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TMI Blog1998 (7) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... e- dure to discharge the accused persons on the ground that the said Court has no territorial jurisdiction to try the cases as the registered offices of those companies are situated outside the Karnataka State. The learned Magistrate after hearing both the parties rejected the applications holding that the Court had territorial jurisdiction to try the offences. As against that order Criminal Petitions are filed. In other cases the petitioners have not approached the Court below. On the other hand they questioned the order passed by the learned Court issuing summons to them after taking cognizance of the offences directly in this case. 2. The learned advocates appearing for the petitioner-companies have specifically argued that the Spl. Court for Economic Offences at Banga- lore, has no territorial jurisdiction and therefore directing issue of notices to the petitioners hereinafter taking cognizance on the complaint filed by the respondent is contrary to the provisions of law. Since the Court lacks territorial jurisdiction, the entire proceedings will have to be quashed on the ground that the offence is said to have been committed by the company only where the registered office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in all these cases after having heard both sides, this order is passed. Retain a copy of this order in each file. 7. In support of his argument, the learned counsel for the petitioners placed reliance on a decision reported in Hanuman Prasad Gupta v. Hiralal AIR 1971 SC 206, wherein their Lordships have held: "A dividend once declared is a debt payable by the company to its registered shareholders. Once a dividend warrant is posted to the registered address of the share- holder, dividend is deemed to have been paid within meaning of section 205. The section makes the failure to post within the prescribed period and not the non-receipt of the warrant by the shareholder an offence. Prima facie both the obligation to post the dividend warrant and the failure to satisfy that obligation would occur at the place where the obligation is to be performed and that would be the registered office of the company and not the address at which the warrant is to be posted. Payment in cash or the posting of a cheque or a warrant are equivalent and the obligation to pay is discharged when either of them is done. Where the power to pay dividend by posting a cheque or a warrant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the learned Court has held as follows: "Hence on the basis of power of the company to pay the dividend by posting a cheque or a warrant provided in section 205(5) the Hon ble Supreme Court held that the place of commission of offence was at the place of posting dividend warrant. The mode of delivery referred to under section 113 is mentioned in section 53 namely personal service or service by post. By virtue of section 205(5) the word paid in cash was equated to the word posting a cheque or a warrant . But in section 113 the word deliver is equated to personal service or service by post, but the word personal service is not equated to service by post as is done under section 205(5). Hence, the offence under section 113 can also be committed by not personally serving the share certificate. If really personal service was not contemplated and service only by post was contemplated, there was no necessity to use the words either personally in section 53 of the Act. Hence, it cannot be said that section 113 and section 53 are similar to sections 207 and 205. On this ground also the decision of the Hon ble Supreme Court relied on by the accused is not applicable to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate within the stipulated time, and if an addressee does not receive it, it may not amount to an offence. Under these cases, admittedly the request of the complainant was not carried out within the prescribed time. Therefore, the offences were committed and those offences were committed in the registered offices which are situated outside the territorial jurisdiction of Karnataka and particularly at the registered office of the company. Therefore, the place where the offence is committed is within the jurisdiction of such Court where the registered office is situated has territorial jurisdiction to try offence. 9. The respondent further had drawn my attention to the decisions in American Pipe Co. v. State of Uttar Pradesh AIR 1983 Cal. 186 wherein it is held that jurisdiction of the Court in a case of acceptance of contract by correspondence would be the place where the acceptance had taken place. In this case the question of acceptance does not arise. On the other hand, only a delivery of articles required by the shareholder as stated above is the question involved. Rajasthan High Court in J.K. Synthetics Ltd v. ITO [1987] 1 Comp. LJ 252 (Delhi) has held that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, under those circumstances, the offence was committed at the place of the registered office. 11. Their Lordships of the Supreme Court in Morgan Stanley Mutual Fund v. Kartick Das [1994] 4 SCC 225 while considering the sections 19 and 20 and order 39, rules 1, 3 and 5 - Constitution of India - Article 226 have held that venue restriction need against adventurism by disgruntled litigants seeking injunctions, damages, etc. against companies by filing suits far away from their registered offices - suits should normally be filed where registered office is situate and also must be filed well in time to enable issue of notice to the company before passing any interim order. Such facts must be, considered before issuing ex parte injunctions. It is also held that as far as India is concerned the residence of the company is where the registered office is located. Normally, a case should be filed only where the registered office of the company is situate. There is an increasing tenden- cy on the part of the litigants to indulge in speculative and vexatious litigation and adventurism which the for a seem readily to oblige. Such a tendency should be curbed. Though it is pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y." 13. In view of this, and taking into consideration the fact that if thousands of persons holding shares and residing in different parts of this vast country, were to file complaints in different courts where they are residing, against the company and directors for the offences of not sending the dividend warrants, transfer of share certificates or articles of association as requested by the members and other offences as contem- plated in the Act, the representatives of the company and the directors who would be accused before the Court will have to attend the Court in far off places spending money as well as time which will consequently affect their valuable service to the company. It may not be also possible for them to be present in various Courts simultaneously, resulting in issuance of warrants by the Courts leading to disastrous consequences besides leading to inconveniences and hardships to the directors of the Company. Taking into consideration all these facts their Lordships of the Supreme Court also held that the cause of action arises for the sharehold- ers to file the complaint before the court having jurisdiction over the place where the registered office is loc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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