Companies Act, 2013 – Sections 448, 451, 447, 212(6)
Cognizance – Statutory bar – Private complaint – Fraud offences
An offence under Section 448 (false statement) is inextricably linked to Section 447 (punishment for fraud). Since punishment under Section 448 can be imposed only through Section 447, an offence under Section 448 is an “offence covered under Section 447” for the purpose of Section 212(6). Consequently, cognizance cannot be taken on a private complaint in view of the second proviso to Section 212(6).
(Paras 33–35, 41–45)
Companies Act, 2013 – Section 212(6) (Second Proviso)
Mandatory pre-condition – Cognizance by Special Court
Where allegations attract liability under Section 447, cognizance by the Special Court is permissible only upon a complaint in writing by the Director, SFIO or an officer authorised by the Central Government. The bar is a jurisdictional safeguard against frivolous private prosecutions alleging corporate fraud.
(Paras 24–26, 35)
Companies Act, 2013 – Section 451
Punishment for repeated default – Dependent offence
When cognizance of the principal offence under Section 448 is barred, cognizance for repeated default under Section 451 is not maintainable, as the foundation offence itself cannot proceed.
(Paras 46–47)
Interpretation of amended Section 212(6) (2015 Amendment)
Legislative intent – Narrowing of rigour
Post-2015 amendment, Section 212(6) restricts the stringent regime to offences relating to fraud under Section 447. However, offences which derive punishment through Section 447 (such as Section 448) remain within its sweep for purposes of cognizance bar, notwithstanding that Section 447 is not expressly invoked in the complaint.
(Paras 27–35)
Criminal Procedure Code, 1973 – Section 482
Quashing – Lack of jurisdiction – Abuse of process
Where cognizance is taken in violation of an express statutory bar, continuation of proceedings constitutes abuse of process, warranting interference under Section 482 CrPC.
(Paras 41–47)
Companies Act, 2013 – Section 436(2)
Jurisdiction of Special Court – IPC offences
A Special Court may try IPC offences only when it is also trying an offence under the Companies Act. Once proceedings under the Companies Act are quashed, the Special Court loses jurisdiction over IPC offences, which must then be tried by the competent court of territorial jurisdiction.
(Paras 49–54)
Civil disputes and criminal liability
Parallel proceedings – Maintainability
Pendency of civil suits or company petitions (including proceedings before NCLT) does not bar criminal prosecution where allegations disclose distinct criminal offences under the IPC.
(Paras 55–57)
ANALYSIS
1. Core controversy
The appellants sought quashing of criminal proceedings arising from a private complaint alleging falsification of corporate records and fraud, where the Special Court had taken cognizance under Sections 448 and 451 of the Companies Act and various IPC offences.
(Paras 1–11)
2. Statutory architecture
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Section 448 defines false statements but does not prescribe punishment.
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Punishment flows only through Section 447 (fraud).
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Section 212(6) bars cognizance of offences “covered under Section 447” except on complaint by SFIO / authorised Central Government officer.
(Paras 21–33)
3. Effect of 2015 Amendment
The Court examined legislative history and the Statement of Objects and Reasons, holding that while bail rigour was narrowed, the cognizance safeguard for fraud offences remained intact where liability flows through Section 447.
(Paras 27–35)
4. Indirect circumvention impermissible
The Court held that what cannot be done directly (taking cognizance under Section 447 on a private complaint) cannot be done indirectly by invoking Section 448 alone while avoiding Section 447.
(Paras 43–45)
5. Precedent consistency
The Court noted consistent views of the Telangana, Madras, Karnataka and Delhi High Courts, and held that the impugned High Court judgment erred in not following or referring the issue to a larger bench.
(Paras 36–40)
6. Consequence on Section 451
Since Section 451 presupposes a valid underlying offence, its invocation collapsed once Section 448 proceedings were barred.
(Paras 46–47)
7. IPC offences severable
Relying on S. Satyanarayana v. Energo Masch Power Engg. & Consulting (P) Ltd., the Court held that IPC offences survive independently and must be tried by the proper territorial court, not the Companies Act Special Court.
(Paras 49–54)
8. Civil nature argument rejected
The Court reaffirmed that civil and criminal remedies may coexist, and pendency of civil/NCLT proceedings does not ipso facto render criminal prosecution abusive.
(Paras 55–57)
RATIO DECIDENDI
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An offence under Section 448 of the Companies Act is an offence “covered under Section 447” for the purpose of Section 212(6), since punishment for Section 448 is imposable only through Section 447.
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Cognizance of such offences cannot be taken on a private complaint and must comply with the second proviso to Section 212(6), i.e., a complaint by SFIO or an authorised Central Government officer.
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Invoking Section 448 without Section 447 to bypass the statutory bar is impermissible in law.
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Where cognizance under the Companies Act is barred, consequential proceedings under Section 451 also fail.
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Once Companies Act offences are quashed, the Special Court loses jurisdiction under Section 436(2) to try IPC offences, which must be transferred to the competent territorial court.
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Pendency of civil or company law proceedings does not bar continuation of criminal proceedings under the IPC where criminality is alleged.
