D. Ganesh Vs. A. Natarajan

D. Ganesh vs A. Natarajan

Disposition Petition dismissed Court Chennai Decided Mar 04, 2005

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Citation: sooperkanoon.com/822663
Court: Chennai High Court
Judge: N. Kannadasan, J.
Decided On: Mar 04, 2005
Case Number: Crl.R.C. No. 1530 of 2003 and Crl.M.P. Nos. 9444 and 9445 of 2003
Subject: Company;Criminal
Disposition: Petition dismissed

Case Summary

AI-generated summary - not the official court judgment text.

- SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS & ENFORCEMENT OF SECURITY INTEREST ACT, 2002 [C.A. No. 54/2002]Section 17; Power of Tribunal to impose condition relating to deposit for grant of stay of auction Held, There is no specific provision made under Section 17 of Securitisation Act or under any other ...

Key legal issue: Company;Criminal
Outcome / disposition: Petition dismissed
Acts & sections: Code of Criminal Procedure (CrPC) , 1973 - Sections 190(1) and 200; Companies Act, 1956 - Sections 41, 82, 84, 314(2), 621 and 629(A); Indian Penal Code (IPC) - Sections 409

Parties & Advocates

Appellant / Petitioner

D. Ganesh

Advocate T.K. Seshadri, Adv.

Respondent

A. Natarajan

Advocate A.L. Somayaji, Senior Counsel

Legal References

Acts: Code of Criminal Procedure (CrPC) , 1973 - Sections 190(1) and 200; Companies Act, 1956 - Sections 41, 82, 84, 314(2), 621 and 629(A); Indian Penal Code (IPC) - Sections 409
Cases Referred: Adalat Prasad v. Rooplal Jindal and Ors.
Reported In: 2005(3)CTC405; [2006]67SCL310(Mad)

Excerpt

.....that any of the measure taken by the secured creditor is not in accordance with the provisions of the act. the scheme cannot be bypassed by issuing a mandatory order for redelivery of the possession before conclusion of the proceedings under section 17--sections 17, 13 (4); [a.p.shah, c.j., f.m. ibrahim kalifulia &v. ramasubramanian, jj] scope of enquiry under section 17 held, the main purpose of the securitisation act, and in particular section 13 thereof, is to enable and empower the secured creditors to take possession of their securities and to deal with them without the intervention of the court. therefore, in an application under section 17, the tribunal is concerned only with the validity of the acts of the secured creditor in taking possession of the securities and dealing with the same under section 13. all such grounds, which would render the action of the bank/financial institution illegal, can be raised before the tribunal in the proceedings under section 17. it is for the tribunal to decide in each case whether the action of the bank was in accordance with the provisions of the act and legally sustainable. however, while considering the question of validity of the action of the bank, it is not necessary for the tribunal to adjudicate the exact amount due to the secured creditors. in other words, the purpose of an application under section 17 is not the determination of the quantum of claim per se as the tribunal is concerned with the issue of the validity of the measures taken by the banks/financial institutions under section 13(4)--sections 17(4), 13(4) ; [a.p. shan c.j.,f.m.ibrahim kalifulla & v. ramasubramanian, jj] appeal right of bank held, the right of the bank is not automatically suspended upon filing of an appeal by borrower under section 17 of the securitisation act and the bank as secured creditor can proceed to auction secured asset where no stay is granted by the tribunal. there is nothing in section 17 of the securitisation act..........that the said communication was without prejudice to the rights of the petitioners none of the allegations as contained in the complaint is supported by evidence on record and accordingly, the said complaint ought to have been dismissed.4. the learned magistrate, by order dated 10.9.2003, has dismissed the petition filed by the petitioner herein and proceeded with the complaint.5. the learned counsel for the petitioner would contend that the respondent has no locus standi to approach this court to maintain the complaint before the learned magistrate in the light of the specific prohibition as contained under section 621 of the companies act. he further contended that the respondent cannot take advantage of an order passed by the civil court in a connected proceedings, inasmuch as an appeal is pending as against, the said order of the civil court and the respondent was directed to attend the annual general body meeting only in pursuance of the order of the civil court and without, prejudice to the right of pursuing the appeal and as such, the said communication permitting the respondent to attend the meeting will not enure any benefit to him to maintain the complaint.6. learned counsel has seriously disputed the fact that the petitioner is owning shares and his right to maintain the complaint before the learned magistrate. the learned counsel has relied upon the several decisions of the supreme court which proceed to the effect that the magistrate has no power to entertain the complaint, merely on receipt of the complaint and this court in exercise of powers under section 482, cr.p.c. is entitled to quash the proceedings initiated as against the petitioner. the learned counsel also placed reliance upon the provisions of sections 41, 82 and 84 of the companies act and contended that the petitioner has no locus standi to maintain the said complaint.7. per contra, learned senior counsel for the respondent would submit that the right of the respondent has been.....

Full Judgment

N. Kannadasan, J.

1. The above revision is filed challenging the order dated 10.9.2003 of the learned Judicial Magistrate No. 2, Madurai, wherein the petition filed by the petitioner under Sections 204 and 245, Cr.P.C. to dismiss the complaint by dropping the proceedings.

2. The respondent has filed a complaint under Sections 190(1)(a) and 200 of Cr.P.C. and 621 of the Companies Act, before the learned Magistrate, which reads as follows:

He was one of the promoter of the Madurai City Benefit Fund Limited (hereinafter called as a 'Company'), subscriber and also the shareholder. The revision petitioner, who was appointed as a Clerk initially, became the Branch Manager and also the Director of the said company. The appointment and other activities implicate the petitioner for the alleged offence under Section 314(2) r/w 629(A) of the Companies Act, and under Section 409, I.P.C. The respondent is owning the shares of the company as per the evidence available on record, he is having transactions with the company as per Rule-3 of the Articles of Association the transactions of the Company shall be restricted to the shareholders only.

The petitioner herein, as Director and Branch Manager, has received more than two lakhs from the shareholders an members of the company and committed serious irregularities. Even though the Company has earned about Rs. 43,90,301 as income for a particular year, the petitioner has not chosen to give dividend to the shareholders. But however, the said income was accounted towards the expenses of the company by falsifying the records. In the light of the above facts, the relief was sought by the complainant.

3. The petitioner herein in his application filed under Sections 204 and 245, Cr.P.C. has prayed the learned Magistrate to dismiss the complaint by dropping the proceedings under the following facts:

According to the petitioner herein, the complaint is not maintainable in law in view of the specific prohibition as contained under Section 621 of the Companies Act. The complainant, without adducing any materials to substantiate before the learned Magistrate that he is actually a shareholder, the complainant ought not to have been entertained. The complainant has chosen to transfer all his shares to his wife's name and accordingly he has no connection whatsoever with the company. The mere participation of the complainant in the Annual General Body Meeting in a particular year is only in pursuance of the order passed by the Civil Court. In the communication itself, wherein the complainant was called upon to attend the Annual General Body Meeting. It is specifically mentioned that the said communication was without prejudice to the rights of the petitioners none of the allegations as contained in the complaint is supported by evidence on record and accordingly, the said complaint ought to have been dismissed.

4. The learned Magistrate, by order dated 10.9.2003, has dismissed the petition filed by the petitioner herein and proceeded with the complaint.

5. The learned counsel for the petitioner would contend that the respondent has no locus standi to approach this Court to maintain the complaint before the learned Magistrate in the light of the specific prohibition as contained under Section 621 of the Companies Act. He further contended that the respondent cannot take advantage of an order passed by the Civil Court in a connected proceedings, inasmuch as an appeal is pending as against, the said order of the Civil Court and the respondent was directed to attend the Annual General Body meeting only in pursuance of the order of the Civil Court and without, prejudice to the right of pursuing the appeal and as such, the said communication permitting the respondent to attend the meeting will not enure any benefit to him to maintain the complaint.

6. Learned counsel has seriously disputed the fact that the petitioner is owning shares and his right to maintain the complaint before the learned Magistrate. The learned counsel has relied upon the several decisions of the Supreme Court which proceed to the effect that the Magistrate has no power to entertain the complaint, merely on receipt of the complaint and this Court in exercise of powers under Section 482, Cr.P.C. is entitled to quash the proceedings initiated as against the petitioner. The learned counsel also placed reliance upon the provisions of Sections 41, 82 and 84 of the Companies Act and contended that the petitioner has no locus standi to maintain the said complaint.

7. Per contra, learned Senior Counsel for the respondent would submit that the right of the respondent has been recognized by the order of the Civil Court in I.A. No. 676 of 2001 in O.S. No. 718 of 2001, wherein a clear finding is given to the effect that the respondent herein is entitled to protect the existence of his right as well as the General Public, as a Promoter of the Company and as a shareholder, depositor and borrower along with his wife. The learned counsel has also placed reliance upon the decision of the Apex Court, in Adalat Prasad v. Rooplal Jindal and Ors. which proceeds to the effect that such complaint can be entertained and the learned Magistrate has rightly issued the process under Section 204 of the Code in the light of the averments made in the complaint.

8. I have considered the rival contentions of the learned counsel for both the parties.

9. From the materials available on record, it cannot be disputed that the Civil Court has passed an order in I.A. No. 676 of 2001 in O.S. No. 718 of 2001 wherein the learned Additional District Munsif, Madurai by order dated 18.9.2001 has rendered a finding to the effect that the complainant viz., the respondent herein, is entitled to protect his right in the company as a shareholder, depositor and borrower along with his wife's right and also he is entitled to protect the general public as a promotor of the company. Admittedly, the said order is neither set aside nor stayed as on today by the Appellate Court, even though it is stated that an appeal is pending.

10. Further, even before the grant of the order by the Civil Court, the respondent's right is recognised in view of the fact that he has participated in the Annual General Body Meeting of the year 1999 as well as 2000 which fact is supported by relevant materials placed before this Court. Merely, because there is prohibition as contained in Section 621 of the Companies Act, it cannot be suggested that a person like the respondent, herein whose right has been recognised by the Civil Court should be barred from approaching the learned Magistrate by way of a complaint.

11. The various decisions referred to by the learned counsel for the petitioner viz., Punjab National Bank v. Surendra Prasad Sinha AIR 1992 Crl.L.J. 2916; Pepsi Foods Ltd v. Special Judicial Magistrate 1998 SC 128; G. Sagar Suri v. State of U.P. ; Kunstocom Electronics (I) Pvt. Ltd. v. Gilt Pack Ltd.; S.W. Palanitkar v. State of Bihar and B.S. Joshi v. State of Haryana are mainly with regard to the power of this Court under Section 482, Cr.P.C. to quash the proceedings initiated by the learned Magistrate and the scope of the learned Magistrate in entertaining a complaint against a Director or a Partner of the company or the firm respectively. The facts of the cases as referred to above are not applicable to the facts of the present case on hand.

12. Even though the learned counsel for the petitioner has placed reliance upon the judgment of the Apex Court in Registrar of Companies v. Rajshree Sugar and Chemicals Ltd. and Ors. the said decision is rendered by considering the fact that complaint was lodged by a person, who has transferred all his shares and no connection whatsoever with the company. Whereas in the instant case, even the Civil Court in the order referred to supra has upheld the claim of the respondent about his existing right with the company. In view of the fact that the right of the respondent is crystallised by the order of the, Civil Court, it cannot, be suggested that the complaint is not maintainable in law in view of the prohibition contained in Section 621 of the Companies Act.

13. As per the decision of the Supreme Court, in Adalat Prasad v. Rooplal Jindal and Ors. the learned Magistrate can issue process by way of summons under Section 204, Cr.P.C. if he is satisfied with regard to the materials placed before him. In the instant case, it cannot be suggested that no material at all is placed before the learned Magistrate for the issuance of the process.

14. For the reasons stated above, the petition is devoid of merits and accordingly, it is dismissed. Consequently, connected Crl.M.Ps are also dismissed.

Same Court & Year Chennai · 2005 Same Parties D. Ganesh vs A. Natarajan Same Subject Company;Criminal Same Judge N. Kannadasan, J. Acts & Sections Code of Criminal Procedure (CrPC) , 1973 - Sections 190(1) an...

Company;Criminal