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TMI Blog1983 (2) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... M.P. No. 2074 of 1979, who is the only respondent in the other two petitions, Crl. M.P. Nos. 1785 and 1881 of 1979 (hereinafter referred to as "the complainant"), has filed a private complaint against the eighth accused complaining of commission of offences under sections 108B(6), 108F(1) and 108F(2) of the Companies Act. Six out of the eight accused are the petitioners herein. The gist of the private complaint of the complainant is as follows: The complainant is a shareholder of M/s. Radhakrishna Mills Ltd. Coimbatore (seventh accused), hereinafter referred to as "the company" which is a public limited liability company. Besides being a shareholder, the complainant is also a director of the seventh accused-company. The first accused, Venkataswamy Naidu, is a shareholder and director of the company and the second-and third accused, who are the sons of the first accused, are also shareholders and directors of the said company. Two concerns, namely, Ramakrishna Industrial and Jayalakshmi Mills, of whom accused 1 to 3 are directors, held 37,048 shares and they pledged their shares to M/s. Vysya Bank Ltd. (eighth accused) and obtained loans on the security of the shares. Thereupon, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also be stated that the purchasers of these shares, namely, accused 5 and 6, who are stock brokers of Bombay, have laid a complaint to the police against the present complainant, R. Prabhu and others, for having allegedly committed offences, under section 102B ( sic ) and 477, IPC. The police charge-sheeted the said persons in C.C. No. 737 of 1979, on the file of the very same court, viz ., Judicial First Class Magistrate, Coimbatore, and the first respondent herein has filed a petition, Crl. M.P. No. 4594 of 1979, under section 482, Cr. PC, for quashing the said prosecution. That matter is also disposed of today separately. Mr. V. P. Raman, learned senior counsel for the petitioners in Crl. M.P. No. 2074 of 1979, has raised several points and urged that the prosecution by this private complainant is wholly untenable in law, that the complainant has no locus standi to maintain the complaint and that the court below had no material to take the said complaint on file. I shall take up the points one by one. It was argued on behalf of the petitioners that it was the Vysya Bank Ltd. (eighth accused), a scheduled bank, which has actually sold the shares in exercise of its right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y" in the Companies Act, it may be permissible to read the term "body corporate" as including a "banking company" as well. The Companies Act has made a distinction between a "banking company" and "body corporate" and as section 108B of the Companies Act stands, the prohibition or restriction on the transfers can relate only to transfer by a body corporate and not by a banking company. In this case, the transfer was by the eighth accused, Vysya Bank, which is a banking company under the control of the Reserve Bank and, therefore, section 108B is not applicable to it. The next argument raised by Mr. V. P. Raman, on behalf of the petitioners is this : The object and the effect of section 108B have to be borne in mind in the case of prosecution in a criminal court against a scheduled bank, its officer and its clients. Section 108B of the Companies Act contemplates intimation to the Central Govt. of the proposal to transfer shares so that the Central Govt. may take up follow-up action under section 108B(2), if it is satisfied that as a result of the transfer of the shares of a company a change in the composition of the board of directors of the company is likely to take place and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction of any of its claims; ( g )acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security; . ( n )doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company." Thus, under the above provisions of the Banking Regulation Act, the banking company has got unqualified powers for doing all things as are incidental or conducive to promotion or advancement of the business of the company. It may be recalled that Vysya Bank (eighth accused) has merely dealt with the shares pledged to it by the borrower company (seventh accused) as security for the loan. That apart, section 21 of the Banking Regulation Act deals with the powers of the Reserve Bank to control advances by banking companies. It is noticed that on a reading of this section it is the Reserve Bank which has to control the advances made by banking companies and that it is a part of the business of the banking company to deal with the security for any loans as provided for in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between two rival groups. As pointed out by Mr. V.P. Raman, the object is only to see that the Central Govt. has the occasion or opportunity to decide whether the transfer has the evil consequences sought to be suppressed. That the private complaint in this case is not maintainable is also borne out by yet another factor. Even assuming for argument's sake that section 108B of the Companies Act is held to be attracted in this case, it is clear that this section is repugnant to section 6(1)( f ), ( g ) and ( n ) of the Banking Regulation Act. Section 2 of the Banking Regulation Act, 1949, reads that " the provisions of this Act shall be in addition to, and not, save as herereinafter expressly provided, in derogation of the Companies Act, 1956, or any other law for the time being in force". Thus, section 2 should be read along with section 616 of the Companies Act, which runs as follows: (Sub-clause ( b ) of section 616 is relevant): "616. The provisions of this Act shall apply ... ( b )to banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Companies Act, 1949". A leading of the relevant sections of the two Acts, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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