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Thursday, March 26, 2015

As can be seen from the complaint the allegations are that the accused conspired with each other to cheat the complainant and a series of transactions gave rise to offence under Section 120B read with Section 420 of the Indian Penal Code as also Section 628 of the Companies Act. It is, therefore, clear that if the Special Court has jurisdiction to try offences under both the aforesaid Acts then the trial can certainly continue in respect of the offences which do not require the complainant to belong to the categories specified under Section 621 of the Companies Act. Thus the trial could certainly continue against those accused under the IPC. 9. The High Court completely overlooked the fact that the complaint made allegations against the accused A4, A5, A6, A9 and A10 only in respect of Section 120B and 420 of Indian Penal Code and there was no reason in law to quash a complaint against them on the ground that they were immune from prosecution under Section 628 of the Companies Act by virtue of Section 621 of that Act. 10. We accordingly set aside the findings of the High Court that taking of cognizance against the accused A4, A5, A6 and A9 is without jurisdiction on the ground that the complaint does not make out a prima facie case for the offences under Section 628 of the Companies Act, 1956 against the said accused. At this stage, it may be noted that the Special Court is empowered to try the offences under the Companies Act alongwith other Acts by virtue of a notification issued by the erstwhile Government of Andhra Pradesh dated 13.3.1981 which empowers such special Courts to try offences under specified enactments such as The Companies Act, 1956, The Income-tax Act, 1961, The Wealth-tax Act, 1957 etc., which reads as follows:- "even if such cases include offences punishable under the Indian Penal Code, 1860 and any other enactments, if such offences form part of the same transaction." [vide Notification reproduced in Criminal Petition No. 5846 of 2014 The Superintendent Of Customs Vs. Kannur Abdul Kader Mohammed Haneefa reported in 2014 (310) ELT49(A.P.)] 11. Thus, even if a number of persons are accused of offences under a special enactment such as 'the Companies Act and as also the IPC' in respect of the same transaction or facts and even if some could not be tried under the special enactment, it is the special court alone which would have jurisdiction to try all the offences based on the same transaction to avoid multiplicity of proceedings. We make this observation because at some stage in the hearing learned counsels addressed us on this point. We make it clear that in the present case all the accused are liable to be tried by the special court in respect of the offences under the IPC as well as the Companies Act as alleged in the complaint. 12. Appeals are allowed in above terms.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                    CRIMINAL  APPEAL Nos. 516-518 OF 2010




      S. SATYANARAYANA                                    .... APPELLANT



                                   VERSUS



ENERGO MASCH POWER ENGINEERING &
CONSULTING PVT. LTD. & ORS.                   .... RESPONDENTS



                                 1 JUDGMENT



S. A. BOBDE, J.



            These Criminal Appeals are preferred by the complainant  against
the Judgment of the High Court of Judicature of Andhra Pradesh at  Hyderabad
by which the High Court has in exercise of powers under Section 482  of  the
Code of Criminal Procedure (in short Cr.P.C.) quashed the proceedings in  CC
No. 37 of 2008 on the file of the court of the Special  Judge  for  Economic
Offences at Hyderabad insofar as the accused Nos. A4, A5,  A6,  A9  and  A10
are concerned.

2.          The complainant i.e.  the  appellant  herein  lodged  a  private
complaint in his capacity as a Promoter Director of Sri Satyanarayana  Power
Private Ltd. - a  company  incorporated  to  generate  biomass  based  power
project in  the  District  of  Warangal  in  the  State  of  Andhra  Pradesh
(hereinafter referred to as the  'Company').  The  complaint  was  filed  in
respect of the  offences  allegedly  committed  under  Section  628  of  the
Companies Act, 1956 (in short the 'Companies Act')  and  Sections  120B  and
420 of the Indian Penal Code (in  short  the  'IPC').   This  complaint  was
filed in the Court of Special Judge for Economic Offences at Hyderabad.

3.    The accused Nos. 1, 2  and  3  are  Directors  of  the  Company.   The
accused no. 4 i.e. Energo Masch Power Engineering & Consulting Pvt. Ltd.  is
another Company.  The accused Nos. 5, 6, 7 & 8 are its  Directors.   Accused
No. 9 is the Manager of M/s Indian Renewable Energy Development  Agency  (in
short 'IREDA') a financing agency and is brother-in-law of A5  and  A6,  and
accused No. 10 is a private person, namely Mrs. Sudha Ramani who is said  to
have been given a fictitious authorization in respect of a Bank  account  by
a resolution of the company.

4.          In brief, it  was  alleged  that  the  accused  entered  into  a
criminal conspiracy to cheat the  complainant  and  the  Company.   Further,
accused A1 to A3 made false  declaration  in  regard  to  record  maintained
under the provisions of the Companies Act, and  filed  a  false  declaration
purporting to be an extract  of  Board  Resolution  of  the  Company  before
Andhra Bank, Sowcarpet Branch, Chennai in order  to  open  a  bank  account.
According to the complainant the signatory to the Board Resolution  was  not
even a Director in the Company on the date the bank account was  opened.   A
series of events alleged in the  complaint  show  how  the  complainant  was
induced to invest in the Company by acquiring land  for  the  Company  at  a
cost of Rs. 20 lakhs and make payment for the front end fee to  IREDA  which
had in collusion with the other accused sanctioned the financial  assistance
to the Company to the extent of Rs. 11.50 crores subject  to  the  condition
that the promoters should invest  Rs.  4.98  crores  as  their  contribution
towards the total project cost of Rs. 16.48 crores.

5.          According to the  complainant,  accused  A9  -  the  Manager  of
IREDA, suggested that the company should appoint A4 Company as a  contractor
representing that the Directors of the said A4 Company i.e.  A5  and  A6  in
reality  his  brother-in-law,  have  wide  experience  in   executing   such
projects. The complainant believed that  representation  and  allowed  those
persons and others to become Director as a result of  which  A1  along  with
his nominee Directors enjoyed a  majority  on  the  Board  of  the  Company.
Thereafter, in order to obtain the first installment  of  loan  the  accused
represented that they have spent an amount  of  Rs.  1,88,21,484/-,  to  the
accused A4 Company as if the amount was invested from the Company's  account
maintained in Andhra Bank, Sowcarpet Branch.  On such a  representation,  A9
IREDA released the first installment of loan.  The accused again induced  A9
to release the second installment of loan of Rs.  2.85  crores  without  the
knowledge of the complainant and without submitting any Board Resolution  of
the Company.  A major amount  of  the  loan  was  paid  to  the  accused  A4
Company, which had not done any substantial  work.   Though  Rs.  145  lakhs
from the first installment  of  loan  and  Rs.  92  lakhs  from  the  second
installment of loan were paid to the A4 Company only  a  nominal  amount  of
Rs. 30 lakhs was used for work and the rest was  swindled.   As  a  part  of
these transactions the complainant alleged that A1 to A3 had  made  a  false
declaration as records in a purported Board Resolution  of  the  Company  in
order to open a bank account and falsely authorised A10 and thereby  made  a
false  declaration  amounting  to  an  offence  under  Section  628  of  the
Companies Act.  Thus,  A10  was  falsely  authorized  to  operate  the  bank
account.

6.          It will thus be seen  from  the  above  that  according  to  the
complainant the transactions of all the accused persons in  conspiracy  with
each other amounted to offences under Sections 120B and 420 of the  IPC  and
Section 628 of the Companies Act.

7.          Against the complaint, the following accused-namely A4  Company;
its Directors A5 and A6; A9 the manager of the IREDA; and  A10  the  private
person approached the High Court under Section  482  of  the  Cr.P.C..   The
High Court took the view  that  the  Special  Judge  could  not  have  taken
cognizance of the offences under Sections 120B and 420 of the IPC unless  he
could also try the accused under Section  621  of  the  Companies  Act.   As
regards the accused Company A4 and its Directors A5 and A6, the  High  Court
held that no cognizance could be taken against the said accused because  the
complainant did not belong to any of the  categories  or  persons  who  were
entitled to file a complaint under Section 621 of the Companies Act[1]  i.e.
to say the complainant was neither (a) the Registrar, (b) a  shareholder  of
the company, or (c) a person authorized in  that  behalf.   Thus,  the  High
Court held that taking of cognizance by the  Special  Court  in  so  far  as
accused nos. A4, A5 and A6 is without jurisdiction. This finding  is  sought
to be supported by the provisions of Section 621(1) of  the  Companies  Act.
However, without giving any special reasons as regards accused Nos.  A9  and
A10 the High Court quashed the taking of cognizance.   In  fact  A9  is  the
manager of IREDA a financing agency and A10 is  a  private  person  and  are
prima facie not a company or officers of a Company  vide  Section  621.  The
High Court has not committed  any  error  in  reading  Section  621  of  the
Companies Act and observing an accused cannot be  prosecuted  under  Section
621 of the Companies Act because the complainant is not a  share  holder  in
the accused Company.  However, it is obvious from the complaint  that  there
was no allegation that the accused Nos. A4, A5, A6 and A9 have committed  an
offence under Section 628 of the  Companies  Act.   Such  an  allegation  of
commission of an offence under Section 628 of the  Companies  Act  was  only
against the accused A10 (vide para 19 and 20 of the complaint).  It  may  be
recalled that the allegation as regards Section 628[2] of the Companies  Act
is said to have been committed by the accused A1 to A3  by  making  a  false
declaration with regard to the record that is maintained in accordance  with
Section 193 of  the  Companies  Act  by  filing  an  extract  of  the  Board
resolution of the company before the Andhra Bank, Sowcarpet Branch,  Chennai
in order to open a bank account 'the said Board  resolution  being  a  false
declaration,' since a bank account in the said bank was already opened  even
before A1 had obtained consent of the complainant to open the  said  account
and further since the said Board resolution is signed by Hari Sesha Reddy  -
A3 who was not even a Director in the company as on the date of the  opening
of the bank account.  The offence alleged  against  A10  was  that  she  had
drawn huge amounts through self cheques in the capacity  of  the  authorized
signatory of the company.  It is surprising to see that the High  Court  has
quashed the complaint against the accused persons on  the  ground  of  legal
defects though no allegation containing such defects were made  against  the
said accused persons.

8.          As can be seen from the complaint the allegations are  that  the
accused conspired with each other to cheat the complainant and a  series  of
transactions gave rise to offence under Section 120B read with  Section  420
of the Indian Penal Code as also Section 628 of the Companies Act.   It  is,
therefore, clear that if the Special Court has jurisdiction to try  offences
under both the aforesaid Acts then  the  trial  can  certainly  continue  in
respect of the offences which do not require the complainant  to  belong  to
the categories specified under Section 621 of the Companies  Act.  Thus  the
trial could certainly continue against those accused under the IPC.

9.           The  High  Court  completely  overlooked  the  fact  that   the
complaint made allegations against the accused A4, A5, A6, A9 and  A10  only
in respect of Section 120B and 420 of Indian Penal Code  and  there  was  no
reason in law to quash a complaint against them  on  the  ground  that  they
were immune from prosecution under Section  628  of  the  Companies  Act  by
virtue of Section 621 of that Act.

10.         We accordingly set aside the findings of  the  High  Court  that
taking of cognizance against the accused  A4,  A5,  A6  and  A9  is  without
jurisdiction on the ground that the complaint does  not  make  out  a  prima
facie case for the offences under Section 628 of  the  Companies  Act,  1956
against the said accused.  At this stage, it may be noted that  the  Special
Court is empowered to try the offences under  the  Companies  Act  alongwith
other Acts by virtue of a notification issued by  the  erstwhile  Government
of Andhra Pradesh dated 13.3.1981 which empowers such special Courts to  try
offences under specified enactments such as The  Companies  Act,  1956,  The
Income-tax Act,  1961,  The  Wealth-tax  Act,  1957  etc.,  which  reads  as
follows:-

"even if such cases include  offences  punishable  under  the  Indian  Penal
Code, 1860 and any other enactments, if such offences form part of the  same
transaction."

 [vide Notification reproduced in Criminal Petition No.  5846  of  2014  The
Superintendent Of Customs Vs. Kannur Abdul Kader Mohammed  Haneefa  reported
in 2014 (310) ELT49(A.P.)]

11.         Thus, even if a number of persons are accused of offences  under
a special enactment such as 'the Companies Act  and  as  also  the  IPC'  in
respect of the same transaction or facts and  even  if  some  could  not  be
tried under the special enactment, it  is  the  special  court  alone  which
would  have  jurisdiction  to  try  all  the  offences  based  on  the  same
transaction to avoid multiplicity of proceedings.  We make this  observation
because at some stage in the hearing learned counsels addressed us  on  this
point.  We make it clear that in  the  present  case  all  the  accused  are
liable to be tried by the special court in respect  of  the  offences  under
the IPC as well as the Companies Act as alleged in the complaint.

12.         Appeals are allowed in above terms.



                      ....................................................J.
                                                      [JAGDISH SINGH KHEHAR]



                           ...............................................J.
                                                     [S.A. BOBDE]
 NEW DELHI,
 MARCH 26, 2015




ITEM NO.101        COURT NO.4               SECTION II




               S U P R E M E  C O U R T  O F  I N D I A

                     RECORD OF PROCEEDINGS



Criminal Appeal  No(s).  516-518/2010



S. SATYANARAYANA                                              Appellant(s)



                                VERSUS



ENERGO MASCH POWER ENGG.&CONST.P.L.&ORS.     Respondent(s)

(for directions)



Date : 26/03/2015 These appeals were called on for hearing
           today.



CORAM :

         HON'BLE MR. JUSTICE JAGDISH SINGH KHEHAR

         HON'BLE MR. JUSTICE S.A. BOBDE



For Appellant(s) Mr. Vikas Singh, Sr. Adv.

                 Mr. Vivek Singh

                       Ms. Deepika Kalia, Adv.

                 Mr. Kapish Seth, Adv.

                 for Mr. Lakshmi Raman Singh,AOR



For Respondent(s)Mr. Suresh Babu, Adv.

                        Mr. Ravi Kumar Tomar,AOR



                        Mr. V.Senthil Kumar, Adv.

                  Mr. K. Muthu, Adv.

                  Mr. M. A. Chinnasamy,Adv.



                        Mr. V. N. Raghupathy,Adv.(NP)



          UPON hearing the counsel the Court made the following

                             O R D E R



            Heard learned counsel for the appearing parties.



            Registry is directed to list the appeals today (26.03.2015) for
pronouncement of judgment at 2.00 p.m.



(Parveen Kr. Chawla)                         (Renu Diwan)

    Court Master                                   Court Master





ITEM NO.1D        COURT NO.4               SECTION II



               S U P R E M E  C O U R T  O F  I N D I A

                       RECORD OF PROCEEDINGS



Criminal Appeal  No(s).  516-518/2010



S. SATYANARAYANA                                              Appellant(s)



                                VERSUS



ENERGO MASCH POWER ENGG.&CONST.P.L.&ORS.     Respondent(s)



[HEARD BY HON'BLE JAGDISH SINGH KHEHAR AND HON'BLE S.A.BOBDE, JJ.]



Date : 26/03/2015 These appeals were called on for judgment
         today.



For Appellant(s) Mr. Vivek Singh

                       for Mr. Lakshmi Raman Singh,AOR



For Respondent(s)Mr. Ravi Kumar Tomar,AOR



                 Mr. M. A. Chinnasamy,AOR



                       Mr. V. N. Raghupathy,Adv.(NP)





            Hon'ble Mr. Justice S.A. Bobde pronounced the  judgment  of  the
Bench comprising Hon'ble Mr. Justice Jagdish Singh Khehar and His Lordship.



            For the reasons recorded in the Reportable  judgment,  which  is
placed on the file, the appeals are allowed.





(Parveen Kr. Chawla)                         (Renu Diwan)

    Court Master                                   Court Master

-----------------------
[1]    "621. Offences against Act to be  cognizable  only  on  complaint  by
Registrar, shareholder or Government-

      (1) No court shall take cognizance of any  offence  against  this  Act
which is alleged to have been  committed  by  any  company  or  any  officer
thereof, except on the complaint in  writing  of  the  Registrar,  or  of  a
shareholder of the company,  or  of  a  person  authorised  by  the  Central
Government in that behalf:
       Provided  that  nothing  in  this  sub-  section  shall  apply  to  a
prosecution by a company of any of its officers.
      [Provided further that  the  Court  may  take  cognizance  of  offence
relating to issue and transfer of securities and non-payment of dividend  on
a complaint in writing by a person authorized  by  the  Securities  Exchange
Board of India].

      (1A)  Notwithstanding anything  contained  in  the  Code  of  Criminal
Procedure, 1898 , (5 of 1898) where the complainant under sub-  section  (1)
is the Registrar or a person  authorised  by  the  Central  Government,  the
personal attendance of the complainant before the Court trying  the  offence
shall not be necessary unless the  Court  for  reasons  to  be  recorded  in
writing requires his personal attendance at the trial.]

      (2) Sub- section (1) shall not  apply  to  any  action  taken  by  the
liquidator of a company in respect of  any  offence  alleged  to  have  been
committed in respect of any of the matters included in  Part  VII  (sections
425 to 560) or in any other provision of this Act relating  to  the  winding
up of companies.

      (3) A liquidator of a company shall not be deemed to be an officer  of
the company, within the meaning of sub- section (1)."



[2]    628. Penalty  for  false  statements.-  If  in  any  return,  report,
certificate,  balance  sheet,  prospectus,  statement  or   other   document
required by or for the purposes of any of the provisions of  this  Act,  any
person makes a statement-

      (a) which is false in  any  material  particular,  knowing  it  to  be
false; or
      (b) which omits any material fact knowing it to be material,
       he shall, save as  otherwise  expressly  provided  in  this  Act,  be
punish- able with imprisonment for a term which may  extend  to  two  years,
and shall also be liable to fine.




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