Sri Niranjan Nakshatri vs Registrar Of Companies
2024 Latest Caselaw 24837 Kant

Karnataka High Court

Sri Niranjan Nakshatri vs Registrar Of Companies on 16 October, 2024

                                           1       CRL.RP NO.1358/2019


                   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                      DATED THIS THE 16TH DAY OF OCTOBER, 2024

                                        BEFORE

                          THE HON'BLE MS.JUSTICE J.M.KHAZI

                  CRIMINAL REVISION PETITION NO.1358 OF 2019

               BETWEEN:
               SRI NIRANJAN NAKSHATRI
               SON OF SRI. A.R. NAKSHATRI,
               AGED ABOUT 54 YEARS,
               RESIDING AT NO.49-A, II STAGE,
               M.S.H. LAYOUT, ANAND NAGAR,
               BENGALURU - 560 024.
                                                           ...PETITIONER
               (BY SRI. S.SREEVATSA, SENIOR COUNSEL FOR
                   SMT. UDITA RAMESH, ADVOCATE)
               AND:
Digitally signed by
BHARATHI H M        THE REGISTRAR OF COMPANIES,
Location: HIGH      2ND FLOOR, 'E' WING,
COURT OF
KARNATAKA           KENDRIYA SADAN, KORAMANGALA,
               BENGALURU - 560 034.
                                                        .....RESPONDENT
               (BY SMT. ANUPAMA HEGDE, CGSC)

                  THIS CRIMINAL REVISION PETITION IS FILED UNDER
               SECTION 397 R/W 401 OF CR.P.C PRAYING TO SET ASIDE
               THE JUDGMENT DATED 16.08.2019 IN CRL.A.NO.1323/2015
               PASSED BY THE LXV ADDITIONAL CITY CIVIL AND SESSIONS
               JUDGE, AT BENGALURU AND SET ASIDE THE JUDGMENT
               DATED 26.09.2015 PASSED BY THE SPECIAL COURT FOR
               ECONOMIC OFFENCES, BENGALURU IN C.C.NO.1631/2004
               AND GRANT SUCH OTHER OR FURTHER RELIEFS AS THIS
               HON'BLE COURT MAY DEEM FIT IN THE CIRCUMSTANCES OF
               THE CASE.

                  THIS CRIMINAL REVISION PETITION HAVING BEEN
               HEARD AND RESERVED ON 12.07.2024, COMING ON FOR
               PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE
               THE FOLLOWING:
                               2      CRL.RP NO.1358/2019



                           ORDER

In this petition filed under Section 397 r/w Section

401 of Cr.P.C, petitioner who is arraigned as accused

No.2 has challenged the judgment and order dated

26.09.2015 in C.C.No.1631/2004 passed by the trial

Court, which came to be confirmed by the Sessions Court

by dismissing the appeal filed by him.

2. For the sake of convenience, parties are

referred to by their ranks before the trial Court.

3. Registrar of companies (for short 'ROC') filed a

private complaint against accused Nos.1 to 3 alleging

offence punishable under Section 58A(10) for failure to

comply with the order of the Company Law Board (for

short 'CLB') u/s 58 A (9) of the Companies Act, 1956 (for

short 'the Act').

4. It is alleged that accused No.1 - M/S Yashasvi

Ltd (for short 'company') was incorporated on

03.07.1989 under the Companies Act originally as a

private company in the name Sanmitra Leasing and

Finance Private Ltd. With effect from 28.09.1994, it

became a deemed public company. Later with effect from

15.06.1995 its name was changed to Yashasvi Leasing

and Finance Ltd. Again its name was changed to Yashasvi

Ltd with effect from 11.05.2000. The registered office of

the company was situated at S.F.10, City Point, Infantry

Road, Bengaluru. Accused No.2 is the Managing Director

of the company at the relevant point of time. Accused

No.3 is the Company Secretary with effect from

25.11.2002. Accused Nos.2 and 3 are the Officers in

default within the meaning of Section 5 of the Act.

5. On the failure to repay the deposits

aggregating to Rs.81,000 together with interest, on the

application filed by Shri Raghavendra N and 2 other

depositors, the Company Law Board, Southern Region

Branch at Chennai passed order dated 31.10.2003 under

Section 58A (9), directing to pay the deposits together

with up-to-date interest at the contracted rate and filing

fee to the applicants i.e, (a) Deposits up to Rs.20,000/-

in four equal instalments commencing from 30.11.2003

and (b) Deposits above Rs.20,000/- in six equal monthly

instalments commencing from 30.11.2003 and to file an

affidavit of compliance within a week thereafter with the

complainant. In the event of failure of repaying any one

instalment, the entire outstanding amount will forth with

become payable.

6. The accused have not complied with the order

of CLB and consequently, no affidavit of compliance was

filed. In their capacity as the Managing Director and as

the Company Secretary, accused Nos.2 and 3 along with

accused No.1 have committed offence punishable under

Section 58 A(10) of the Act. A Show cause notice dated

05.07.2004 is issued to the accused. However, no reply

was sent and also the default is still continuing and

hence the complaint.

7. The accused appeared before the trial Court

and contested the matter by pleading not guilty.

8. At the trial on behalf of the complainant, one

witness is examined as PW-1 and Exs.P1 to 12 are

marked.

9. Accused Nos.3 and 2 are examined as DW-1

and 2. Exs.D1 to 4 are marked on their behalf.

10. The trial Court dismissed the complaint

against accused No.1 company on the ground that it is

not represented by a proper person. It accepted the

defence of accused No.3 that at the relevant point of

time, he was not the Company Secretary and Officer in

default within the meaning of Section 5 of the Act.

11. However, the trial Court convicted accused

No.2 and sentenced him as detailed in the impugned

judgment and order.

12. Aggrieved by the same, accused No.2 went in

appeal before the Sessions Court, which came to be

dismissed, confirming the order of the trial Court.

13. In this petition, accused No.2 has challenged

the judgment and order passed by the trial Court as well

as the Sessions Court, contending that both Courts have

failed to appreciate the fact that under Section 58 A (9)

vicarious liability is fixed on every Officer of the company

in default. They have failed to appreciate the fact that

the Reserve Bank of India has filed a petition for winding

up of the company in company petition No.17/2005 and

it was wound up by Order of the Hon'ble High Court of

Karnataka dated 22.02.2006.The official liquidator ought

to have been shown as representing the company.

Failure to implead the company as accused is fatal to the

prosecution. The Courts below have erred in not

appreciating the fact that notice was not given to the

accused No.2 regarding the order passed by the CLB.

Even otherwise, the punishment imposed is on the higher

side. The CLB has directed the company and the

Directors to redeem the debentures and pay the value

with interest. It did not fasten any personal liability on

accused No.2. Viewed from any angle impugned

judgment and order passed by the trial Court as well as

the Sessions Court are not sustainable and pray to set

aside the same and dismiss the petition filed by the

complainant.

14. In support of his arguments, learned Senior

counsel representing the petitioner has relied upon the

following decisions:

(1) Aneeta Hada Vs. Godfather Travels and Tours Private Limited (Aneeta Hada)1 (2) Anil Hada Vs. Godfather Travels and Tours Pvt.

Ltd. (Anil Hada)2 (3) Avnish Bajaj Vs. State (Avnish Bajaj)3 (4) Ebay India Private Limited Vs. State and Another (Ebay India)4

15. On the other hand, learned counsel

representing the complainant has supported the

judgment and order. She would submit that there is no

gross miscarriage of justice or manifest illegality caused

by the impugned judgment and orders calling for

interference in the exercise of powers under Section 397

r/w 401 Cr.P.C and sought for dismissal of the petition.

(2012) 5 SCC 661

(2012) 3 SCC (Civ) 350

(2012) 3 SCC (Cri) 241

2012 SCC OnLine SC 383

16. Heard elaborate arguments of both sides and

perused the record.

17. At the outset, it is relevant to note that in the

complaint, the company is arraigned as accused No.1.

The trial Court has dismissed the complaint against it on

the technical ground that by the time the final order

came to be passed, the company was under liquidation

and it is not represented by a proper person. The

complaint was filed during 2004 and at the time the

winding of proceedings were not initiated. In the cause

title, it is shown to be represented by accusedNo.2, who

is the Managing Director. Anyhow, the complainant has

not challenged the dismissal of the complaint against

accused No.1 - company. Since the company is made a

party, it is not open for accused No.2 to claim that in the

absence of company, the complaint is not maintainable

against him.

18. Even otherwise under Section 58 A (10),

whoever fails to comply with any order made by the

Company Law Board/Tribunal under sub-section (9) shall

be punishable. Therefore, this Section does not require

company to be punished to make the Officers in default

to be punished. The decision in Aneeta Hada (referred

to supra) relied upon by accused No.2 is arising out of

provisions of Section 138 of N I Act and as per Section

141, in case of criminal liability for dishonour of cheque

by company, in order to punish the director or authorised

signatory of the cheque, the arraigning of company as

accused is mandatory. In view of this specific provision,

in case of dishonour of cheque by the company, it is

mandatory to arraigning the company in order to punish

the Director or authorised signatory. However, the same

is not necessary in the present case.

19. As rightly held by the trial Court, accused

No.2 was a party before the Company Law Board when

the order in question was passed. He was aware of the

said order. The complaint came to be filed in 2004 and a

show cause notice was sent to the registered address of

the company. Therefore, it is deemed that the notice is

duly served on him. Even otherwise, having regard to the

fact that accused No.2 was a party in the proceedings

before the CLB, he cannot claim ignorance of the said

order. Moreover, accused No.2 has not challenged the

order passed by the CLB and he has also not sought time

to comply the same before the proper forum. Even

according to accused No.2, he has resigned from the

company during the year 2006. As rightly held by the

trial Court and the Sessions Court, the default committed

by accused No.2 is long prior to the winding up of the

company and therefore it is not justifiable ground for him

to commit the default.

20. Considering the undisputed facts, the oral and

documentary evidence placed on record, the trial Court

as well as the Sessions Court have held accused No.2

guilty of the offence alleged. This Court finds no

justifiable grounds to interfere with the said orders in

exercise of the revisional powers under Section 397

Cr.P.C. In the result, the petition fails and accordingly

the following:

ORDER

(i) Petition filed by accused No.2 under Section 397 r/w 401 Cr.P.C is dismissed.

(ii) The impugned judgment and order dated 26.09.2015 in CC.No.1631/2004 on the file of the Special Court for Economic Offences at Bangalore and dated 16.08.2019 in Crl.A.No.1323/2015 on the file of the LXV Additional City Civil and Sessions Judge, Bangalore City (CCH No.66) are confirmed.

(iii) The Registry to send back the trial Court and Session Court records along with copy of this order forthwith.

Sd/-

(J.M.KHAZI) JUDGE

RR