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
