the investigation/trial of criminal cases and should not stall the investigation or prosecution except when it is convinced beyond doubt that the FIR or charge sheet does not disclose commission of offence or prosecution is barred by law or it is necessary to interfere to prevent the abuse of process of the Court. The charge sheet would disclose that the police collected the evidence as per the record of Registrar of Companies, which was a statutory record. They also collected the e-mail given by A3 to the complainant wherein he admitted that he acted upon the instructions of A1. Thus, there was prima facie evidence collected by the investigating officer to prove the offences against the petitioners under Sections 406 and 420 IPC. The statements of the witnesses recorded also would prima facie prove the other offences. The truth or otherwise of these allegations can be decided only after a full-fledged trial. This Court ordinarily would not embark upon an enquiry whether the evidence in question is reliable or not or whether the accusations would be sustained or not. It was the function of the trial court. The inherent power under Section 482 Cr.P.C. should not be exercised to stifle a legitimate prosecution. Hence, it is considered not fit to quash the charge sheet against the petitioners. The petition is dismissed.

Summary

Issues:
Petition to quash proceedings under Section 482 Cr.P.C. in C.C. No.8 of 2016 on the file of II Additional Chief Metropolitan Magistrate, Hyderabad.

Analysis:

Issue 1: Allegations and Disputes
The petitioners, own brothers, were involved in business disputes with the de facto complainant regarding an oil company. The complainant alleged that the petitioners conspired to take over the company by appointing themselves as directors without permission. The complaint led to the filing of a charge sheet under Sections 406, 420, 506 read with 34 IPC.

Issue 2: Legal Arguments
The petitioners argued that the complaint was false and frivolous, governed by the Companies Act 1956, and subsequent amendments barred such proceedings. They contended that the 3rd petitioner, an employee, had no personal involvement in the alleged offense. The complainant's counsel argued that the criminal proceedings were valid as the offense occurred before the Companies Act amendment in 2013.

Issue 3: Judicial Analysis
The Court noted that the alleged offense predated the Companies Act amendment in 2013, making certain provisions inapplicable. The charge sheet indicated evidence against the petitioners for cheating, criminal breach of trust, and threats. The Court emphasized that Section 482 Cr.P.C. should be sparingly used to interfere with legitimate prosecutions, especially when prima facie evidence exists.

Issue 4: Decision and Rationale
The Court declined to quash the charge sheet, citing prima facie evidence collected by the investigating officer, witness statements, and statutory records. It emphasized that the truth of the allegations should be determined in a full-fledged trial, not at the pre-trial stage. The Court highlighted the importance of not stifling legitimate prosecutions and dismissed the petition.

In conclusion, the High Court of Telangana rejected the petition to quash the proceedings under Section 482 Cr.P.C., emphasizing the need for a trial to determine the veracity of the allegations and the existence of prima facie evidence against the petitioners for various offenses under the Indian Penal Code.