Calcutta High Court (Appellete Side)
Aloke Chatterjee And Another vs Union Of India And Another on 16 November, 2023
16th November,
2023
(AK)
10
W.P.A. 23787 of 2023
Aloke Chatterjee and Another
Vs.
Union of India and another
Mr. Reetobrata Kr. Mitra
Mr. Rudrajit Sarkar
Mr. Tamoghna Saha
...for the petitioners.
Mr. S.K. Tiwari
Mr. Jayesh Choradia
...for the respondents.
1. Learned counsel for the petitioners contends that a
report purportedly furnished by the respondent
authorities under Section 208 of the Companies Act,
2013, thereby incriminating the petitioners on certain
allegations, has not yet been furnished to the petitioners,
thereby rendering the purported investigation against the
petitioners a farce.
2. It is argued although the petitioners categorically
replied to a notice under Section 206(5) of the 2013 Act,
the said substantial response was ignored by the
respondent authorities and no hearing was given to the
petitioners on such count.
3. A pre-condition of an investigation within the
contemplation of Section 210 of the 2013 Act, it is
argued, is that the principles of natural justice and the
procedure delineated under the said Act are to be
precisely adhered to, which have not been done in the
present case.
4. Learned counsel for the petitioners cites two
judgments on such count which will be dealt with
presently.
5. Learned counsel for the respondent authorities
denies the contentions of the petitioners and argues that
the investigation is at the stage when, under Section 217
of the 2013 Act, certain interrogatories and documents
have been asked for by the respondents.
6. To stall the proceedings, at this belated stage, the
petitioners are setting up the defence as indicated above.
Several other similar matters are also sought to be stalled
by the petitioners, it is submitte.
7. The first judgment cited by the petitioners is that of
a Division Bench of the Bombay High Court in
Parmeshwar Das Agarwal vs. Additional Director
(Investigation).
8. In the said judgment, the Division Bench laid down
the principle incorporated in the relevant provisions of the
Companies Act, 2013.
9. It was observed that the principle is that there has
to be an opinion formed which may be subjective, but the
existence of circumstances relevant to the interference as
to the sine qua non for action must be demonstrable.
10. It was observed that in such light if one peruses the
powers conferred under the 2013 Act, they are also
identical. By Section 206, there is a power to conduct
inspection and enquiry by Section 207, both of which
have to be exercised by the Registrar.
11. The court went on to observe that the Central
Government must form an opinion which must be that it
is necessary to investigate into the affairs of a Company.
12. The Central Government can act on the receipt of a
report of the Registrar or inspector under Section 208 or
on intimation of a special resolution passed by a company
that its affairs are to be investigated or in public interest.
Thus, there is discretion to order an investigation into the
affairs of the company.
13. A perusal of the said judgment, however, does not
indicate anything to support the contention of the
petitioners that a copy of the report under Section 208
has mandatorily to be handed over to the petitioners at
the stage of investigation.
14. The other judgment of a coordinate Bench of this
court dated November 18, 2022 passed in Shree Radhe
Tea Plantation Private Limited and another vs. Registrar of
Companies, West Bengal and others also deals with the
provisions of Sections 206, 207 and 210 of the 2013 Act.
15. The learned Single Judge observed that a careful
perusal of the provisions relating to inspection, inquiry
and investigation of the companies under Sections 206-
210 of the 2013 Act indicates that the sequential steps
required to be taken by the ROC must be followed before
it submits the report in writing to the Central
Government for further investigation into the affairs of
the company if necessary.
16. The learned Single Judge also went on to hold that
the stage of filing a report comes only after inspection of
books of accounts or conducting inquiry under Sections
206 and 207 of the Act.
17. The learned Single Judge, inter-alia, observed that
to the extent of the steps taken by the respondents
including the order under Section 206(4) therein was
concerned, the summons issued thereafter, the hearing
given to the petitioners and the acceptance of the
petitioners' response, there was little doubt that the
respondents must follow the step-wise compliance of
Sections 206-210 of the Act.
18. However, although the petitioners seek to argue
that the said observations indicate that a hearing was
required to be given to the petitioners, the learned Single
Judge while passing the said judgment, was considering
the provisions of a notice under Section 206(4), which
contemplates information or explanation to be sought
from the alleged recalcitrant company and its officials.
19. As opposed to sub-section (4), sub-Section (5) of
Section 206 does not contemplate or envisage any
opportunity of explanation which might require a hearing
or an opportunity of explanation to be given to the
petitioners.
20. Sub-Section (5) merely envisages that the Central
Government ma,y if it is satisfied that the circumstances
so warrant, direct inspection of books and papers of a
company by an inspector acquainted by it for the
purpose.
21. Although the petitioners might have given a
response in writing to such notice, no such response is
contemplated or even required under the law at all.
22. The only duty of the petitioners was to furnish or
provide inspection of the books of accounts of the
company or class of companies on the intimation of the
Central Government.
23. Hence, we cannot read into the said innocuous
provision of furnishing documents or giving inspection a
right of hearing of the petitioners.
24. In fact, if in every pre-investigation inquiry, rights
of hearing have to be incorporated on an overly inflated
conception of audi alteram partem, no investigation would
reach its logical culmination at any point of time and it
would provide a handle to companies which are subject to
such inquiry/investigation, to stall the proceedings
indefinitely.
25. In the present case, the ROC has furnished a
report, initiating an investigation which is already
ongoing and is at the stage of documents having been
required to be furnished within the contemplation of
Section 217 of the 2013 Act by the respondent
authorities.
26. In the event the petitioners are to take any
contention as regards non-furnishing of any report or for
that matter any other relevant document relating to the
investigation, the appropriate stage for the same is the
criminal trial which would or has been initiated under
Section 200 of the Code of Criminal Procedure, on the
complaint which has already been lodged by the
respondent authorities.
27. However, at this stage, there is no occasion or legal
right of the petitioners to insist upon furnishing of a copy
of the report filed by the ROC under Section 208.
28. The said document, along with other documents
may at best be necessary at the stage of criminal trial
when it will be open to the petitioners to ask before the
appropriate judicial forum for copies or inspection of such
documents to enable them to contest the case properly.
29. However, at this stage there is no scope of
interference with the investigation.
30. Accordingly, WPA 23787 of 2023 is dismissed
without any order as to costs.
Urgent photostat copies of this order, if applied for,
be given to the parties upon compliance of all requisite
formalities.
(Sabyasachi Bhattacharyya, J.)
