M.L. Lakhotia And Others vs The State
1989 Latest Caselaw 420 Del

JUDGMENT

Malik Sharief-Ud-Din, J.

1. The petitioners are being prosecuted for 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 Monopolies and Restrictive Trade Practices 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 for under section 22(1) of the Act. Admittedly, the petitioners in this case were directors of M/s. Indian Tool Manufacturers Ltd. Notices were issued to them from 1971 onwards stating that the company was to be registerable then under section 26 of the Act on the relevant date. 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 a reply to it was sent. These issues are, however, the subject matter of the main dispute and a finding is yet to be recorded on the question as to whether the company was registrable 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 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 as to whether, on the relevant date on which the petitioners applied for the registration, the company was or was not registrable under section 26 of the Monopolies and Restrictive Trade Practices 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 for making a delayed complaint advanced by the complainant that the names of the directors of the company were not known to them till October 1, 1986, is absolutely wrong.

3. The second contention of learned counsel for the petitioners is that the offence under section 22 of the Monopolies and Restrictive Trade Practices 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, the liability of the directors would arise only 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 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, the Delhi courts have 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, 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 be gone into only 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 an 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 Monopolies and Restrictive Trade Practices 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 which is required to accord permission is situated in Delhi does not confer any jurisdiction on the Delhi courts. It is the common case of parties that the unit has been established in contravention of section 22 of the Monopolies and Restrictive Trade practices Act within the State of Maharashtra, and the offence as such would be tribal 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 petitioner 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 Monopolies and Restrictive Trade Practices 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.