M/S Rakoor Industries Pvt. Ltd. ... vs Sh. R.L. Bali, Income Tax Officer ...
2001 Latest Caselaw 1474 Del

ORDER

K.S. Gupta, J.

1. This revision petition is directed against the order dated 23rd May 2001 passed by an Additional Chief Metropolitan Magistrate, Delhi, dismissing the application of petitioner for staying the proceedings in criminal complaint No. 1229 / 1/ 97 R.L. Bali vs. M/s. Rakoor Industries Pvt. Ltd. and others.

2. In short the submission advanced by Sh. Shabmbhu Nath for petitioner whom I heard on the point of admission, was that as the Provisional Liquidator with respect to M/s. Rakoor Industries Pvt. Ltd., petitioner No.1 had been appointed in C.P.No.17/88 by the order dated 22nd May 1990, the complaint filed by respondent No.1 fro the offences punishable under section 276-C and 277 of Income Tax Act, 1962 (for short the 'Act') against the petitioner could not be proceeded except by leave of winding up court which the respondent No.1 has not obtained and, thus, the impugned order declining to stay proceedings is bad in law. He pointed out that decision in M/s. BSI Ltd. and another vs. Gift Holding Pvt. Ltd. and another 2000(2) Supreme To-day 41 relied upon by Additional Chief Metropolitan Magistrate is inapplicable as it was rendered with reference to section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. Submission is, however without any merit. Complaint was filed by respondent NO.1 against petitioner No.1 company, R.K. Gupta, petitioner No.2 and Smt. Prem Lata Gupta who is alleged to have died, on 31st march, 1987. Rajender Kumar Gupta and Smt. Prem Lata Gupta had been imp leaded as accused being managing Director / director of accused/ petitioner No.1 company. Para No.6 of the complaint (copy at pages 10 to 15) which is material, reads thus:-

"From the facts stated hereinabove, it is clear that the accused willfully attempted to evade tax, penalty of interest chargeable or imposable under the provisions of the Act and as such, they are guilty of offence punishable under section 276C of the Act. From the facts stated hereinabove, it is further clear that the accused made a statement in the verification of the return and delivered accounts/ statement which were false and which they knew or believed to be false and as such they are guilty of offences under section 277 of the Act."

3. It was prayed that accused be punished for the offences under Sections 276-C and 277 of the Act.

4. Section 446(1) of Companies Act says that when a winding up order has been made or Official Liquidator appointed as Provisional Liquidator, no suit or other legal proceedings shall be commenced or if pending at the time of winding up order, shall be proceeded with, against the company except by leave of the court and subject to such terms as the court may impose. Expression "legal proceedings" in section 446(1) is wide enough to include criminal prosecution also but such proceedings must be in relation to the assets of company. As the proceedings arising out of criminal complaint for alleged violation of said two sections of the Act are not in respect of assets of petitioner No.1 company, said sub section (1) of section 446 has no applicability. Further, aforesaid section cannot be invoked as regards criminal proceedings against the managing director/director of company for the offences under the Act. I am fortified in this view of mine by the decision in Jose Antony vs. Official Liquidator, 2000(3) Crimes 191 wherein scope of section 446(1) vis-a-vis section 138 of Negotiable Instrument Act was considered by a Division Bench of Kerala High Court. As was rightly pointed out, M/s. BSI Ltd & Another's case (supra) has no applicability in the matter as it was not decided with reference to section 446(1) of the Companies Act.

5. For the foregoing discussion, proceedings against the petitioners in pending criminal complaint cannot be stayed by invoking section 446(1) of the Companies Act.

6. Revision petition is, therefore, dismissed.