Since, petitions are having common factual background and reliefs
claimed by the petitioners in the petitions are same, therefore, this
common order is being passed governing disposal of these three petitions.
2. These petitions have been filed by the petitioners under Section 482
of the Code of Criminal Procedure (for short 'Cr.P.C.') invoking
jurisdiction of this Court for quashing of complaint case Nos.
SC/10/2021, SC/3/2021 and SC/12/2021 (Now numbered as SC/31/2024
upon transfer from Gwalior to Special Court, PMLA, Bhopal) filed by the
respondent, Registrar of Companies under Section 447 of the Companies
Act, 2013 (hereinafter referred as 'Act of 2013'). However, for the sake
of convenience, facts of M.Cr.C. No.2350/2025 are being taken for
consideration to resolve the controversy involved in these cases.
3. Learned counsel for the petitioners has submitted that this Court has
already decided one case involving similar facts and issues, therefore,
these cases may also be decided in the same manner.
the truth and as such, this petition is not maintainable and can be
dismissed in the light of the findings given by the Court about the
applicability of Section 447 of the Act of 2013.
5. The submission made by learned counsel for the intervener has
been opposed by the learned counsel for the petitioners pointing out that
this aspect has already been taken care of by this Court on earlier
occasion when this Court has decided M.Cr.C. No. 6919/2024 vide order
dated 20.12.2024 in the case of Shri Ishtiaq Hussain Siddiqui vs.
Registrar, Companies, Ministry of Corporate Affairs.
6. I have heard the submissions made by learned counsel for the
parties and perused the order passed by this Court in the case of Shri
Ishtiaq Hussain Siddiqui (supra) on which petitioners are placing
reliance. Upon perusal of the order passed by this Court, it is seen that
same objection had been raised by the respondent at the time of hearing of
that case and objection was considered by the Court and assigned reason
in detail as to why the subsequent petition, even after passing the order by
the Gwalior Bench of this Court in the case of M/s. Peoples General
Hospital Pvt. Ltd. (supra), could be entertained and therefore, I do not
find substance in the submission made by learned counsel for the
intervener and therefore, the objection and submission made by him is
hereby rejected.
7. As per the facts of the case, a complaint was preferred by the
respondent i.e. Registrar of Companies against the petitioners and it was
registered as Complaint Case No. SC/10/2021. Vide order dated
22.01.2024, IX Additional District and Sessions Judge/Special Court
(MP), Gwalior, MP directed to transfer the case to Special Court (PMLA),
Bhopal from Gwalior for further proceedings and as such, case has been
transferred to Bhopal.
8. The aforesaid complaint was made by the respondent alleging
violation of Section 447 of the Act of 2013 by the present petitioners, as
such, a complaint case was registered vide Complaint Case No.
SC/10/2021 in which present petitioner Nos.1 and 2 have been arrayed as
accused. Summons were issued by the Court to the present petitioners
and also to other accused. In the complaint, it is alleged by the respondent
that the accused being Directors of the Company have violated Section
447 of the Act of 2013 and have granted loan at the rate of interest lower
than the prevailing yield. The allegation was confined to the assessment
period i.e. FY 2006-2007 to FY 2013-2014 but according to the
petitioners, offence under Section 447 of the Act of 2013 is not made out.
In the petition, it is also submitted by the petitioners that the provision of
loan and investment by the Company is governed by Section 186 of the
Act of 2013 and Section 186(7) laid down that no loan shall be given
under Section 186 at a rate of interest lower than the prevailing yield of
one year, three year, five year or ten year Government Security closest to
the loan tenor and if any loan is given then it will be governed by Section
186 of the Act of 2013 and this section itself laid down that in case any
loan is given lesser than the threshold limit, the company shall be
punishable with fine which shall not be less than twenty five thousand
rupees but it may extend upto five lakh rupees and every officer of the
company who is in default, shall be punishable with imprisonment for a
term which may extend upto two years with fine which shall not be less
than twenty five thousand rupees but it may extend to one lakh rupees.
9. It is also pointed out by the petitioners that the scheme of Section
186 of the Act of 2013 is self-contained code for purpose of violation of
Section 186(7) and for the purpose of punishment thereof and hence the
entire complaint filed by the respondent is misconceived and abuse of the
process of law.
10. It is further pointed out by the petitioners that offence mentioned
under Section 186(7) of the Act of 2013 is not a scheduled offence under
PMLA, 2002 but with some ulterior motive, respondent has filed the
complaint under Section 447 of the Act of 2013 which has no application
in the present case because according to the petitioners, it is only 186(7)
which deals with the initial limit of the interest rates and Section 447 has
nothing to do with the same. According to the petitioners, the other
grounds raised by them challenging the action taken by the respondent
and filing a complaint are misconceived and deserve to be dismissed. It is
also pointed out that this Court in a similar circumstance has considered
the very aspect of the matter which is involved in the present case and
therefore, their case be also decided in the light of the observation made
by the Court in the similar case i.e. M.Cr.C. No.6919/2024 (Shri Ishtiaq
Hussain Siddiqui vs. Registrar, Companies, Ministry of Corporate
Affairs).
11. Although, respondent has submitted the reply and also raised
preliminary objection as has been raised by the intervener and also
supported that the complaint filed by the respondent is not liable to be
quashed and according to learned counsel, these petitions deserve to be
dismissed as the issue has already been dealt with by the High Court
holding that the applicability of Section 447 shall be determined during
the course of trial.
12. I have perused the record and after hearing the submissions made
by learned counsel for the parties and perusal of the order passed by this
Court in Shri Ishtiaq Hussain Siddiqui (supra), I find that the issue
involved in these cases is similar to that case decided by this Court.
Therefore, in my opinion, there is no reason for taking a different view
which had already been taken dealing with almost all issues raised in the
present petition. The observation made by this Court on an earlier
occasion, is as follows :-
3. Per contra, learned counsel for the respondent
opposes the submissions made by learned counsel for
the petitioner and submits that in view of the settled
legal position, when earlier petition got decided by the
Court and that observation got affirmed by the
Supreme Court, second petition is not maintainable.
Pointing-out to paragraphs-22, 23 and 24, he submits
that the applicability of Section 447 of the Act of 2013
has been considered by the Court and the contention of
learned counsel for the petitioner was rejected,
therefore, the same ground cannot be raised again in
the present petition. According to him, the petition is
not maintainable. He also submits that looking to the
allegations made against the present petitioner, when
the offence was committed in the year 2018 and was a
continuous offence and currency period of said offence
started from year 2006 and ended in year 2018, then it
is clear that the offence has been committed after
enforcement of Section 447 of the Act of 2013, and
therefore, according to the respondent, nothing wrong
has been committed by the authority. He submits that
looking to the facts and circumstances of the case, it is
for the trial Court to see whether fraud has been
committed or not and offence of Section 447 is
applicable or not, but at this stage, this Court cannot
consider this aspect and the same should be left for the
trial Court and petition under Section 482 of Cr.P.C.
seeking quashment of complaint, is not maintainable.
He further submits that as per the allegations made
against the present petitioner, it is not only a violation
of the provisions of Sub section-7 of Section 186, but
the conduct of the petitioner moves beyond the said
provision and it is nothing but a fraud as has been
specified and prescribed under Section 447 of the Act
of 2013, therefore, nothing wrong has been committed
while registering the offence under Section 447 of the
Act of 2013. He submits that when the Supreme Court,
while dismissing the SLP, has already observed that the
petitioner is at liberty to raise the objections before the
trial Court, then there is no reason for filing the present
petition and the petitioner can raise all these grounds
before the trial Court.
4. Considering the submissions made by learned
counsel for the parties and on perusal of record, the
preliminary question with regard to maintainability of
petition as has been raised by learned counsel for the
respondent saying that earlier also a petition i.e.
M.Cr.C. No.41956 of 2023 was filed under Section 482
of Cr.P.C. in which quashing of complaint case
registered as Complaint Case No.SC/12/2021 was
sought to be quashed and similar relief is being claimed
in this petition, therefore, this petition is not
maintainable because the order of dismissal of previous
petition passed by the High Court, was also affirmed by
the Supreme Court. In the order of the Supreme Court,
liberty was granted to the then petitioner to raise all the
grounds before the trial Court and as such, declined to
interfere in the order passed by the High Court.
5. Shri Pushpendra Yadav, Deputy Solicitor General
has raised objection that in such a circumstance, this
petition is not maintainable whereas learned counsel
for the petitioner has tried to impress the Court that it is
a settled principle of law and in number of cases,
Hon'ble Supreme Court has observed that dismissal of
petition under Section 482 of Cr.P.C. does not debar the
petitioner or other accused persons to file second
petition under Section 482 of Cr.P.C.
6. Learned counsel for the petitioner has submitted that
in the earlier petition, present petitioner was not the
party and that petition had been filed by some other
person. It is also pointed out that the said petition
which got dismissed by the High Court was affirmed
by the Supreme Court and the point which is being
raised in the present petition had not been considered
- 10 -
and no opinion was expressed by the High Court
because the said point was never argued and raised
before the Court. As per the submission made by
learned counsel for the petitioner in a case of Anil
Khadkiwala vs. State (Government of NCT of
Delhi) and another passed in Criminal Appeal NO(s)
1157 of 2019, the Supreme Court has held that the
previous petition if does not contain a specific factual
plea then second petition under Section 482 of Cr.P.C.
would not be treated to be a repeat application and also
not barred to entertain the second petition. In the
judgment passed in Anil Khadkiwala (supra), the
Supreme Court has dealt with the following question :-
"The application preferred by the appellant under
Section 482, Cr.P.C. to quash the summons issued in
complaint case no.3403/1/2015 was dismissed by the
High Court opining that since the earlier Crl.M.C.
No.877 of 2005 for the same relief had already been
dismissed, the second application was not
maintainable."
7. To answer the aforesaid question, Hon'ble Supreme
Court observed as under :-
"3. The appellant then preferred a fresh application
under Section 482 giving rise to the present
proceedings. The High Court noticing the reliance on
Form 32 issued by the Registrar of Companies, under
the Companies Act, 1956, in proof of resignation by the
appellant prior to the issuance of the cheques, issued
notice, leading to the impugned order of dismissal
subsequently.
4. Learned counsel for the appellant submitted that
there was no bar to the maintainability of a second
application under Section 482, Cr.P.C. in the peculiar
facts and circumstances of the case, relying on
- 11 -
Superintendent and Remembrancer of Legal Affairs,
West Bengal vs. Mohan Singh and Ors., AIR 1975 SC
1002.
5. Learned counsel for respondent no.2 relied upon
order dated 06.05.2019 of this Court in Atul Shukla vs.
The State of Madhya Pradesh and another (Criminal
Appeal No.837 of 2019) to contend that such an
application was not maintainable. The cheques being
post-dated, the appellant cannot escape its
answerability.
6. We have considered the respective submissions on
behalf of the parties and are of the opinion that the
appeal deserves to be allowed for the reasons
enumerated hereinafter.
7. The complaint filed by respondent no.2 alleges
issuance of the cheques by the appellant as Director on
15.02.2001 and 28.02.2001. The appellant in his reply
dated 31.08.2001, to the statutory notice, had denied
answerability in view of his resignation on 20.01.2001.
This fact does not find mention in the complaint. There
is no allegation in the complaint that the cheques were
post-dated. Even otherwise, the appellant had taken a
specific objection in his earlier application under
Section 482, Cr.P.C. that he had resigned from the
Company on 20.01.2001 and which had been accepted.
From the tenor of the order of the High Court on the
earlier occasion it does not appear that Form 32 issued
by the Registrar of Companies was brought on record
in support of the resignation. The High Court dismissed
the quashing application without considering the
contention of the appellant that he had resigned from
the post of the Director of the Company prior to the
issuance of the cheques and the effect thereof in the
facts and circumstances of the case. The High Court in
- 12 -
the fresh application under Section 482, Cr.P.C.
initially was therefore satisfied to issue notice in the
matter after noticing the Form 32 certificate. Naturally
there was a difference between the earlier application
and the subsequent one, inasmuch as the statutory
Form 32 did not fall for consideration by the Court
earlier. The factum of resignation is not in dispute
between the parties. The subsequent application,
strictly speaking, therefore cannot be said to a repeat
application squarely on the same facts and
circumstances.
8. In Mohan Singh (supra), it was held that a successive
application under Section 482, Cr.P.C. under changed
circumstances was maintainable and the dismissal of
the earlier application was no bar to the same,
observing:
"2. ...... Here, the situation is wholly different. The
earlier application which was rejected by the High
Court was an application under Section 561A of the
CrPC to quash the proceeding and the High Court
rejected it on the ground that the evidence was yet to be
led and it was not desirable to interfere with the
proceeding at that stage. But, thereafter, the criminal
case dragged on for a period of about one and half
years without any progress at all and it was in these
circumstances that respondents Nos. 1 and 2 were
constrained to make a fresh application to the High
Court under Section 561-A to quash the proceeding. It
is difficult to see how in these circumstances it could
ever be contended that what the High Court was being
asked to do by making the subsequent application was
to review or revise the Order made by it on the earlier
application. Section 561-A preserves the inherent
power of the High Court to make such Orders as it
- 13 -
deems fit to prevent abuse of the process of the Court
or to secure the ends of justice and the High Court
must, therefore, exercise its inherent powers having
regard to the situation prevailing at the particular point
of time when its inherent jurisdiction is sought to be
invoked. The High Court was in the circumstances
entitled to entertain the subsequent application of
Respondents Nos. 1 and 2 and consider whether on the
facts and circumstances then obtaining the continuance
of the proceeding against the respondents constituted
an abuse of the process of the Court or its quashing was
necessary to secure the ends of justice. The facts and
circumstances obtaining at the time of the subsequent
application of respondents Nos. 1 and 2 were clearly
different from what they were at the time of the earlier
application of the first respondent because, despite the
rejection of the earlier application of the first
respondent, the prosecution had failed to make any
progress in the criminal case even though it was filed
as far back as 1965 and the criminal case rested where
it was for a period of over one and a half
years............"
9. In Harshendra Kumar D. vs. Rebatilata Koley Etc.,
2011 Crl.L.J. 1626, this Court held :
"22. Criminal prosecution is a serious matter; it affects
the liberty of a person. No greater damage can be done
to the reputation of a person than dragging him in a
criminal case. In our opinion, the High Court fell into
grave error in not taking into consideration the
uncontroverted documents relating to Appellant's
resignation from the post of Director of the Company.
Had these documents been considered by the High
Court, it would have been apparent that the Appellant
has resigned much before the cheques were issued by
- 14 -
the Company. As noticed above, the Appellant resigned
from the post of Director on March 2, 2004. The
dishonoured cheques were issued by the Company on
April 30, 2004, i.e., much after the Appellant had
resigned from the post of Director of the Company. The
acceptance of Appellant's resignation is duly reflected
in the resolution dated March 2, 2004. Then in the
prescribed form (Form No. 32), the Company informed
to the Registrar of Companies on March 4, 2004 about
Appellant's resignation. It is not even the case of the
complainants that the dishonoured cheques were issued
by the Appellant. These facts leave no manner of doubt
that on the date the offence was committed by the
Company, the Appellant was not the Director; he had
nothing to do with the affairs of the Company. In this
view of the matter, if the criminal complaints are
allowed to proceed against the Appellant, it would
result in gross injustice to the Appellant and tantamount
to an abuse of process of the court."
10. ......
11. The Company, of which the appellant was a
Director, is a party respondent in the complaint. The
interests of the complainant are therefore adequately
protected. In the entirety of the facts and circumstances
of the case, we are unable to hold that the second
application for quashing of the complaint was not
maintainable merely because of the dismissal of the
earlier application.
8. Further reliance has been placed by learned counsel
for the petitioner on a decision of Supreme Court
reported in (1975) 3 SCC 706, Superintendent and
Remembrancer of Legal Affairs, West Bengal vs.
Mohan Singh and others wherein the Supreme Court
has considered the issue of entertaining the second
- 15 -
application in a changed set of circumstances under
Section 482 of Cr.P.C. and observed as under :-
"2. The main question debated before us was whether
the High Court had jurisdiction to make the order dated
April 7, 1970 quashing the proceeding against
Respondents 1, 2 and 3 when on an earlier application
made by the first respondent, the High Court had by its
order dated December 12, 1968 refused to quash the
proceeding. Mr Chatterjee on behalf of the State
strenuously contended that the High Court was not
competent to entertain the subsequent application of
Respondents 1 and 2 and make the order dated April 7,
1970 quashing the proceeding, because that was
tantamount to a review of its earlier order by the High
Court, which was outside the jurisdiction of the High
Court to do. He relied on two decisions of the Punjab
and Orissa High Courts in support of his contention,
namely, Hoshiar Singh v. State [AIR 1958 Punj 312 :
60 Punj LR 438 : 1958 Cri LJ 1093] and Namdeo
Sindhi v. State [AIR 1958 Ori 20 : 1958 Cri LJ 67 :
ILR 57 Cut 355] . But we fail to see how these
decisions can be of any help to him in his contention.
They deal with a situation where an attempt was made
to persuade the High Court in exercise of its revisional
jurisdiction to reopen an earlier order passed by it in
appeal or in revision finally disposing of a criminal
proceeding and it was held that the High Court had no
jurisdiction to revise its earlier order, because the
power of revision could be exercised only against an
order of a subordinate court. Mr Chatterjee also relied
on a decision of this Court in U.J.S. Chopra v. State of
Bombay [AIR 1955 SC 633 : (1955) 2 SCR 94 : 1955
Cri LJ 1410] where N.H. Bhagwati, J., speaking on
behalf of himself and Imam, J., observed that once a
judgment has been pronounced by the High Court
- 16 -
either in exercise of its appellate or its revisional
jurisdiction, no review or revision can be entertained
against that judgment and there is no provision in the
Criminal Procedure Code which would enable the High
Court to review the same or to exercise revisional
jurisdiction over the same. These observations were
sought to be explained by Mr Mukherjee on behalf of
the first respondent by saying that they should not be
read as laying down any general proposition excluding
the applicability of Section 561-A in respect of an order
made by the High Court in exercise of its appellate or
revisional jurisdiction even if the conditions attracting
the applicability of that section were satisfied in respect
of such order, because that was not the question before
the Court in that case and the Court was not concerned
to inquire whether the High Court can in exercise of its
inherent power under Section 5 61 A review an earlier
order made by it in exercise of its appellate or
revisional jurisdiction. The question as to the scope and
ambit of the inherent power of the High Court under
Section 561-A vis-a-vis an earlier order made by it was,
therefore, not concluded by this decision and the matter
was res integra so far as this Court is concerned. Mr
Mukherjee cited in support of this contention three
decisions, namely, Raj Narain v. State [AIR 1959 All
315 : 1959 Cri LJ 543 : 1959 All LJ 56], Lal Singh v.
State [AIR 1970 Punj 32 : 1970 Cri LJ 267 : ILR
(1970) 1 Punj 177] and Ramvallabh Jha v. State of
Bihar [AIR 1962 Pat 417 : (1962) 2 Cri LJ 625 : 1962
BLJR 553]. It is, however, not necessary for us to
examine the true effect of these observations as they
have no application because the present case is not one
where the High Court was invited to revise or review
an earlier order made by it in exercise of its revisional
jurisdiction finally disposing of a criminal proceeding.
- 17 -
Here, the situation is wholly different. The earlier
application which was rejected by the High Court was
an application under Section 561-A of the Code of
Criminal Procedure to quash the proceeding and the
High Court rejected it on the ground that the evidence
was yet to be led and it was not desirable to interfere
with the proceeding at that stage. But, thereafter, the
criminal case dragged on for a period of about one and
a half years without any progress at all and it was in
these circumstances that Respondents 1 and 2 were
constrained to make a fresh application to the High
Court under Section 561-A to quash the proceeding. It
is difficult to see how in these circumstances, it could
ever be contended that what the High Court was being
asked to do by making the subsequent application was
to review or revise the order made by it on the earlier
application. Section 561-A preserves the inherent
power of the High Court to make such orders as it
deems fit to prevent abuse of the process of the Court
or to secure the ends of justice and the High Court
must, therefore, exercise its inherent powers having
regard to the situation prevailing at the particular point
of time when its inherent jurisdiction is sought to be
invoked. The High Court was in the circumstances
entitled to entertain the subsequent application of
Respondents 1 and 2 and consider whether on the facts
and circumstances then obtaining the continuance of
the proceeding against the respondents constituted an
abuse of the process of the Court or its quashing was
necessary to secure the ends of justice. The facts and
circumstances obtaining at the time of the subsequent
application of Respondents 1 and 2 were clearly
different from what they were at the time of the earlier
application of the first respondent because, despite the
rejection of the earlier application of the first
- 18 -
respondent, the prosecution had failed to make any
progress in the criminal case even though it was filed
as far back as 1965 and the criminal case rested where
it was for a period of over one and half years. It was for
this reason that, despite the earlier order dated
December 12, 1968, the High Court proceeded to
consider the subsequent application of Respondents 1
and 2 for the purpose of deciding whether it should
exercise its inherent jurisdiction under Section 561-A.
Thus the High Court was perfectly entitled to do and
we do not see any jurisdictional infirmity in the order
of the High Court. Even on the merits, we find that the
order of the High Court was justified as no prima facie
case appears to have been made out against
Respondents 1 and 2."
9. The Supreme Court in the case of Vinod Kumar,
IAS vs. Union of India & others, Writ Petition(s)
(Criminal) No(s). 255/2021 relying upon the decision
of Superintendent and Remembrancer of Legal
Affairs (supra) has observed as under :-
"The law on point as held by this Court in
"Superintendent and Remembrancer of Legal Affairs,
West Bengal Vs. Mohan Singh & Ors." reported in
SCC (1975) 3 706 is clear that dismissal of an earlier
482 petition does not bar filing of subsequent petition
under Section 482, in case the facts so justify. Needless
to say that as and when any appropriate application
under the Code is preferred by the petitioner, the same
shall be dealt with purely on its own merits without
being influenced by the dismissal of the instant writ
petition."
10. Thus, considering the submissions made by
learned counsel for the petitioner in response to the
objection raised by learned counsel for the respondent
- 19 -
and looking to the legal position as has been
enumerated above and also on perusal of earlier order
of High Court, it is clear that the present petitioner was
not a party in the said petition and he was not the
petitioner in the same.
11. From the order and the facts considered
therein, it is clear that the quashing of the complaint
case was solely on the ground that the ex post facto
application of penal provision is proper or not. The
High Court while dismissing the petition observed that
at the relevant point of time, it was not proper for the
Court to enter into the factual aspect of the matter
because Court was of the opinion that prima facie only
on the basis of inter-departmental communication, if
any summary is prepared, that summary note cannot be
considered the opinion and it has no legal sanctity
prima facie. The Court at that time refused to enter
into the factual aspect of the matter and observed that it
can be unveiled only after conducting the trial.
12. It is clear from the order of High Court that
the points raised before this Court in the present
petition have not been discussed and no opinion was
given by the Court on this aspect which has been
argued before this Court. Accordingly, in view of the
legal position, the objection raised by learned counsel
for the respondent about maintainability of this
petition, in my opinion, is not sustainable and
accordingly it is rejected and therefore, this petition is
held maintainable.
13. Further, in support of his submissions and
grounds raised for quashing the complaint case,
reliance has been placed by learned counsel for the
petitioner upon a view taken by the Supreme Court in
the case of State of Haryana & Others vs. Ch.
- 20 -
Bhajan Lal and others reported in AIR 1992 SC 604
in which the Supreme Court has laid down the
yardstick specifying as to under which circumstance
the power under Section 482 of Cr.P.C. can be
exercised and criminal proceeding can be quashed.
The yardstick laid down by the Supreme Court is as
under :-
"(1) Where the allegations made in the first information
report or the complaint, even if they are taken at their
face value and accepted in their entirety do not prima
facie constitute any offence or make out a case against
the accused.
(2) Where the allegations in the first information report
and other materials, if any, accompanying the FIR do
not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) of
the Code except under an order of a Magistrate within
the purview of Section 155(2) of the Code.
(3) Where the uncontroverted allegations made in the
FIR or complaint and the evidence collected in support
of the same do not disclose the commission of any
offence and make out a case against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-
cognizable offence, no investigation is permitted by a
police officer without an order of a Magistrate as
contemplated under Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint
are so absurd and inherently improbable on the basis of
which no prudent person can ever reach a just
conclusion that there is sufficient ground for
proceeding against the accused.
(6) Where there is an express legal bar engrafted in any
of the provisions of the Code or the concerned Act
(under which a criminal proceeding is instituted) to the
- 21 -
institution and continuance of the proceedings and/or
where there is a specific provision in the Code or the
concerned Act, providing efficacious redress for the
grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended
with mala fide and/or where the proceeding is
maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to
spite him due to private and personal grudge."
14. As per the counsel for the petitioner, it is a
case in which allegations made against the present
petitioner, though available on record but do not
constitute any offence under the provision for which
offence has been registered. It is also submitted by the
learned counsel for the petitioner that when the
allegations made against the petitioner and material
collected by the prosecution, a specific offence could
have been registered under the respective provision
which is available under the Act of 2013 then there was
no reason to register an offence under Section 447 of
the Act of 2013, especially, when allegations and
material collected do disclose that the main allegations
are relating to the period when Section 447 of the Act
of 2013 had no application and therefore, instead of
Section 447, the offence could have been registered
under the respective provisions which are available
under the Act itself i.e Sections 185, 186 and 188 of the
Act of 2013. The F.I.R. is available on record which
has been prepared on the basis of inspection done by
the authority of Central Government exercising the
power provided under Section 206(5) of Act of 2013
and at the time of inspection of books of accounts of
the company, following irregularities and illegality
have been noticed :-
- 22 -
"WHEREAS, during the inspection of books of
accounts and financial statements of the company, it is
observed by the IO that from 30.11.2000 to 25.07.2006,
Alliance Industries Limited (a foreign entity) has made
investment of Rs. 144.18 crore by way of purchase of
shares at premium. (Out of which, Share Capital
amount is Rs.14.66 crore and Premium amount is
Rs.129.52 crore.) Further, the company under
inspection has given loans to related parties namely
P.G.H. International Pvt. Ltd and Sarvajanik
Jankalayan Parmarthik Nyas at the terms which are not
in the interest of the shareholders/company. It is
observed that 66% funds were transferred by the
company in F.Y. 2003-04 and from F.Y. 2005-06
onwards, more than 88% funds were transferred by the
company to related parties. 100% funds from the Net
worth of the company were transferred as on
31.03.2018. The rate of interest was much lesser than
the prevailing market price or the company has given
interest free loans to related parties instead of carrying
on its main business activity. Loans given to
Sarvajanik Jankalyan Parmarthik Nyas, a trust
registered under The M.P. Public Trust Act, 1951 are at
the interest rates 1% to 3% during 2003-04 to 2017-18
whereas prevailing market rates at that time was around
6% to 8%. Further, the loans given to related parties
namely P.G.H. International Pvt. Ltd. were Interest
free. In this manner, company has given wrongful gain
to the other related party which includes the
management of the company and wrongful loss to the
shareholders/company which tantamount to fraud.
Thus, there appears violation of Section 447 of the
Companies Act, 2013."
15. From the aforesaid alleged irregularities, it is
clear that the provision of Section 185 of Act of 2013 is
- 23 -
available under which it is permissible to give loan to
the directors. Section 185 of Act of 2013 reads as
under :-
"185. Loans to directors, etc. - (1) No company shall,
directly or indirectly, advance any loan, including any
loan represented by a book debt to, or give any
guarantee or provide any security in connection with
any loan taken by,--
(a) any director of company, or of a company which is
its holding company or any partner or relative of any
such director; or
(b) any firm in which any such director or relative is a
partner.
(2) A company may advance any loan including any
loan represented by a book debt, or give any guarantee
or provide any security in connection with any loan
taken by any person in whom any of the director of the
company is interested, subject to the condition that--
(a) a special resolution is passed by the company in
general meeting:
Provided that the explanatory statement to the
notice for the relevant general meeting shall disclose
the full particulars of the loans given, or guarantee
given or security provided and the purpose for which
the loan or guarantee or security is proposed to be
utilised by the recipient of the loan or guarantee or
security and any other relevant fact; and
(b) the loans are utilised by the borrowing company for
its principal business activities.
Explanation.--For the purposes of this sub-section, the
expression "any person in whom any of the director of
the company is interested" means--
(a) any private company of which any such director is a
director or member;
- 24 -
(b) any body corporate at a general meeting of which
not less than twenty-five per cent. of the total voting
power may be exercised or controlled by any such
director, or by two or more such directors, together; or
(c) any body corporate, the Board of directors,
managing director or manager, whereof is accustomed
to act in accordance with the directions or instructions
of the Board, or of any director or directors, of the
lending company.
(3) Nothing contained in sub-sections (1) and (2) shall
apply to--
(a) the giving of any loan to a managing or whole-time
director--
(i) as a part of the conditions of service extended by the
company to all its employees; or
(ii) pursuant to any scheme approved by the members
by a special resolution; or
(b) a company which in the ordinary course of its
business provides loans or gives guarantees or
securities for the due repayment of any loan and in
respect of such loans an interest is charged at a rate not
less than the rate of prevailing yield of one year, three
year, five year or ten year Government security closest
to the tenor of the loan; or
(c) any loan made by a holding company to its wholly
owned subsidiary company or any guarantee given or
security provided by a holding company in respect of
any loan made to its wholly owned subsidiary
company; or
(d) any guarantee given or security provided by a
holding company in respect of loan made by any bank
or financial institution to its subsidiary company:
Provided that the loans made under clauses (c)
and (d) are utilised by the subsidiary company for its
principal business activities.
- 25 -
(4) If any loan is advanced or a guarantee or security is
given or provided or utilised in contravention of the
provisions of this section,--
(i) the company shall be punishable with fine which
shall not be less than five lakh rupees but which may
extend to twenty-five lakh rupees;
(ii) every officer of the company who is in default shall
be punishable with imprisonment for a term which may
extend to six months or with fine which shall not be
less than five lakh rupees but which may extend to
twenty-five lakh rupees; and
(iii) the director or the other person to whom any loan
is advanced or guarantee or security is given or
provided in connection with any loan taken by him or
the other person, shall be punishable with
imprisonment which may extend to six months or with
fine which shall not be less than five lakh rupees but
which may extend to twenty-five lakh rupees, or with
both."
16. Further, the Act itself provides and made
permissible for the company to provide loan and make
investment. As such, Section 186 also provides the rate
of interest on which loan can be granted and as pointed
out by learned counsel for the petitioner that if any
violation and contravention of the prescribed procedure
for granting loan and investment by the company is
done, the Section itself provides mechanism to punish
the defaulter and penal provision i.e. sub section 13 of
section 186 is very specific. It is also apt to reproduce
Section 186 of Act of 2013, which reads as under :-
"186. Loan and investment by company.--(1)
Without prejudice to the provisions contained in this
Act, a company shall unless otherwise prescribed,
make investment through not more than two layers of
investment companies:
- 26 -
Provided that the provisions of this sub-section shall
not affect,--
(i) a company from acquiring any other company
incorporated in a country outside India if such other
company has investment subsidiaries beyond two
layers as per the laws of such country;
(ii) a subsidiary company from having any
investment subsidiary for the purposes of meeting the
requirements under any law or under any rule or
regulation framed under any law for the time being in
force.
(2) No company shall directly or indirectly--
(a) give any loan to any person or other body
corporate;
(b) give any guarantee or provide security in
connection with a loan to any other body corporate or
person; and
(c) acquire by way of subscription, purchase or
otherwise, the securities of any other body corporate,
exceeding sixty per cent of its paid-up share capital,
free reserves and securities premium account or one
hundred per cent of its free reserves and securities
premium account, whichever is more.
[Explanation.--For the purposes of this sub-section,
the word "person" does not include any individual who
is in the employment of the company.]
[(3) Where the aggregate of the loans and
investment so far made, the amount for which
guarantee or security so far provided to or in all other
bodies corporate alongwith the investment, loan,
guarantee or security proposed to be made or given by
the Board, exceed the limits specified under sub-
section (2), no investment or loan shall be made or
guarantee shall be given or security shall be provided
- 27 -
unless previously authorised by a special resolution
passed in a general meeting:
Provided that where a loan or guarantee is given or
where a security has been provided by a company to its
wholly owned subsidiary company or a joint venture
company, or acquisition is made by a holding company,
by way of subscription, purchase or otherwise of, the
securities of its wholly owned subsidiary company, the
requirement of this sub-section shall not apply:
Provided further that the company shall disclose the
details of such loans or guarantee or security or
acquisition in the financial statement as provided under
sub-section (4).]
(4) The company shall disclose to the members in the
financial statement the full particulars of the loans
given, investment made or guarantee given or security
provided and the purpose for which the loan or
guarantee or security is proposed to be utilised by the
recipient of the loan or guarantee or security.
(5) No investment shall be made or loan or guarantee
or security given by the company unless the resolution
sanctioning it is passed at a meeting of the Board with
the consent of all the directors present at the meeting
and the prior approval of the public financial institution
concerned where any term loan is subsisting, is
obtained:
Provided that prior approval of a public financial
institution shall not be required where the aggregate of
the loans and investments so far made, the amount for
which guarantee or security so far provided to or in all
other bodies corporate, alongwith the investments,
loans, guarantee or security proposed to be made or
given does not exceed the limit as specified in sub-
section (2), and there is no default in repayment of loan
instalments or payment of interest thereon as per the
- 28 -
terms and conditions of such loan to the public
financial institution.
(6) No company, which is registered under Section 12
of the Securities and Exchange Board of India Act,
1992 (15 of 1992) and covered under such class or
classes of companies as may be prescribed, shall take
inter-corporate loan or deposits exceeding the
prescribed limit and such company shall furnish in its
financial statement the details of the loan or deposits.
(7) No loan shall be given under this section at a rate of
interest lower than the prevailing yield of one year,
three year, five year or ten year Government Security
closest to the tenor of the loan.
(8) No company which is in default in the repayment of
any deposits accepted before or after the
commencement of this Act or in payment of interest
thereon, shall give any loan or give any guarantee or
provide any security or make an acquisition till such
default is subsisting.
(9) Every company giving loan or giving a guarantee or
providing security or making an acquisition under this
section shall keep a register which shall contain such
particulars and shall be maintained in such manner as
may be prescribed.
(10) The register referred to in sub-section (9) shall be
kept at the registered office of the company and --
(a) shall be open to inspection at such office; and
(b) extracts may be taken therefrom by any member,
and copies thereof may be furnished to any member of
the company on payment of such fees as may be
prescribed.
[(11) Nothing contained in this section, except sub-
section (1), shall apply--
(a) to any loan made, any guarantee given or any
security provided or any investment made by a banking
- 29 -
company, or an insurance company, or a housing
finance company in the ordinary course of its business,
or a company established with the object of and
engaged in the business of financing industrial
enterprises, or of providing infrastructural facilities;
(b) to any investment--
(i) made by an investment company;
(ii) made in shares allotted in pursuance of clause
(a) of sub-section (1) of Section 62 or in shares allotted
in pursuance of rights issues made by a body corporate;
(iii) made, in respect of investment or lending
activities, by a non-banking financial company
registered under Chapter III-B of the Reserve Bank of
India Act, 1934 (2 of 1934) and whose principal
business is acquisition of securities.]
(12) The Central Government may make rules for the
purposes of this section.
(13) If a company contravenes the provisions of this
section, the company shall be punishable with fine
which shall not be less than twenty-five thousand
rupees but which may extend to five lakh rupees and
every officer of the company who is in default shall be
punishable with imprisonment for a term which may
extend to two years and with fine which shall not be
less than twenty-five thousand rupees but which may
extend to one lakh rupees.
Explanation.--For the purposes of this section,--
(a) the expression "investment company" means a
company whose principal business is the acquisition of
shares, debentures or other securities [and a company
will be deemed to be principally engaged in the
business of acquisition of shares, debentures or other
securities, if its assets in the form of investment in
shares, debentures or other securities constitute not less
than fifty per cent of its total assets, or if its income
- 30 -
derived from investment business constitutes not less
than fifty per cent as a proportion of its gross income;]
(b) the expression "infrastructure facilities" means
the facilities specified in Schedule VI"
17. Section 188 of the Act of 2013 also permits
related party transactions. That provision is also
material so far the alleged transactions of the company
referred in the FIR are concerned and the said
provision also provides penal provision. Section 188,
thus, prescribes as under :-
"188. Related party transactions.--(1) Except with
the consent of the Board of Directors given by a
resolution at a meeting of the Board and subject to such
conditions as may be prescribed, no company shall
enter into any contract or arrangement with a related
party with respect to--
(a) sale, purchase or supply of any goods or materials;
(b) selling or otherwise disposing of, or buying,
property of any kind;
(c) leasing of property of any kind;
(d) availing or rendering of any services;
(e) appointment of any agent for purchase or sale of
goods, materials, services or property;
(f) such related party's appointment to any office or
place of profit in the company, its subsidiary company
or associate company; and
(g) underwriting the subscription of any securities or
derivatives thereof, of the company:
Provided that no contract or arrangement, in the case
of a company having a paid-up share capital of not less
than such amount, or transactions not exceeding such
sums, as may be prescribed, shall be entered into
except with the prior approval of the company by a
[resolution]:
- 31 -
Provided further that no member of the company
shall vote on such 295[resolution], to approve any
contract or arrangement which may be entered into by
the company, if such member is a related party:
[Provided also that nothing contained in the second
proviso shall apply to a company in which ninety per
cent or more members, in number, are relatives of
promoters or are related parties:]
Provided also that nothing in this sub-section shall
apply to any transactions entered into by the company
in its ordinary course of business other than
transactions which are not on an arm's length basis:
[Provided also that the requirement of passing the
resolution under first proviso shall not be applicable for
transactions entered into between a holding company
and its wholly owned subsidiary whose accounts are
consolidated with such holding company and placed
before the shareholders at the general meeting for
approval.]
Explanation.-- In this sub-section,--
(a) the expression "office or place of profit" means any
office or place--
(i) where such office or place is held by a director, if
the director holding it receives from the company
anything by way of remuneration over and above the
remuneration to which he is entitled as director, by way
of salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise;
(ii) where such office or place is held by an individual
other than a director or by any firm, private company
or other body corporate, if the individual, firm, private
company or body corporate holding it receives from the
company anything by way of remuneration, salary, fee,
commission, perquisites, any rent-free accommodation,
or otherwise;
- 32 -
(b) the expression "arm's length transaction" means a
transaction between two related parties that is
conducted as if they were unrelated, so that there is no
conflict of interest.
(2) Every contract or arrangement entered into under
sub-section (1) shall be referred to in the Board's report
to the shareholders alongwith the justification for
entering into such contract or arrangement.
(3) Where any contract or arrangement is entered into
by a director or any other employee, without obtaining
the consent of the Board or approval by a [resolution]
in the general meeting under sub-section (1) and if it is
not ratified by the Board or, as the case may be, by the
shareholders at a meeting within three months from the
date on which such contract or arrangement was
entered into, such contract or arrangement [shall be
voidable at the option of the Board or, as the case may
be, of the shareholders] and if the contract or
arrangement is with a related party to any director, or is
authorised by any other director, the directors
concerned shall indemnify the company against any
loss incurred by it.
(4) Without prejudice to anything contained in sub-
section (3), it shall be open to the company to proceed
against a director or any other employee who had
entered into such contract or arrangement in
contravention of the provisions of this section for
recovery of any loss sustained by it as a result of such
contract or arrangement.
(5) Any director or any other employee of a company,
who had entered into or authorised the contract or
arrangement in violation of the provisions of this
section shall,--
(i) in case of listed company, be 300[liable to a penalty
of twenty-five lakh rupees]; and
- 33 -
(ii) in case of any other company, be 301[liable to a
penalty of five lakh rupees]."
18. As per learned counsel for the petitioner,
Section 447 has been introduced by way of amendment
in the Act of 2013 and in earlier Act, there was no such
provision like Section 447. Therefore, it is apt to
reproduce Section 447, which reads as under :-
"447. Punishment for fraud.-- Without prejudice to
any liability including repayment of any debt under this
Act or any other law for the time being in force, any
person who is found to be guilty of fraud, shall be
punishable with imprisonment for a term which shall
not be less than six months but which may extend to
ten years and shall also be liable to fine which shall not
be less than the amount involved in the fraud, but
which may extend to three times the amount involved
in the fraud:
Provided that where the fraud in question involves
public interest, the term of imprisonment shall not be
less than three years.
[Provided further that where the fraud involves an
amount less than ten lakh rupees or one per cent. of the
turnover of the company, whichever is lower, and does
not involve public interest, any person guilty of such
fraud shall be punishable with imprisonment for a term
which may extend to five years or with fine which may
extend to [fifty lakh rupees] or with both.]
Explanation.--For the purposes of this section--
(i) "fraud" in relation to affairs of a company or any
body corporate, includes any act, omission,
concealment of any fact or abuse of position committed
by any person or any other person with the connivance
in any manner, with intent to deceive, to gain undue
advantage from, or to injure the interests of, the
- 34 -
company or its shareholders or its creditors or any
other person, whether or not there is any wrongful gain
or wrongful loss;
(ii) "wrongful gain" means the gain by unlawful means
of property to which the person gaining is not legally
entitled;
(iii) "wrongful loss" means the loss by unlawful means
of property to which the person losing is legally
entitled.
19. Learned counsel for the petitioner has also
pointed out that the element of fraud was introduced
first time in the year 2013 and fraud itself has been
defined with the explanation attached with proviso of
Section 447 but looking to the alleged irregularity,
offence of fraud is not made out and secondly for the
transaction which took place prior to 2013,
retrospective application under Section 447 cannot be
made.
20. Shri Pushpendra Yadav, learned counsel
appearing for respondent has submitted that the
transaction which is found to be illegal and Section 447
has been applied, cannot be confined to the period prior
to enforcement of Section 447 but since it continued
even after period of enforcement of Section 447 and
that was done for wrongful gain therefore, offence of
Section 447 has rightly been registered against the
petitioner and he submits that it was a question of trial
and therefore, nothing wrong has been done and this
Court, at this stage, cannot examine this aspect.
21. The Karnataka High Court in the case of
Srividya C.G. vs. Serious Fraud Investigation Office
(W.P. No.4380 of 2018) has considered the
applicability of Section 447 of the Act of 2013 and put
- 35 -
the confusion at rest and held that no such offence shall
be tried under Act of 2013 which had been committed
at the time when Act of 2013 was not even in force
rather such offence shall be deemed to be prosecuted
under the old Act only. The observation made by the
Court is as follows :-
"61. The alleged offences were purportedly committed
during the period when the Companies Act of 1956 was
in effect. The initiation of legal proceedings under
Section 36, in conjunction with Sections 447 and 448
of the 2013 Act, lacks legal authority. The petitioners
cannot be prosecuted for actions that were not deemed
punishable under the provisions of the 1956 Act. This
purported action violates Article 20, Sub Clause 1 of
the Constitution of India, which safeguards against
retrospective criminalization."
The Court also observed that Article 20(1) of the
Constitution of India provides so and prescribes as
under :-
"20. Protection in respect of conviction for offences.-
(1) No person shall be convicted of any offence except
for violation of a law in force at the time of the
commission of the act charged as an offence, nor be
subjected to a penalty greater than that which might
have been inflicted under the law in force at the time of
the commission of the offence."
22. Notably, the pyramid of submissions made on
behalf of the respondent is based on three pillars.
Primarily about the maintainability of the petition;
secondarily, about the applicability of Section 447 on
the basis of continuous offence and transactions made
as per the complaint even after enforcement of the Act,
2013 and tertiary, that at this stage this court should not
- 36 -
exercise the powers enshrined under Section 482 of
CrPC and should be left for the trial court.
23. For fathoming the depth of above threefold
submissions, on the face of record and legal position
already set at rest, which would definitely navigate the
path, I find it apposite to deal with the submissions
one-by-one in the following manner:-
(i) So far as the submission about maintainability of the
petition is concerned, this court has already observed in
foregoing paragraphs that the petition is maintainable.
(ii) As far as applicability of the provisions of Section
447 of Act, 2013 is concerned, I am not convinced with
the submission made at the behest of the respondent
that it is a continuous offence even after the year 2013
and therefore Section 447 has rightly been applied.
From the allegations made, it is clear that the
Investigating Officer did take note of transactions made
from 30.11.2000 to 25.07.2006 and also the
transactions of Financial Year 2003-04 and Financial
Year 2005-06 and further transactions made upto the
year 2017-18. The allegations made in the FIR do
confirm that it is not a continuous offence inasmuch as
the transactions made in different years. The definition
of Financial Year under the old Companies Act, 1956 is
prescribed in Section 2(17), wherein it is provided that
the period in respect of which any profit or loss account
of the body corporate laid before it in annual general
meeting is made up, whether that period is a year or
not. Moreso, as per the 'Financial Year' as defined
under Section 2(41) of Act, 2013, it is clear that the
period ending on 31st of March of every year. Thus, it
can profitably be held that it is not a continuous
offence. My view takes strength from the view taken
by the Supreme Court in the case of Udai Shankar
- 37 -
Awasthi vs. State of Uttar Pradesh and another
(2013) 2 SCC 435, wherein the Supreme court has
considered the aspect of continuous offence and came
to observe as under:-
"Continuing offence
23. Section 472 CrPC provides that in case of a
continuing offence, a fresh period of limitation begins
to run at every moment of the time period during which
the offence continues. The expression "continuing
offence" has not been defined in CrPC because it is one
of those expressions which does not have a fixed
connotation, and therefore, the formula of universal
application cannot be formulated in this respect.
24. In Balakrishna Savalram Pujari Waghmare v. Shree
Dhyaneshwar Maharaj Sansthan [AIR 1959 SC 798]
AIR p. 807, para 31 this Court dealt with the
aforementioned issue, and observed that a continuing
offence is an act which creates a continuing source of
injury, and renders the doer of the act responsible and
liable for the continuation of the said injury. In case a
wrongful act causes an injury which is complete, there
is no continuing wrong even though the damage
resulting from the said act may continue. If the
wrongful act is of such character that the injury caused
by it itself continues, then the said act constitutes a
continuing wrong. The distinction between the two
wrongs therefore depends upon the effect of the injury.
In the said case, the Court dealt with a case of a
wrongful act of forcible ouster, and held that the
resulting injury caused was complete at the date of the
ouster itself, and therefore there was no scope for the
application of Section 23 of the Limitation Act in
relation to the said case.
25. In Gokak Patel Volkart Ltd. v. Dundayya
Gurushiddaiah Hiremath [(1991) 2 SCC 141 : 1991
- 38 -
SCC (Cri) 315] this Court dealt with the issue and held
as under :
"7. ... According to Black's Law Dictionary, [5th Edn.
(Special Deluxe)], 'continuing' means 'enduring; not
terminated by a single act or fact; subsisting for a
definite period or intended to cover or apply to
successive similar obligations or occurrences'.
Continuing offence means 'type of crime which is
committed over a span of time'. As to period of statute
of limitation in a continuing offence, the last act of the
offence controls for commencement of the period. 'A
continuing offence, such that only the last act thereof
within the period of the statute of limitations need be
alleged in the indictment or information, is one which
may consist of separate acts or a course of conduct but
which arises from that singleness of thought, purpose
or action which may be deemed a single impulse'. So
also a 'continuous crime' means 'one consisting of a
continuous series of acts, which endures after the
period of consummation, as, the offence of carrying
concealed weapons. In the case of instantaneous
crimes, the statute of limitation begins to run with the
consummation, while in the case of continuous crimes
it only begins with the cessation of the criminal
conduct or act.'"
On the anvil of above legal touchstone, it
becomes clear like a noon day that each and every
offence committed in different Financial Years, on the
face of allegations made in the complaint, the offence
committed after enforcement of the Act, 2013 cannot
be consolidated and tried under Section 447 of Act,
2013. Ergo, the Financial Year prior to Act, 2013 can
be treated differently to that of Financial Year as
defined in the Act, 2013. Especially, the transactions as
- 39 -
have been considered by this court hereinabove can be
tried under specific provision available under Act, 2013
itself and also available in the old Companies Act, 1956
with the penal provision. As such, it is testified that the
respondent has utterly committed illegality in setting
the sails of trial proposing to apply Section 447
retrospectively.
Over and above, the Supreme Court in the case
of Commissioner of Income Tax (Central)-1, New
Delhi vs. Vatika Township Private Limited (2015) 1
SCC 1 dealing with the provisions of Income Tax Act,
has observed as under :-
"General principles concerning retrospectivity
27. A legislation, be it a statutory Act or a statutory
rule or a statutory notification, may physically consists
of words printed on papers. However, conceptually it is
a great deal more than an ordinary prose. There is a
special peculiarity in the mode of verbal
communication by a legislation. A legislation is not just
a series of statements, such as one finds in a work of
fiction/non-fiction or even in a judgment of a court of
law. There is a technique required to draft a legislation
as well as to understand a legislation. Former technique
is known as legislative drafting and latter one is to be
found in the various principles of "interpretation of
statutes". Vis-à-vis ordinary prose, a legislation differs
in its provenance, layout and features as also in the
implication as to its meaning that arise by presumptions
as to the intent of the maker thereof.
28. Of the various rules guiding how a legislation has
to be interpreted, one established rule is that unless a
contrary intention appears, a legislation is presumed
not to be intended to have a retrospective operation.
The idea behind the rule is that a current law should
govern current activities. Law passed today cannot
- 40 -
apply to the events of the past. If we do something
today, we do it keeping in view the law of today and in
force and not tomorrow's backward adjustment of it.
Our belief in the nature of the law is founded on the
bedrock that every human being is entitled to arrange
his affairs by relying on the existing law and should not
find that his plans have been retrospectively upset. This
principle of law is known as lex prospicit non respicit :
law looks forward not backward. As was observed in
Phillips v. Eyre [(1870) LR 6 QB 1] , a retrospective
legislation is contrary to the general principle that
legislation by which the conduct of mankind is to be
regulated when introduced for the first time to deal
with future acts ought not to change the character of
past transactions carried on upon the faith of the then
existing law.
29. The obvious basis of the principle against
retrospectivity is the principle of "fairness", which
must be the basis of every legal rule as was observed in
L'Office Cherifien des Phosphates v. Yamashita-
Shinnihon Steamship Co. Ltd. [(1994) 1 AC 486 :
(1994) 2 WLR 39 : (1994) 1 All ER 20 (HL)] Thus,
legislations which modified accrued rights or which
impose obligations or impose new duties or attach a
new disability have to be treated as prospective unless
the legislative intent is clearly to give the enactment a
retrospective effect; unless the legislation is for purpose
of supplying an obvious omission in a former
legislation or to explain a former legislation. We need
not note the cornucopia of case law available on the
subject because aforesaid legal position clearly
emerges from the various decisions and this legal
position was conceded by the counsel for the parties. In
- 41 -
any case, we shall refer to few judgments containing
this dicta, a little later."
In view of the aforesaid, it is clear that trying
offence by the respondent under Section 447 applying
the same retrospectively, is apparently illegal and it can
be considered to be a malicious prosecution.
Essentially, when the prosecution has come under the
shadow of malice, the Supreme Court has already
engrafted yardsticks in the case of Bhajan Lal (supra).
In view of the thoughtful yardsticks formulated by the
Supreme Court, which make me undoubtedly
unhesitant to hold that the prosecution in the case at
hand is not sustainable in the eyes of law and such
proceedings can be quashed by this court exercising the
power provided under Section 482 of CrPC.
(iii) So far as the third submission made on behalf
of the respondent about exercising power by this court
at this stage is also not sustainable inasmuch as it is a
settled principle of law that if on the basis of
allegations contained in FIR, the court finds
considering the same to be true at its face value, the
offence registered is not formulated and prosecution
can be considered to be malicious prosecution, same
can be quashed."
13. Thus, in view of the aforesaid legal position and the similar facts
involved in the present cases, all the three petitions are allowed. The
proceedings of complaint case arising out of Complaint Case
No.SC/10/2021 in M.Cr.C. No.2350/2025 (M/s. PGH International Pvt.
Ltd. and others vs. Union of India), proceedings of complaint case arising
out of Complaint Case No. SC/3/2021 in M.Cr.C. No.2369/2025 (M/s.
Peoples International & Services Pvt. Ltd. and others vs. Union of India)
- 42 -
and proceedings of Complaint Case No. SC/12/2021 (new number
SC/31/2024) in M.Cr.C. No.9477/2025 (M/s. Peoples General Hospital
Pvt. Ltd. and others vs. Union of India) pending before XVIII District &
Additional Sessions Judge/Special Judge, (PMLA), Bhopal are hereby
quashed in respect of petitioners in the respective petitions.
14. M.Cr.C. No.2350/2025, M.Cr.C. No.2369/2025 and M.Cr.C.
No.9477/2025 are allowed.
(SANJAY DWIVEDI)
JUDGE
PK
PARITOSH Digitally signed by PARITOSH KUMAR
DN: c=IN, o=HIGH COURT OF MADHYA PRADESH, ou=HIGH COURT OF
MADHYA PRADESH,
2.5.4.20=43c946b45c8a66c03b68676e788802a41cc03b5b9567caf9c2c3b
KUMAR
981b8cb6596, postalCode=482001, st=Madhya Pradesh,
serialNumber=678DC301994B496012A9643D92E6C6335F11A93DA54F2
DFB6E44B8B7A45044FC, cn=PARITOSH KUMAR
Date: 2025.05.19 12:09:41 +05'30'
