M.L. Lakhotia And Ors. vs State
1988 Latest Caselaw 216 Del

JUDGMENT

Malik Sharief-Ud-Din, J.

(1) The petitioners are being prosecuted for the offences punishable under section 22 read with sections 46 and 53 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the 'MRTP Act'). Before I take up for consideration the main grievance of the petitioners, reference may be made to the scheme of the Mrtp Act. On the relevant date it made it obligatory for a company having assets worth more than Rs. 20 crores to be registered. It further commands that no new undertaking can be started without the permission of the Government. This is specifically provided under section 22(1) of the Act. Admittedly, the petitioners in this case were directors of M/s. Indian Tools Manufacturers Ltd. Notices were issued to them from 1971 onwards that the company was to be registerable then under section 26 of the Act on the relevant dale. This was so required on the ground that it fell within section 20 of the Act on the relevant date. This dispute continued but it seems that somewhere in December 1975 the notices were dropped. In 1978 again a similar notice was sent to the company and reply to it was sent. These issues are, however, subject matter of main dispute and finding is yet to be recorded on the question as to whether the company was registerable at any date before February 25, 1983 when for the first time the company itself made an application for registration under section 26 of the said Act. It appears that the company in between made an application to the Textile Commissioner to set up a man-made fibre spinning unit and the permission was granted to it on May 29,1980, This unit went into commercial production for the first time on March 26, 1982.

(2) Learned counsel for the plaintiff, however, frankly admitted that he does not want this court to go into the respective claims of the parties whether on the relevant date the petitioners applied for ibe registration the company was not registerable under section 26 of the Mr Tp Act as it was in existence then. He has, however, raised three important questions which are that admittedly according to the complainant the offence was committed on March 26,1982 and the complaint was filed on May 4,1987. According to him the complaint is hopelessly barred under section 468 of the Code of Criminal Procedure and' the reason turn making a delayed complaint advanced by the complainant that the names of the directors of the compa.ny were .not known to them till October 1,1986 is absolutely wrong.

(3) The second contention of the learned counsel for the petitioners is that the offence under section 22 of the Mrtp Act is the establishment of a new unit and this is admittedly being established within the State of Maharashtra and that the court in Delhi has no jurisdiction as such to entertain the complaint as according to the legal principles the offence is to be tried within the jurisdiction of the court where it is committed.

(4) The third contention on behalf of the petitioners is that M/s. Indian Tools Manufacturers is a limited company and the accused are its directors. According to him this liability of the directors would only arise if the company is held guilty of the offence and, therefore, since the company has not been prosecuted the prosecution of the directors is unwarranted.

(5) Mr. G.S. Sharma while arguing the case on behalf of the Union of India apart from making an attempt to refute the contentions raised, has submitted that this Court should not exercise its jurisdiction under section 482 of the Code of Criminal Procedure as the points raised can thoroughly be gone into by the courts seized of the matter. Mr. Sharma submits that the fact as to whether the complainant came to know about the names of the directors only on October 1,1987 or not is a matter which has been raised in the complaint and only the trial court can go into it to decide whether the complaint is barred by limitation or not. He further submits that since the office of the Department of Company Affairs is situated at Delhi, courts have the jurisdiction. In respect of the third contention he submits that since the name of the company was not known on the date when the complaint was filed, therefore, it could not be made an accused. Mr. Sharma may be right in so far as the first contention is concerned that the point of limitation can only be gone into by deciding the factual aspect as to when the names of the directors were known to the complainant, though, to me, it appears that this has been mentioned in the complaint only to overcome the requirements of section 468 of the Code of Criminal Procedure. Section 159 of the Companies Act makes it compulsory on every company having a share capital to submit to the Registrar annual return which apart from other things has to mention the names of the directors and other office bearers, it does not, therefore, in my view, lie in the mouth of the Department of Company Affairs to say that the names of the directors were not known to them.

(6) Under section 22 of the Mrtp Act the offence is the establishment of a new unit without the permission of the Government and the offence will always be tried by a court within whose jurisdiction it is committed. The simple fact that the authority who is required to accord permission is situated in Delhi does not confer any jurisdiction on Delhi Courts. It is the common case of the parties that the unit has been established in contravention of section 22 of the Mrtp Act within the State of Maharashtra, the offence as such would be friable within the jurisdiction of the court where it is committed. That apart, in the complaint itself it is clearly mentioned by the complainant that the petitioners are being prosecuted as they are held vicariously liable for the offence committed by the company. If the company is not prosecuted or punished, the petitioners under section 53 of the Mrtp Act cannot be held liable. In my view, therefore, this prosecution is an exercise in futility and will amount to abuse of the process of the court. The petition as such is allowed and the impugned complaint is quashed.