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TMI Blog2019 (4) TMI 2029X X X X Extracts X X X X X X X X Extracts X X X X ..... o him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act, he can proceed with inquiry. From the reading of the complaint, it is alleged that the petitioners herein have committed Act of omission and commission and concealment to deceive the complainant/2nd respondent who is one of the shareholders. In such circumstances, the Act provides for him to inform the matter to the Registrar under Section 206 of the Companies Act-2013 who in turn will conduct enquiry. If the enquiry conducted by the Registrar discloses material for further investigation, he under Section 210 of the Companies Act-2013, can report to the Central Government to conduct investigation into the affairs of the Company. This Court of the opinion that the complaint under Section 156(3) of the Cr.P.C before the Judicial Magistrate and seeking registration of the complaint by the Inspector of Police, CCB, Coimbatore, itself an come out of malafide intention to pressurize the petitioners to part away their right of Managing the Company - The complaint on the file of the 1st respondent cannot be probed effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, the 1st petitioner in connivance with the 2nd petitioner/Mr. Ramaraj, Financial Officer, Mr. Dhanalakshmi/3rd petitioner and son-in-law petitioners 4 to 6 have indulged in forgery, criminal breach of trust and cheating. Only when State Bank of India, Commercial Branch, Coimbatore informed the complainant and others Directors about the nonpayment of loan, they came to know about the offence committed by the petitioners. It is alleged in the complaint that the fabric stocks worth about ₹ 8,32,14,000/- hypothecated to the State Bank of India was removed by the petitioners between 2014 to November 2016, without the knowledge and permission of the bank and other Directors. Based on the said hypotheca, the Bank had advanced Cash Credit Loan Facilities to a tune of ₹ 15 crores. By stealthy removing the hypothecated goods, the petitioners have committed breach of trust. Various machineries of M/s. M.C. Spinners Pvt. Ltd worth about ₹ 1,89,15,625/- was removed from the mill premises. The Auto Corner machines and 2 numbers of carding machines worth about ₹ 1,33,52,888/- were removed by the petitioners and installed in the premises of M/s. Vigneshkumar Spinners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir Companies and pursuant to that Carona group of companies run by the petitioners and Mehala group of companies run by the 2nd respondent, started operation jointly in the name and style of M/s. Mehala Carona Textile (P) Ltd. Later, misunderstanding cropped up between them and in the presence of well-wishes mediation took place and memorandum of understanding between them was arrived on 12.11.2014. The Mehala groups of companies was exclusively given to the administration of the 2nd respondent. M/s. Sunrise Group of companies were given to the exclusively administration of the 1st petitioner. The Management of the M/s. M.C. Spinners (P) Ltd., was taken over by the 1st petitioner as per the memorandum of understanding. Suppressing the factum of memorandum of understanding entered between the 2nd respondent and 1st petitioner and with false allegations, a complaint has been filed before the Magistrate with a prayer to direct the 1st respondent/police to investigate the complaint. 5. Further, it is contended in the petition that even after the execution of the memorandum of understanding, the dispute continued between two groups of Companies. As the group of companies run by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that memorandum of understanding dated 12.11.2014 is invalid. While so, it is incorrect to say that in the complaint, the 2nd respondent has suppressed the MOU. The complaint has provided material facts and evidence to prove that after the Management of M/s. M.C. Spinner (P) Ltd., took over by the 1st petitioner, the assets of the Company had diminished. Most of the machineries were removed and sold for pittance to the Companies held by the petitioners. The forgery in the RC book of the vehicles also prima faciely established from the information collected from the Regional Transport Authority. While so, the 1st respondent is fully competent to investigate the offence alleged in the complaint. The provisions of Companies Act does not denude the powers of police to investigate. Further, the learned counsel would contend that investigation by SFIO and by the Registrar of the Companies Act-2013, as contemplated under Section 210 and 212 are procedures supplementing the general-rule and not alternate procedure in substitution of the general rule. Therefore, the petition is liable to be dismissed. 9. The learned counsel for the 2nd respondent would submit that due to the mismanage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conspiracy. 13. Before adverting to the legal submissions, few facts which are necessary to decide this application is stated below:- M/s. M.C. Spinners Pvt Ltd., was registered at ROC in the year 2012. The shares of the company has been held by Mr. C. Subramaniam and his family 50%, Mr. Doraisamy/1st petitioner and his family 26.67%, Venkatachalam 9.66% and Mr. M. Sivaraman 14.67%. 14. In the complaint, it is contended that during the month of April-2014, Mr. Doraisamy took over the absolute administration of M/s. M.C. Spinners Pvt Limited. He was submitting reports to the other Board of Directors with false information, which the other Board of Directors believed till they received notice from the bank for non-payment of instalments. Further, allegations is that the assets of the properties were removed without the knowledge of Board of Directors and the bank to which the properties were hypothecated. The Board of Directors meetings was not properly connived. Making very grave allegations of mismanagement, fraud and misappropriation, the impugned complaint has been lodged by one of the Directors against the other Directors. 15. In this context, it is relevant to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to MOU, later not honoured by both the parties. The 1st petitioner has made a specific declaration that it has become invalid. In the said circumstances, when any member of the company has any grievance or complaint about oppression or mismanagement, he should have resorted to an application to the tribunal as contemplated under Section 241 of the Companies Act-2013. In this case, Mr. C. Subramaiam, the complaint besides mismanagement had grievance against the co-director that he and his family members have connived together to misappropriate the assets of M/s. M.C. Spinners Pvt Ltd. In such circumstances, Chapter XIV of the Companies Act-2013, provides for remedy. Under Section 206 of the Companies Act-2013, the Registrar of the Company, based on the information received by him can seek for explanation, production of document and conduct enquires. If the Registrar is satisfied on the basis of information available with him or furnished to him or on a representation made to him by any person that the business of a company is being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions of this Act, he can proceed with inquiry. The second proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether or not there is any wrongful gain or wrongful loss; (ii) wrongful gain means the gain by unlawful means of property to which the person gaining is not legally entitled; (iii) wrongful loss means the loss by unlawful means of property to which the person losing is legally entitled. 19. Thus, it is very clear that while dealing with the affairs of a company, if any person abuse the position with intend to deceive, to gain undue advantage from, or to injure the interests of, company or its shareholders or its creditors or any other person, he deemed to have committed fraud. 20. From the reading of the complaint, it is alleged that the petitioners herein have committed Act of omission and commission and concealment to deceive the complainant/2nd respondent who is one of the shareholders. In such circumstances, the Act provides for him to inform the matter to the Registrar under Section 206 of the Companies Act-2013 who in turn will conduct enquiry. If the enquiry conducted by the Registrar discloses material for further investigation, he under Section 210 of the Companies Act-2013, can report to the Central Government to conduct investigation into the affairs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout the consent of the owners namely M/s. M.C. Spinners Pvt Ltd. 23. Under Chapter XXVIII of the Companies Act-2013 establishment of Special Court and the offence triable by Special Courts are prescribed under Sections 435 and 436 of the Companies Act. When the complaint of complex nature in the administration of the Company to be investigated, the Act gives a comprehensive procedure and powers as well as forum. A specialized investigating agency is also established empowered to investigate. 24. If the complainant really aggrieved and need redressal in the manner know to law, he should have resorted to the procedures, which has been explained above. Contrarily, he has chosen only the affairs of M/s. M.C. Spinners Pvt Ltd and alleged certain offences, which in isolation cannot be investigated. Unless a comprehensive investigation into the affairs of all the companies held and managed by the petitioners as well as the 2nd respondent and his family members are scrutinized and probed truth will not come out. The Registrar of the Companies is competent person to conduct such inspection he can call for records and arrive at an opinion. If the materials are available, he can subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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