Delhi High Court
Dharmendra Kr. Lila vs Registrar Of Companies on 23 September, 2010
Author: A. K. Pathak
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CRL. M.C. 6249/2006
% Decided on: 23rd September, 2010
DHARMENDRA KR. LILA ..... Petitioner
Through: Mr. Sidharth Luthra, Sr. Adv.
with Mr. P.S. Singhal,
Ms. Smriti Sinha &
Mr. Arshdeep Singh, Advs.
Versus
REGISTRAR OF COMPANIES ..... Respondent
Through: Mr. Baldev Malik, Adv.
AND
+ CRL. M.C 6263/2006
KRISHNA KUMAR ..... Petitioner
Through: Mr. Sidharth Luthra, Sr. Adv.
with Mr. P.S. Singhal,
Ms. Smriti Sinha &
Mr. Arshdeep Singh, Advs.
Versus
REGISTRAR OF COMPANIES ..... Respondent
Through: Mr. Baldev Malik, Adv.
AND
+ CRL. M.C. 6278/2006
SUBHASH CHANDRA GUPTA ..... Petitioner
Through: Mr. Sidharth Luthra, Sr. Adv.
with Mr. P.S. Singhal,
Ms. Smriti Sinha &
Mr. Arshdeep Singh, Advs.
Versus
REGISTRAR OF COMPANIES ..... Respondent
Through: Mr. Baldev Malik, Adv.
CRL. M.C. 6249/2006 Page 1 of 4
CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK
1. Whether the Reporters of local papers
may be allowed to see the judgment? No
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
A.K. PATHAK, J. (ORAL)
By these petitions under Section 482 of the Code of Criminal
Procedure, 1973, petitioners seek quashing of criminal complaint
No.805/2002 under Section 62 read with Section 68 of the Indian
Companies Act, 1956 (for short hereinafter referred to as "the Act")
filed by Registrar of Companies against them. This complaint is
pending in the court of Additional Chief Metropolitan Magistrate
(ACMM), Delhi. It was alleged in the complaint that the petitioners
were signatories to the prospectus dated 28th April, 1994 containing
misstatement of facts. The company had collected `210 lakhs from
the public issue but had failed to accomplish the promises made in
the prospectus.
2. Learned Senior counsel for the petitioners has contended that
no criminal complaint can be filed under Section 62 of the Act as
this provision deals with the "civil liability" for making misstatement
in the prospectus. With regard to the complaint under Section 68
of the Act, it has been submitted that for filing of a complaint under
this section, prior sanction of competent authority was required.
Neither such sanction was obtained by the Registrar of Companies
prior to filing of the complaint nor had the same been placed on
record. In nutshell, it has been canvassed that the complaint under
Section 62 read with Section 68 of the Act was liable to be quashed.
Reliance has also been placed on Rajeev Shukla & Anr. vs.
Registrar of Companies 135 (2006) Delhi Law Times 599 and
Manju Yadav vs. Registrar of Companies 2007 (98) DRJ 312.
3. Section 62 of the Act reads as under:-
"62. Civil liability for misstatements in prospectus.
(1) Subject to the provisions of this section, where a
prospectus invites persons to subscribe for shares in
or debentures of a company, the following persons
shall be liable to pay compensation to every persons
who subscribes for any shares or debentures on the
faith fo the prospectus for any loss or damage he
may have sustained by reason of any untrue
statement included therein, that is to say,..........
xx xx xx xx"
4. Bare perusal of the aforesaid provision clearly indicates that
violation thereof entails civil liability inasmuch as, it provides
payment of compensation in case of misstatement in the
prospectus. In my view, the compensation in respect of violation of
Section 62 of the Act can be claimed by filing appropriate civil suit
and no criminal complaint under Section 62 of the Act would be
maintainable in this regard. Similar view has been expressed in
Rajiv Shukla and Manju Yadav's cases (supra).
5. As regards the complaint under Section 68 of the said Act is
concerned, learned counsel for the respondent has not disputed
that prior sanction of the competent authority is required before
launching prosecution under the said provision. However, he
contends that such sanction was granted for initiating prosecution
by the Department of Company Affairs vide its letter dated 13th
March, 2002. I have perused the copy of so called sanction letter
and find that the same is general permission granted to the Regional
Director by the Department of Law & Justice for initiating
prosecution in respect of violations of Sections 62, 63 read with 628
of the said Act. This sanction nowhere includes launching of
prosecution under Section 68 of the Act. In Rajiv Shukla's case
(supra) also this very sanction letter was involved and was adversely
commented upon. No other sanction letter has been placed on
record. In absence of any such sanction, the only presumption
which can be drawn is that no sanction was obtained for launching
prosecution under Section 68 of the Act against the petitioners. In
absence of prior sanction, the complaint under Section 68 of the
said Act would also be not maintainable.
6. For the foregoing reasons, petitions are allowed and complaint
case bearing no. 805/2002 pending before the ACMM and all
further proceedings arising therefrom qua the petitioners are hereby
quashed.
7. All the abovementioned petitions are disposed of in the above
terms.
A.K. PATHAK, J.
September 23, 2010
ga
